Bitcoin back on the corporate radar
Bitcoin's meteoric rise following the U.S. election sent levered owners of the crypto asset flying. For example, MicroStrategy's stock more than doubled in the last month. The company, already the largest corporate Bitcoin holder, announced plans to ramp up its convertible senior notes (debt that can be turned into shares) issuance to US$2.6 billion (an increase of almost 50%) to fund further Bitcoin acquisitions. The move appeared to catch the attention of other companies, with whispers of Bitcoin balance sheet strategies growing louder. However, with significant leverage across the crypto ecosystem, we can expect to see high volatility. In life, we say better late than never. In the market, however, sometimes it’s better never than late; time will tell.
Meanwhile, traders eagerly awaited Nvidia's Q3 earnings, hoping for a market lift after Target's dismal report cast a pall over retail stocks. Target plummeted by over 20% after slashing its full-year outlook, citing stagnant sales and excess inventory. This starkly contrasted with Walmart's stellar performance just a day earlier, showing the divide in the retail sector. In what is now a richly valued and complex market, we can expect to see winners and losers, with considerable disparity around performance. As for Nvidia, it delivered strongly (posting US$35.1 billion in sales against estimates of US$33.2 billion), but its guidance for Q4 sales failed to excite. Despite "very strong" demand for its Blackwell chips (set to ship this quarter), its shares slipped. That’s what happens when you’re priced to perfection.
In India, the Adani Group faced a storm of allegations, as U.S. prosecutors indicted Gautam Adani and key executives for bribery and fraud. Shares in Adani Green Energy nosedived, dragging India’s NIFTY 50 Index down. It’s now more than 10% off its recent highs. The fallout is poised to shake investor confidence in the group and the broader Indian market.
Stateside, the labour market painted a mixed picture. Initial jobless claims fell to 213,000 (the lowest level since April), while continuing claims climbed above 1.9 million for the first time since late 2021. The labour market is hard to read these days, sending both good and bad signals. Also in the U.S., investors are keeping an eye on potential policy shifts, as Donald Trump shapes his economic team. Reports suggested Marc Rowan of Apollo Global Management is the frontrunner for Treasury Secretary. With tax policy and debt ceiling negotiations looming, these appointments could have interesting market implications.
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