Early premarket gappers
- Gapping up:
- LI +10.1%, NIO +9%, HOLX +8.4%, CIVI +7.3%, MLCO +6.9%, HLF +5.7%, GME +4.8%, BSM +4.8%, LSCC +4.6%, RRGB +4.5%, CAR +4.5%, LVS +4.2%, PLOW +4.1%, WYNN +4%, NVTA +3.9%, XPEV +3.9%, LEG +3.7%, ADUS +3.5%, AMKR +3.4%, OTTR +3.1%, IMO +3%, SONY +2.3%, KPTI +2.1%, VIR +2%, BZUN +2%, MGM +2%, OXY +1.7%, AZN +1.6%, VAC +1.5%, LPX +1.4%, CINF +1.1%, DAL +1%, IT +1%, LDOS +0.9%
- Gapping down:
- VRNS -31.5%, HLIT -9%, TREX -8.5%, GT -7.6%, SSL -6.7%, SYK -5.4%, CLW -4.4%, AXNX -4.3%, CVI -2.7%, TSP -2%, FLS -1.8%, SBAC -1.8%, RHP -1.4%, AFL -0.9%
Ether miners repurpose tools following the ‘Merge’
Consumers plan to reuse energy-intensive equipment for alternative services
Ether crypto miners are looking to repurpose technology made obsolete by last month’s “Merge” for other energy-intensive activity, potentially blunting the crypto project’s effort to slash its carbon footprint.
Companies and small investors that lost out following the success of the Merge are turning to mining other cryptocurrencies, hosting services in the cloud and even heating their homes to make use of their equipment.
The Merge, one of the most ambitious projects in crypto history, transformed the running and upkeep of the popular Ethereum blockchain by moving from a “proof-of-work” system to one known as “proof of stake”.
That switch drastically slashed the amount of energy needed to mine new ether tokens and maintain the ledger that tracks all Ethereum deals. Co-founder Vitalik Buterin claimed the transition would cut worldwide electricity consumption by 0.2 per cent.
But that has left many investors who bet against the Merge happening with stacks of redundant IT equipment. Many are looking to repurpose their energy-intensive machines for other computing services. Ether miners use tech that contains graphics processing units, which are more adaptable.
Large companies such as Hut 8 Mining and Hive Blockchain Technologies have said they will turn to cloud computing. “Tracking the consequences of the Merge becomes worse if you consider that graphics cards have uses outside of mining, like cloud computing, AI and gaming,” said Alex de Vries, founder of the Digiconomist crypto analytics site. “It could be near impossible to track.”
Many ether miners were ordinary consumers as it used less power than bitcoin. “There’s a huge retail base in Ethereum mining, because it’s much easier to run a GPU in your house than a Bitcoin mining machine,” said Ethan Vera, chief operating officer of Luxor Technologies, a mining and analytics company.
Chris Kyle, director of marketing at Flexpool, a mutualised crypto mining group, is planning to use his 86 GPUs to heat his Vancouver home. The units are roughly the size of a computer keyboard, and graphics card temperatures can range between 40C and 90C.
“Now that it’s getting cold I’m going to turn them back on . . . all the energy you put in them gets turned into heat so it makes sense to just run my GPU instead of turning the heating on.”
Some are mining other energy-intensive cryptocurrencies. Around a fifth of the computing power that was devoted to mining the old Ethereum blockchain has been switched to alternative coins, such as Ethereum Classic, Ravencoin and Ergo.
However, the influx of new miners has increased competition, squeezing an industry already struggling with high energy costs. “It is extremely unlikely mining these coins is profitable anymore as margins will be squeezed to an extreme,” said James Check, a lead analyst at Glassnode, a blockchain data and intelligence company.
Others are waiting for a pick-up in prices. Jon Hartwig, a manufacturing engineer from Iowa, spends his evenings and weekends dusting and checking the wiring of his 600 GPUs.
“A lot of miners are holding on to their gear . . . I’m going to sit on it and wait until the next thing that comes along,” he said.
Mark D’Aria, chief executive of Bitpro Consulting, which resells used mining equipment, said the volume of GPUs sold on the platform has risen 30 per cent in the month since the Merge, and prices have not fallen “as much as I thought they would”.
“More people are selling . . . but it has slowed a lot after those first two weeks. There are an enormous amount of graphic cards out there waiting for someone to figure out what to do with.”
>>> Up
* Campari Raised to Buy at Deutsche Bank; PT 12 euros
* EQT Raised to Buy at Goldman; PT 295 kronor
* Scor Raised to Outperform at Mediobanca SpA; PT 20 euros (+)
* Wood Raised to Buy at HSBC; PT 282 pence
>>> Down
* Arjo Cut to Hold at Handelsbanken
* F-Secure Cut to Accumulate at Inderes; PT 3.10 euros (+)
* Fresenius Medical Cut to Sell at M.M. Warburg; PT 24 euros (+)
* Swiss Re Cut to Neutral at Mediobanca SpA; PT 90 Swiss francs (+)
>>> Initiation
* Argo Blockchain ADRs Cut to Hold at Jefferies; PT $1.10
* Auction Technology Group Rated New Overweight at Barclays
* Deltic Energy Rated New Speculative Buy at Canaccord (+)
* Edda Wind Rated New Buy at Pareto Securities; PT 32 kroner
* Kone Rated New Hold at Deutsche Bank; PT 41 euros
* Logista Rated New Overweight at Barclays; PT 25 euros
* Next Fifteen Reinstated Buy at Berenberg; PT 1,450 pence
* Schindler Rated New Buy at Deutsche Bank; PT 184 Swiss francs
>>> Call
* Energy Windfall Tax Would Hurt Oil Investment, Saxo Analyst Says
* Schindler Is Preferred Elevator Pick Over Kone at Deutsche Bank (+)
China Docks Final Module to Space Station
The joining of the Mengtian to the previous two modules marks a milestone on Beijing’s way to becoming a global space power
HONG KONG—China has successfully docked the final module to its space station, marking a milestone in Beijing’s long-coveted ambition of becoming a world-leading space power.
The 23-ton module, dubbed Mengtian, or “Dreaming of the Heavens,” lifted off from the Wenchang Spacecraft Launch Site on China’s southern island province of Hainan on Monday, according to China’s National Space Administration. It docked 13 hours later to the first two modules—the core module, Tianhe (“Harmony of the Heavens”), and the first research module, Wentian (“Quest for the Heavens”).
Wentian was designed for biology research, but Mengtian is designed to primarily study fundamental physics and microgravity—the condition in which objects and people, under extremely tiny gravitational pull, appear to be weightless. It includes 13 cabinets with the equipment to perform experiments for fluid physics, material science, combustion science and aerospace technology, the space administration said.
The chief designer of the Mengtian Space Application System, He Yufeng, told state media the module could also be used to develop quantum technologies—a field of research in which China has rapidly advanced and, in some areas, has become a world leader. Mengtian includes facilities, for example, to conduct experiments with ultra-cold atoms, one of the ingredients that scientists have tried to use to develop quantum computers, experimental devices designed to perform calculations far faster than conventional electronic computers.
With the addition of the third module, the completed space station, Tiangong (“Heavenly Palace”), now weighs around 150,000 pounds and has 4,000 cubic feet of living space. Its weight is roughly one-sixth that of the International Space Station, which has hosted more than 250 astronauts from 20 countries, including 161 from the U.S. and 56 from Russia.
In 2011, Congress passed a law prohibiting NASA from using its funding for any collaborations with China’s space program, effectively barring Chinese astronauts from participating in the ISS. The move fueled Beijing’s efforts to develop its own independent space-research facility, and China became the third country to do so, after the U.S. and Russia, in 2021 with the launch of Tianhe.
The station is designed to be operational for more than 10 years, with robotic arms for maintenance and construction. With the ISS set to retire after 2030—a six-year extension to the previous timeline—China’s Tiangong could become the only space station in orbit for its last few years.
Scientists say the station is a welcome contribution for continuing research that can only be conducted in space, such as observing earth, studying astronomical phenomena such as cosmic radiation, and running experiments that require low gravity or ultra-cold temperatures.
During the Communist Party congress last month, Chinese leader Xi Jinping marked the country’s achievements in its space program, including its manned space flights, lunar and Mars landings, and satellite navigation. He stressed the need to continue pushing for breakthroughs and self-reliance in strategic technologies, including in the aerospace industry.
China has said it plans to make its space station a hub for international scientific cooperation and has already cooperated with France, Germany, Italy, Russia, Pakistan and other space agencies since the launch of its manned space project, Foreign Minister Wang Wenbin said in April.
In August, seeds planted by the first group of Chinese astronauts on Tiangong successfully grew into seedlings, as part of one of the station’s earliest experiments aiming to replicate and observe the full life cycle for plants.
Chip Shortages Still Plague Toyota, Other Auto Makers
Japanese car maker trims full-year production plan by 500,000 vehicles
TOKYO— Toyota TM -0.51% Motor Corp. said it still can’t get its hands on enough semiconductors to meet its production goals, despite signs of excess supply elsewhere in the chip business.
Toyota on Tuesday lowered its production target for the current fiscal year through March to 9.2 million units from a previous goal of 9.7 million units, citing a shortage of automotive chips.
Semiconductor makers have said they see a sharp slowdown in demand, caused by a pullback in sales of personal computers, smartphones and data servers. However, certain chips used in the automotive industry remain in short supply, according to analysts and executives.
Chip maker STMicroelectronics NV said in late October that its backlog of automotive orders remains well above current and planned manufacturing capacity through 2023.
Toyota also reported results for the July-September quarter on Tuesday. It said net profit in the quarter fell 31% from a year earlier to ¥434 billion, equivalent to $2.9 billion. The figure fell short of analysts’ estimates, and Toyota shares were down more than 2% in afternoon trading in Tokyo. The company said profit was weaker in part because of higher costs of materials, despite the positive effects of a weaker yen.
Economists warn of deeper US downturn as Fed keeps up inflation fight
Central bank expected to implement fourth 0.75 point rate rise despite calls for slower pace
When Federal Reserve officials last met to set US monetary policy, chair Jay Powell made it clear that a recession in the world’s largest economy could not be ruled out.
“No one knows whether this process will lead to a recession or if so, how significant that recession would be,” he said at the press conference after the Federal Open Market Committee’s gathering in September.
As the Fed convenes this week, inflation remains at the highest level in decades and is becoming more embedded, meaning policymakers are set to ratchet up their response and implement the fourth 0.75 percentage point increase in a row while also signalling more tightening ahead. Economists warn that means a more severe downturn is on the cards.
“Each adverse [inflation] report and each adverse development in the outside world implies the Fed is going to have to do more in order to bring the situation under control,” said David Wilcox, a former Fed staffer who now works at the Peterson Institute for International Economics.
He added: “Doing more means a higher probability of a recession, and if [it] happens, in all likelihood a deeper recession.”
Since the Fed’s last meeting, there have been signs that the housing market is weakening while consumer demand has started to soften, but fresh inflation data has shown price pressures continue to build and labour costs have firmed.
Most alarmingly, the October consumer price index reported an acceleration in “core” inflation, which strips out volatile items such as food and energy. Inflation had spread from industries hobbled by pandemic-related supply chain disruptions and the war in Ukraine to categories such as services.
Sonal Desai, chief investment officer at Franklin Templeton Fixed Income, described this “migration” as a problem “a bit like whack-a-mole, with a different piece of the basket popping up with inflation pressures”.
She added: “The reality is we are going to need to see some slowdown in the economy to take some of that demand-side pressure off.”
Another 0.75 percentage point increase this week will lift the federal funds rate to a new target range of 3.75 to 4 per cent, a level that policymakers think will start to have a bigger impact on economic activity.
In September, when FOMC members and branch presidents last published forecasts, most saw the benchmark policy rate hitting 4.4 per cent by the end of the year before peaking at 4.6 per cent in 2023.
But given the economic data that has been published since then, many economists and traders betting on fed funds futures now think the rate will probably top out at a “terminal” level of 5 per cent.
“The higher the terminal rate, the greater the window for all borrowing costs to continue to rise, [which] does suggest the growing risk of quite a severe downturn,” said James Knightley, chief international economist at ING.
Knightley is among a growing cohort of economists and policymakers to question whether the central bank should consider slowing the pace of its rate rises. “By moving hard and fast, you just naturally have less control,” he said.
But easing up when inflation is this severe could result in a repeat of communications problems that Powell was forced to rectify in August.
Over the summer, the Fed’s declaration that it would need to slow the pace of rate rises “at some point” fuelled bets the central bank was losing the stomach for the fight against inflation and might start cutting rates next year. Markets rallied sharply, undoing some of the work that the central bank had accomplished in ushering in tighter financial conditions.
Mohamed El-Erian, chief economic adviser at Allianz, said: “On the one hand, it should moderate the pace to see how the massive recent front-loading of hikes plays out in the real economy and for financial stability. On the other hand, it can ill-afford another blow to its inflation-fighting credibility.”
Priya Misra, global head of rates strategy at TD Securities, said one “graceful” way for the Fed to slow down without stoking scepticism about its commitment would be to indicate support for a higher “terminal rate” while also homing in on financial stability concerns.
Those vulnerabilities became evident in the UK last month when government bond markets seized up and tipped pension funds into turmoil, forcing the Bank of England to intervene.
“If you look at the US data, it is very hard to argue why they need to downshift. But the moment you look at the global picture, the UK situation should give them caution to downshift without pivoting,” she said.
A moderation in the pace of policy tightening to half-point increments would be welcome news to some Senate Democrats, mostly on the left of the party, who have recently stepped up their criticism of the Fed and warned of excessive job losses in the future.
But for now at least policymakers seem more concerned about doing too little rather than too much to fight inflation.
“What’s at stake if they make the wrong call is that inflation stays higher, and that means at some point down the road they’ll have to do even more to get inflation back to 2 per cent,” said Steve Blitz, chief US economist at TS Lombard.
BP to buy back more shares after profit doubles to $8bn
Third-quarter earnings exceed estimates as calls increase for more aggressive taxation
BP announced further share buybacks after underlying earnings more than doubled to $8bn in the third quarter, leaving the energy group on course for one of the most profitable years in its history.
Underlying profits for the three-month period were $8.2bn, up from $3.3bn a year earlier and far exceeding average analysts’ estimates of $6.1bn.
The group’s results cap a historic series of earnings for the world’s biggest oil and gas companies, which have fuelled renewed calls in several countries, including the US and UK, for more aggressive taxation of energy company profits.
In the UK, BP said it expected to pay around $2.5bn in taxes on its North Sea business in 2022 including around $800mn under the government’s energy profits levy, which has already increased the taxes on oil and gas production since May.
BP’s earnings were helped by “exceptional” profits from its gas trading business, it said. Underlying earnings in the gas and low carbon energy division in the quarter rose to $6.2bn from $1.8bn a year earlier.
BP committed itself to buying back a further $2.5bn in shares in the fourth quarter, which would bring total share purchases for the year to just under $10bn. It left its dividend unchanged after raising it by 10 per cent in July.
Net debt declined for the tenth quarter in a row to $22bn, down from $22.8bn at the end of June, after falling from $38.9bn at the end of 2020.
BP shares have risen more than 45 per cent this year.
DAX:
- Infineon (IFX TH) +1.4%
- Siemens Energy (ENR TH) +1.3%
- Fresenius SE (FRE TH) +1.3%
- Adidas (ADS TH) +1.2%
- Deutsche Bank (DBK TH) +1.1%
MDAX:
- Telefonica Deutschland (O2D TH) +2%
- TAG Immobilien (TEG TH) +1.7%
- Kion (KGX TH) +1.5%
- Lufthansa (LHA TH) +1.2%
- Aixtron (AIXA TH) +0.9%
SDAX:
- Uniper (UN01 TH) +3.4%
- PNE AG (PNE3 TH) +2.4%
- Deutz (DEZ TH) +1.3%
- DIC Asset (DIC TH) +1.1%
- SMA Solar (S92 TH) +1.1%
- About You (YOU TH) +1%
- Prosus (1TY TH) +9%
- Rio Tinto (RIO1 TH) +3.2%
- Glencore (8GC TH) +1.8%
- Campari (58H TH) +1.6%
- Diageo (GUI TH) +1.4%
- Diageo Enters Non-Discretionary Pact for £0.64b Share Buyback
- LVMH (MOH TH) +1.3%
- Shell (R6C0 TH) +1.2%
- Watch Energy Shares as Biden Aims to Tax ‘Windfall’ Earnings
- Mowi (PND TH) +1.2%
- Siemens (SIE TH) +1.2%
- Adidas (ADS TH) +1.1%
- Nel (D7G TH) -0.6%
- Haleon (H6D0 TH) -1.1%
- Michelin (MCHA TH) -2.8%
- DSM (DSM2 TH) -2.8%
- DSM 3Q Adjusted Ebitda Misses Estimates