Morning Reads

Morning Reads




No more negativity

It took nearly a decade, but the Bank of Japan has finally called time on negative interest rates. It's even more notable when zooming out, as the BOJ hasn't raised rates in almost 17 years. Giving investors some more to chew on overnight, the central bank will also dismantle yield-curve control, which ensured that monetary policy remained loose by holding down the 10-year yield. The BOJ is also ditching purchases of risk assets like ETFs and REITs, while reducing purchases of commercial paper and corporate bonds.

Backdrop: The decision marks the end of a global era of cheap money that began in the 2010s and was employed across Europe and Japan. NIRP focused on reflating growth along with massive monetary stimulus, but inflationary pressures since the COVID pandemic and war in Ukraine resulted in aggressive tightening cycles. The Bank of Japan had been the last remaining holdout, with policymakers viewing recent price increases as imported from elsewhere, but that stance has now formally come to an end.

Helping to tame the market reaction after its latest decision, the BOJ telegraphed some of its intentions ahead of time, like the tweaking of its YCC stance. While the yen fell to 150 per dollar overnight, it didn't hamper gains for the Nikkei 225 (NKY:IND), which is continuing its record run in 2024 (+19% YTD). The move towards policy normalization also suggests the BOJ is confident it has emerged from the threat of deflation, and any rate increases over the medium term are likely to be gradual.

What about the balance sheet? "We will continue to buy roughly the same amount of bonds as in the past," BOJ Governor Kazuo Ueda said during a press conference. "As for the future, we will at some point eye shrinking our balance sheet given we've ended our extraordinary monetary easing, but I don't have any specific idea in mind on whether the next rate hike will proceed a tapering in our bond-buying or reduction in our balance sheet, or vice-versa."


Nvidia (NVDA) made several announcements at its highly anticipated GTC developer conference on Monday, including pushing the world into accelerated computing that has "reached the tipping point." "We're gonna have to build even bigger GPUs. Hopper is fantastic, but we need bigger GPUs," CEO Jensen Huang declared, introducing the new Blackwell GPU platform, as well as the new GB200 super chip. In other AI-related news, Apple (AAPL) is in discussions to fit Google's (GOOG) (GOOGL) Gemini into the iPhone and is also reportedly considering using OpenAI’s AI model. (153 comments)

Seismic fraud

China's securities regulator has accused Evergrande (OTCPK:EGRNQ) of inflating revenues by more than $78B in the two years before its debt default. As a result, the troubled property developer was fined $581M, one of the largest penalties imposed in China. The inflated figures far exceeded that of Luckin Coffee and Enron, and could spell trouble for the underwriters of Evergrande’s bonds that were issued based on these falsified numbers. The penalty also doesn't bode well for the company’s former auditor PricewaterhouseCoopers and the reputation of Chinese regulators. (3 comments)

EV realities

Fisker (FSRis halting production for six weeks as the cash-strapped electric vehicle maker goes into overdrive to avoid a similar fate to that of Lordstown Motors (OTCPK:RIDEQand others. The news weighed on FSR shares, which have been in freefall since it flagged going concern doubts. Fisker did secure a $150M financing commitment from an existing investor, contingent on conditions including continuing talks with a large automaker for a potential investment, but warned that it still may have to curtail operations. "Fisker's last hope may be an investment from Nissan (OTCPK:NSANY) or another major car manufacturer," SA analyst The Asian Investor wrote last week. (2 comments)

Today's Markets

In Asia, Japan +0.7%. Hong Kong -1.2%. China -0.7%. India -1%.
In Europe, at midday, London -0.2%. Paris +0.2%. Frankfurt flat.
Futures at 7:00, Dow -0.1%. S&P -0.2%. Nasdaq -0.3%. Crude -0.2% to $81.98. Gold -0.4% to $2,156.40. Bitcoin -7.2% to $63,098.
Ten-year Treasury Yield -3 bps to 4.31%.

Today's Economic Calendar

FOMC meeting begins
8:30 Housing Starts and Permits
1:00 PM Results of $13B, 20-Year Bond Auction
4:00 PM Treasury International Capital

Companies reporting earnings today »

What else is happening...

WSB survey results: Business automation seen as biggest AI niche.

Again? FedEx (FDX), Amazon (AMZN) held talks on partnerships.

Intel (INTC)-backed Astera Labs (ALAB) boosts size of planned IPO.

Super Micro Computer (SMCI) gives up gains after joining S&P 500.

Bitcoin (BTC-USD) drops from all-time high, drags crypto stocks down.

Guyana rights dispute: Exxon (XOMnot trying to buy Hess (HES).

DocuSign (DOCU) shares quickly gain amid activist speculation.

Joann (JOAN) files for Chapter 11 bankruptcy as anticipated.

Cisco (CSCO) completes $28B deal to acquire Splunk (SPLK).

Major disruption: AI PCs set to grow share in global PC shipments.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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