FT : Europe falls further behind US and Asia in 5G rollout

Europe falls further behind US and Asia in 5G rollout
About 1 in 4 Europeans can connect to a 5G network compared to 76% of Americans

Europe has rapidly fallen behind the US and Asia in the race to build 5G networks despite increased investment by the region’s largest players.

The number of Europeans able to connect to a 5G network was 24 per cent at the end of September compared to 13 per cent at the end of 2019, according to new research.

However, that pales in comparison with the 76 per cent of Americans able to connect to 5G and even higher rates in some parts of Asia, such as South Korea where it is 93 per cent, according to a report by telecoms trade body ETNO and research company Analysys Mason.

Europe’s poor performance will add to concerns about the economic impact of the slow pace of network upgrades compared to other regions. 5G networks are deemed to be critical national infrastructure by most governments and key in modernising factory floors, transport systems and healthcare.

The European Commission has said repeatedly over the past decade that the continent will play a leading role in the 5G era, going as far as to launch multiple ‘action plans’ aimed at stimulating investment, but progress has stalled.

Groups including Deutsche Telekom, Vodafone, BT, Telefónica and Telecom Italia have all launched 5G and upgraded more fixed networks to fibreoptic cables to support the rollout and the ETNO report shows that the pace of investment by the sector is rising, with almost €52bn spent in 2019 compared to €48.6bn the previous year.

However, the average investment per capita in new networks remains lower than in other regions at €94.8 compared to €147.9 in the US and €233 in Japan.

The industry has long argued that heavy-handed and inconsistent regulations have stymied progress across the fragmented European market, causing lower returns on investment and putting a brake on investing the billions of euros needed to upgrade networks to 5G.

“European (telecoms companies) invest more than in the past, but this does not suffice to bridge the gap. We need strong policy action for massive network rollout and uptake,” said Lise Fuhr, director-general of ETNO.

European companies are spending a larger share of their revenue on network upgrades than in other regions. However, monthly average mobile revenue per user in the region was less than €15 compared to €23.7 in the South Korea and €28.1 in Japan and €36.9 in the US, according to the report, which has a detrimental effect on investment the sector says.

5G has yet to emerge as a must-have consumer technology but is regarded as an economic driver for a variety of industries. Europe’s leading industrialists have warned that there is an urgent need to close the growing gap with the US and Asia and that a failure to co-ordinate the rollout across the region could leave supply chains uncompetitive and lead to declining investment.

Freeing up spectrum — the frequencies used to deliver wireless data — is key to that process. Only one country — Finland — has auctioned all of the necessary spectrum bands for 5G while a dozen countries, including Belgium, Poland and Portugal, have not completed any auctions at all.

So far €21.6bn has been raised in Europe’s 5G auctions but the staggered approach across different countries is in marked contrast to markets such as the US where the regulator has made the sale of huge amounts of spectrum an imperative.

“The EU has shifted to a pro-investment policy approach, but this is slow to translate into concrete help at the national level,” Ms Fuhr said.

>>> US After Hours Summary: SWKS +13.7%, WDC +11.4%, RHI +9.4%, DLB +5.7%, X +5.

After Hours Summary: SWKS +13.7%, WDC +11.4%, RHI +9.4%, DLB +5.7%, X +5.2% jump on earnings; BZH -7%, JNPR -2.9% fall on earnings; NVAX +26.7% jumps on COVID vaccine efficacy

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SWKS +13.7% (also approves a new $2 bln stock repurchase program), WDC +11.4%, RHI +9.4%, MSTR +6.3%, DLB +5.7%, X +5.2%, ABCB +5.1%, MATW +4.1%, OLN +3.7%, CE +2.7% (also increases dividend), ETH +2.7%, MITK +2.3%, TEAM +1.6%, AJG +1.5%, V +1.5% (also authorizes new $8 bln stock repurchase program), EMN +1.3%, AX +0.3%, HLI +0.3%, RMD +0.2%, FICO +0.1%, HTH +0.1%

Companies trading higher in after hours in reaction to news: BLCM +51.6% (FDA lifts clinical hold on Phase 1/2 trial evaluating BPX-601), GME +47% (extends momentum), AMC +38.8% (extends momentum), NVAX +26.7% (says its COVID vaccine candidate shows efficacy of 89.3% in Phase 3 trial in the UK), LHX +4.1% (approves new $6 bln share repurchase authorization; increases quarterly dividend), VRTX +3.3% (FDA clears IND, enabling co to proceed with initiating a clinical trial for VX-880), BTAI +1.1% (FDA grants orphan drug designation for BXCL701), SHOP +0.8% (Elon Musk tweets about co), TLRY +0.5% (Corp Dev Officer to step down), ABG +0.1% (increases its share repurchase authorization)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: BZH -7%, EGHT -3.2%, JNPR -2.9%, MDLZ -0.8%, LZB -0.1% (sees Q3 revs below consensus, announces dividend increase)

Companies trading lower in after hours in reaction to news: DS -11.2% (stock offering), OTLK -9.8% (announces bought deal offering of 10 mln shares), ADMP -7.9% (stock offering), STIM -5% (stock offering), DNMR -4.1% (stock offering), DX -2.9% (stock offering), CNTY -1% (in preliminary discussions to sell interests in Casinos Poland), SALT -0.3% (SALT to sell to sell SBI Virgo to EGLE), DLX -0.3% (announces new agreement with Truist)

FT : China car sales recovery helps Daimler defy pandemic

China car sales recovery helps Daimler defy pandemic
Maker of Mercedes is third German carmaker to show signs of better than expected performance

Daimler joined German rival Volkswagen in defying the pandemic to post better than expected results for 2020, off the back of a strong recovery in the global car market led by China.

Preliminary figures released by the maker of the Mercedes brand on Thursday showed earnings before interest and taxes stood at more than €6.6bn, beating analysts’ estimates of about €5.2bn for the year.

That figure compares with €4.3bn in 2019, although the company booked €5.4bn in one-off legal liabilities during that year, including more than €4bn in relation to the alleged manipulation of diesel emissions tests.

The Stuttgart-based company added that, thanks to aggressive cost-cutting and “expected good underlying demand”, it expected to improve on these figures in 2021, assuming there were no further Covid-19 lockdowns.

Daimler’s announcement comes after Volkswagen said it had made operating profits of about €10bn last year, despite fears at the start of the Covid-19 crisis that it would end 2020 in the red.

VW’s earnings from China, its largest and most profitable market, will largely be reported separately, giving a boost to that preliminary figure.

Munich-based BMW on Wednesday said its free cash flow for 2020 stood at roughly €3.4bn, up from €2.6bn the year before and exceeding market expectations. In the early stages of the pandemic, the company had warned that it might make no annual profits in its automotive unit.

All three German carmakers have benefited from an unexpected recovery in car sales towards the end of the year partly because of pent-up demand after months of lockdown, and subsidies in several large economies.

Sales in Asia have been particularly strong. Towards the end of last year, Daimler boss Ola Källenius hailed the company’s rebound in China, saying it was almost “too good to be true”. BMW sold almost 780,000 vehicles in the country last year, an increase of almost 7.5 per cent on 2019.

The car sector as a whole is expected to suffer a 15 per cent drop in sales worldwide for 2020, according to IHS Markit, far better than the 25 per cent predicted in the middle of last year.

Daimler, which is set to publish its annual figures in full on February 18, warned that a shortage of semiconductors, which has forced many large carmakers to cut production in recent weeks, would “probably impact” its results for the first three months of 2021.

WSJ : Silver Surges as GameStop Day Traders Move Into Other Assets

Silver Surges as GameStop Day Traders Move Into Other Assets
Futures prices and shares of silver miners climbed

The day traders are moving into commodities.
Silver futures prices and shares of silver miners climbed Thursday after a user in Reddit’s popular WallStreetBets forum posted about executing a “short squeeze” in the notoriously volatile precious metal.

Most actively traded silver futures closed up 2.1% at $25.922 at troy ounce after earlier adding as much as 6.7%, while U.S.-listed shares of First Majestic Silver Corp. AG 21.38% , a mining company, ended the day up 21%. The iShares Silver Trust, a popular exchange-traded fund tied to silver, also surged.

Silver prices had generally been muted in recent weeks, staying in a tight trading range alongside other precious metals that was well below the multiyear highs it hit during a rally last summer. But Thursday’s gain at one point was pushing the metal back near that nearly eight-year peak.


The moves represent what some analysts called an inevitable move by day traders into other asset classes following outsize gains in popular stocks such as GameStop Corp. GME -44.29% and AMC Entertainment Holdings Inc. AMC -56.63% The moves have captivated Wall Street as individual investors take on hedge funds that wagered on declines in those stocks, and big swings in the silver market could add to the frenetic trading.

A short squeeze occurs when short sellers borrow an asset, sell it and try to buy back at lower prices. If the asset’s price rises sharply, short sellers are forced to buy back at higher prices to minimize their losses, getting “squeezed” out of the market.

Analysts have alleged price manipulation in the silver market going back several decades, including when regulators famously accused the Hunt brothers of driving up prices in 1979 and 1980.

The Reddit post referenced taking on JPMorgan Chase & Co., a large precious-metals trader and the nation’s largest bank. It also mentioned silver stocks such as First Majestic and ETFs that are accessible to everyday investors. It is notable that silver futures also climbed Thursday because they are typically less frequently traded by individual investors.

Some notable precious-metals bulls were taking notice of the big swings. Peter Schiff, CEO of Euro Pacific Capital, said on Twitter that the move into silver shows that the Reddit day traders are getting smarter because silver miners have good value.

“Silver stocks are actually cheap, and represent good investment value,” he said.

WSJ : Coinbase Global Intends to Go Public Via Direct Listing

Coinbase Global Intends to Go Public Via Direct Listing
Company is latest to forgo traditional public-offering process

Cryptocurrency exchange Coinbase Global Inc. said Thursday it plans to go public through a direct listing, making the popular platform the latest company to forgo the traditional public-offering process.

The company said last month it had filed a draft registration statement with the Securities and Exchange Commission for a public offering.

Direct listings differ from traditional initial public offerings in that companies take their shares to the stock market directly. Companies are able to save money that in a more traditional IPO would be shelled out to investment banks. This option to go public isn’t as common as traditional IPOs.

Data-mining company Palantir Technologies Inc. PLTR -8.56% and streaming platform Spotify Technology SA SPOT -1.44% both went public through direct listings.

Coinbase was started in 2012 and is the biggest exchange for cryptocurrency in the U.S. The San Francisco-based company was recently valued at around $8 billion and has more users than Charles Schwab Corp.’s SCHW 0.84% platform.

One of the company’s aims was to make bitcoin accessible to a broader group of people. The platform also serves as a custodian for users’ assets.

>>> US Close Dow +0.99% S&P +0.98% Nasdaq +0.50% Russell -0.10%

Closing Stock Market Summary

The S&P 500 gained 1.0% on Thursday in a rebound paced by all 11 of its sectors, although the benchmark index was up as much as 2.1% intraday. The Nasdaq Composite (+0.5%) and Dow Jones Industrial Average (+1.0%) had similar price action, while the Russell 2000 (-0.1%) closed lower.  

Sector gains ranged from 0.3% (real estate) to 1.9% (financials).

The short-squeeze mania that undercut risk sentiment yesterday was tempered today after several brokerage firms placed trading restrictions on heavily-shorted stocks like GameStop (GME 193.60, -153.91, -44.3%) and AMC Entertainment (AMC 8.63, -11.27, -56.6%). The retracement in these stocks eased some concerns about funds selling long positions to cover their shorts. 

Interestingly, GameStop was very briefly the largest component in the Russell 2000 before shares tanked in the morning. So, with normalcy seemingly restored for the time being, fundamentally-oriented investors presumably felt more comfortable in buying the dip amid some encouraging developments.

Namely, Apple (AAPL 137.09, -4.97, -3.5%) and Facebook (FB 265.00, -7.14, -2.6%) were among the many companies that reported better-than-expected quarterly results, and fourth quarter real GDP increased at an annualized rate of 4.0% (Briefing.com consensus 4.4%) despite a challenging macroenvironment.

Shares of Apple and Facebook closed sharply lower, but that didn't take away from the fact that Apple cleared $100 billion in quarterly sales for the first time ever or that Facebook posted its highest revenue growth rate since the second quarter of 2018. To be fair, FB did issue a cautious outlook for the second half of the year. 

Tesla (TSLA 835.43, -28.73, -3.3%), McDonald's (MCD 206.82, -0.18, -0.1%) and Dow Inc. (DOW 54.38, -0.01, -0.02%) joined Apple and Facebook in negative territory following their earnings reports. 

These negative reactions did hinder the rebound effort in the market, especially in the afternoon when the broad market started to lose some of its early steam. There might have been some caution surrounding the short-squeeze situation amid a wait-and-see mindset for tomorrow's price action and considering lawmakers want to investigate the situation. 

Longer-dated Treasuries finished lower amid the positive outing in equities and lingering expectations for improved economic growth. The 10-yr yield increased four basis points to 1.06%, and the 2-yr yield increased one basis point to 0.12%. The U.S. Dollar Index decreased 0.1% to 90.52. WTI crude futures declined 1.0%, or $0.54, to $52.30/bbl.

Reviewing Thursday's economic data:

  • Fourth quarter real GDP increased at an annualized rate of 4.0% (consensus 4.4%) following a 33.4% increase in the third quarter.
    • The key takeaway from the report is that growth clearly moderated, but at the same time, it held up quite well in light of the concerns surrounding the election, the surge in coronavirus cases, the delayed passage of the $900 billion stimulus, and deterioration in the labor market. That should build some confidence in recovery potential as the year progresses, vaccination efforts improve, and pent-up demand is unleashed.
  • Initial jobless claims decreased by 67,000 for the week ending January 23 to 847,000 (consensus 875,000). Continuing claims for the week ending January 16 decreased by 203,000 to 4.771 million.
    • The key takeaway from the report is that initial claims improved; however, they still aren't a cause for celebration at the current level.
  • New home sales increased 1.6% m/m to a seasonally adjusted annual rate of 842,000 in December (consensus 860,000) from a downwardly revised 829,000 (from 841,000) in November.
    • The key takeaway from the report is that new home sales, which are counted when contracts are signed, moderated for the second straight month from the torrid recovery pace seen in the July to October period that ran at an average sales pace of 968,000. Higher sales prices are presumably contributing to the moderating pace of sales.
  • The Conference Board's Leading Economic Index (LEI) increased 0.3% m/m in December, as expected. That increase followed an upwardly revised 0.7% increase (from 0.6%) for November.
    • The key takeaway from the report is that the strength in component indicators was widespread, with seven of the 10 indicators making positive contributions.
  • The Advance report for International Trade in Goods for December showed a deficit of $82.5 billion versus $85.5 billion in November. The Advance report for Retail Inventories for December increased 1.0%, and the Advance report for Wholesale Inventories for December increased 0.1%.

Looking ahead, investors will receive Personal Income and Spending for December, PCE Prices for December, the Q4 Employment Cost Index, the Chicago PMI for January, Pending Home Sales for December, and the final Univ. of Michigan Consumer Sentiment Survey for January. 

  • Russell 2000 +6.7% YTD
  • Nasdaq Composite +3.5% YTD
  • S&P 500 -0.8% YTD
  • Dow Jones Industrial Average UNCH YTD

(ZH) 70.87 Billion Reasons Why The Retail Brokers Just Betrayed Their Customers

70.87 Billion Reasons Why The Retail Brokers Just Betrayed Their Customers

Yesterday, when TD Ameritrade became the first exchange to impose "unprecedented" restrictions on GME trading, we predicted what would happen next: "expect many more exchanges to follow suit, because hedge funds clearly need to be protected when faced with the retail daytrading mob."
24 hours later, we were proven correct when first Robinhood (an "orderflow" cash cow for Melvin Capital owner Citadel), then Interactive Brokers, then Schwab and countless other brokerages announced - as if on preagreed terms - to halt trading in GME, AMC, BB, BBY, EXPR, KOSS, NAKD, NOK, SNDL, ALL and various other names.
“We’re committed to helping our customers navigate this uncertainty,” Robinhood said in a blog post, but few saw it that way.
This crackdown on retail trading sparked a firestorm, with retail investors rightfully demanding to know why these stocks (and associated options) were put on some ad hoc restricted list with no warning and threatening to take their money and go to more hospitable brokers, politicians threatening that hearings are coming, regulators threatening that lawsuits are coming, and everyone generally shocked at just how openly broken the market is.
Following Robinhood’s move, the brokerage was hit by at least two customer lawsuits. Dave Portnoy, a recent participant in the Reddit-fueled rally, was among those who slammed Robinhood for its decision. “Robinhood is dead,” Portnoy screamed on Twitter. Ocasio-Cortez tweeted that she would welcome a hearing in the House Financial Services Committee, to discuss why hedge funds can freely trade the stocks and retail users are blocked. Even Elon Musk approved of the tweet.
But what was the reason for this unprecedented crackdown? After all, during countless episodes of market turmoil before, brokers had never taken it upon themselves to become the market's supervisor and suspend trading in one or more shares.
It appears that there are several reasons, the first of which may have to do with some backroom deals.
First, consider that Citadel, which as regular readers know is the biggest source of revenue for Robinhood...
... is also now a part-owner of the insolvent bearish hedge fund Melvin Capital (which as recently as last week had $12BN in AUM) which would have collapsed and been forced to liquidate its longs, had it not received $2 billion from Citadel and another $750MM from Steve Cohen. In other words, while nobody has called it that yet, we just lived through a mini LTCM.
Here's the problem: with the r/wasllstreetbets crowd continuing to press the shorts, we were about to have a second, not so mini LTCM, because as CNBC's David Faber earlier today noted, Melvin Capital "is in trouble" after suffering "massive losses" and the infusion from Citadel and Point72 "is probably gone."
Said otherwise, if the squeeze had continued Citadel and Point72 would have had to bail out Melvin Capital again (which is odd since it was CNBC that also reported yesterday that the hedge fund had closed its shorts... which apparently was not exactly true). And while $2.75 billion may be pocket change for Ken and Steve, $5 billion starts to look like real money. And what if it has to be followed by $10 billion, $20... and so on. On the other hand, if they did not throw more good money after bad, not only would their initial investment be wiped out, but once Mevlin was forced to start selling its longs to fund its margin calls - which also happen to be the names contained in the Goldman Sachs Hedge Fund VIP basket biggest longs for Citadel and Point72 - that's when the real carnage would take place as everyone would scramble to frontrun the upcoming liquidation. The result would have been billions in losses for Citadel and Point72.
Steve Cohen in his natural habitat.
Surely the best outcome - for Melvin's forced owners - would be to simply stop the firehose of liquidity whichever way possible, and after a few back door phone calls, which we hope to learn all about during the upcoming Congressional hearings, that's precisely what happened.
But Citadel and SAC Point72 were not the only ones on the firing line. As Faber also said earlier, "any number of large of large hedge funds have suffered significantly."
How much? According to financial data analytics firm Ortex, short-sellers - mostly hedge funds - are sitting on estimated losses of $70.87 billion from their short positions in U.S. companies just in 2021 alone! Add puts and other underwater derivatives, and the real loss will be even greater. And just as striking: Ortex data showed that as of Wednesday, there were loss-making short positions on more than 5,000 U.S. firms.
This means that virtually every hedge fund that had short positions on was getting hammered. So when dozens of these giant asset managers sat down and decided to polite call one broker after another what do you think happened.
That's right: Joe Sixpack was quickly sold down the river.
Why? Because the so-called "retail clients" are nothing but a cost center to the "retail brokers" thanks to the recently introduced $0 commission pay scheme. In fact, brokers would be delighted to dump all but their biggest whales clients. So who pays the fees? Well, just take a look at Robinhood's form 606: Citadel, Virtu, G1X, Wolverine, and countless hedge funds which, like Citadel, are tightly interwoven in the fabric of the market. It's they that made a few phone call and just put dozens of stocks on a market-wide restricted list.
There's more. While unconfirmed, there is speculation that that "Citadel reloaded their shorts before they told Robinhood to stop trading GME." As the source notes, if true the people behind this should be in jail.
Perhaps this is true, perhaps not. We'll find out soon.
But what we really want to find out is when the brokers will again allow trading in GME, AMC, and so on. What will be the catalyst? Will it be when hedge funds have finally covered their shorts, at which point there will be no further need for a squeeze.
If that's indeed the case, it'll tell us all we need to know about who truly runs the erroneously called "free markets."