Weekly Market Update
Weekly Market Update
-
Author : The BlackSummit Team
Date : September 14, 2024
Global Equities Increase
Global equities increased on the week, partly due to hopes of the Federal Reserve cutting interest rates in its upcoming September meeting. The Dow Jones and S&P 500 rose 2.60% and 4.02% on the week, respectively, while the Nasdaq gained 5.95%. The US 10-year Treasury note fell to end the week at 3.66%, and the price of a barrel of West Texas Intermediate crude oil rose by 2.25%, ending the week at $69.19. Volatility, as measured by the CBOE Volatility Index, fell 22.35% over the last 5 days, closing Friday at 16.47.
Janet Yellen Says US is Pulling Off a Soft Landing
Treasury Secretary Janet Yellen recently expressed confidence in the U.S. economy’s trajectory, stating that it is on track for a “soft landing.” Despite some weaker job reports, Yellen emphasized that the economy remains solid and is not heading towards a recession. She highlighted the absence of significant layoffs and noted that the labor market is strong, which supports her optimistic outlook. Her comments come at a time when the Federal Reserve is widely expected to cut interest rates next week.
International Developments
Venezuelan Opposition Candidate Meets with PM Sanchez After Fleeing to Spain
Spanish Prime Minister Pedro Sánchez met Venezuelan opposition leader Edmundo González Urrutia on September 12, 2024, at the Palacio de La Moncloa in Madrid, after Gonzalez fled Venezuela to seek asylum in Spain via a Spanish Air Force Plane over the past weekend. During the meeting, Sánchez affirmed Spain’s commitment to supporting democracy, dialogue, and human rights in Venezuela, amidst rising tensions with the government of Nicolás Maduro. This meeting followed a vote in the Spanish Congress urging Sánchez to recognize González as Venezuela’s legitimate president, although Spain maintains its stance alongside the EU, awaiting further verification of electoral results. Tensions between Spain and Venezuela have escalated after Venezuelan Foreign Minister Yvan Gil summoned Spain’s ambassador following remarks by Spanish Defence Minister Margarita Robles, who called the government in Venezuela a dictatorship.
Summit on AI Military Uses in Seoul, Taiwan Hits Monthly Export Record, and US Pledges CHIPS Funding to Boost India’s Semiconductor Sector
On September 9, 2024, around 60 countries, including the U.S., endorsed a “blueprint for action” at the Responsible AI in the Military Domain (REAIM) summit in Seoul, focused on governing AI use in military applications, but China declined to support it. The blueprint emphasizes risk assessments, human control, and preventing AI-driven proliferation of weapons of mass destruction, with discussions to continue at the UN General Assembly in October. Meanwhile, the U.S. Department of State announced that it is partnering with India’s Semiconductor Mission under the CHIPS Act’s $500 million International Technology Security and Innovation (ITSI) Fund to strengthen the global semiconductor ecosystem. Also in Asia, Taiwan’s exports rose to a record number in the month of August, hitting on the back of the growing demand for chips needed to fuel AI advancements.
Blinken Warns that Iran Has Sent Missiles to Russia
On September 10, 2024, U.S. Secretary of State Antony Blinken publicly stated that Iran had sent short-range ballistic missiles to Russia, escalating Tehran’s involvement in the Ukraine conflict. In response, the U.S., along with the United Kingdom, France, and Germany, imposed new sanctions on Iran, including on Iran Air and entities linked to the missile supply. Russia and Iran have deepened their military ties, with Russia receiving Iranian missiles in exchange for nuclear assistance. Meanwhile, Blinken visited Kyiv on Wednesday to discuss U.S. military aid, as Ukraine faces increased Russian attacks on its energy infrastructure ahead of winter.
US Social & Political Developments
Biden and Trump both Consider Setting Up a U.S. Sovereign Wealth Fund
Both President Biden and former President Trump are considering the creation of a U.S. sovereign wealth fund to support strategic sectors like technology and energy, with Trump suggesting it be funded by tariffs and Biden’s team exploring other revenue streams. White House officials, led by national security adviser Jake Sullivan, have been studying models from countries like India and Singapore, while Trump’s fund proposal would focus on infrastructure and medical research. The fund’s mandate would be to support ventures where private investors are hesitant, especially in areas like critical minerals to counter China’s dominance. However, experts doubt the feasibility of the plan, citing that most natural resources that are government-owned are state-owned limiting funding sources for a national sovereign wealth fund while also posting that there is little need due to the sizable federal funds already set aside for key sectors.
Harris and Trump Clash During Debate
In their first and likely only debate on September 10, 2024, Kamala Harris and Donald Trump clashed over key issues like abortion, immigration, and the economy. Harris took a prosecutorial tone, pressing Trump on the January 6 insurrection, abortion restrictions, and immigration policies, while Trump countered by labeling her a “Marxist” and criticizing her positions on energy and healthcare. Memorable moments included Harris taunting Trump over the shrinking size of his rallies, and Trump deflecting questions about the Project 2025 conservative blueprint. Betting markets shifted in Harris’s favor, signaling that her performance likely bolstered her candidacy.
Corporate/Sector News
Apple Unveils iPhone 16 Series, Loses in EU Court Battle Over Back Taxes
On September 9, 2024, Apple unveiled the iPhone 16 series, featuring new AI capabilities, but the slower-than-expected rollout of these features raised concerns about the potential impact on iPhone sales. Meanwhile, on September 10, 2024, the European Court of Justice upheld a 2016 European Commission ruling, forcing Apple to pay Ireland €13 billion ($14.4 billion) in back taxes, a major setback for the tech giant. The case, which began in 2016, argued that Apple had received “illegal” tax benefits from Ireland, allowing it to pay less than 1% in corporate taxes for years. Apple expressed disappointment with the court ruling, emphasizing the dispute was about jurisdiction rather than the amount of taxes owed.
Billionaire Jared Isaacman Conducts First-ever Private Spacewalk
On September 11, 2024, Jared Isaacman, billionaire and leader of the Polaris Dawn mission, and SpaceX engineer Sarah Gillis successfully completed the first private spacewalk in history. The mission, a collaboration between SpaceX and Isaacman, involved a brief spacewalk outside the SpaceX Crew Dragon capsule to test commercial space technologies, particularly new spacesuits designed for off-world colonization. The spacewalk began at 6:12 a.m. Eastern time and lasted less than two hours, marking a significant milestone in commercial space exploration. This mission, part of a broader series aimed at advancing space technologies, reached an orbit 870 miles above Earth, the highest since the 1970s Apollo missions.
OpenAI Seeking $6.5B in Funding, Pushing OpenAI’s Valuation from $86B to $150B
OpenAI is seeking to raise $6.5 billion in equity financing, as part of a deal that would see the start-up boost its valuation to $150 billion, significantly up from its previous $86 billion valuation. The company is also negotiating a $5 billion revolving credit facility with banks to support its operations. The funding round, expected to be led by Thrive Capital with participation from Microsoft, Apple, and Nvidia, reflects OpenAI’s growing prominence in the AI sector. Founded in 2015 and known for its ChatGPT chatbot, OpenAI aims to use the new funds to bolster its computing capabilities and operational needs.
Recommended Reads
US Sovereign Wealth Fund Proposal Being Crafted by Joe Biden Aides
Lab-grown food faltering on solving world hunger
The Bond Market Rally Rides on How Fast the Fed Cuts Rates
This week from BlackSummit
The BlackSummit Team
Innovations, Valuations, and Epictetus: The Trap of Yearning Beyond Measure
John E. Charalambakis
Image of the Week
Video of the Week
