Three Way Merger of China's Commodities Rare Earth Producers

Minmetals Rare Earth, Chinalco Rare Earths and Metals Co and China Southern Rare Earth Group Co are merging with the approval of the state regulator, Sasac (State-owned assets Supervision and Administration Commission). Analysts have noted pricing power of rare earths such as dysprosium and terbium (whose prices are up 50% in 2021 and are key inputs into rare earth magnets), will be concentrated in the new rare earths "super group", second only to China Northern Rare Earth Group.

Backwardated Brent Futures Curve Retains Lofty Front Month Price

Brent Dec 21 futures have been hovering upwards through the 80s levels all through October 2021 peaking at 86.4 then dropping to 84.3, still above the Jan 22 futures at 83.5. 80+ levels are reflected across all contracts out to April 2022.

Brent front month premium to WTI is $1.10; with WTI Dec 21 futures trading at 83.2. WTI has a much sharper gradient in terms of backwardation, suggesting prices will rock down faster than for Brent.

Evergrande Shares up as Interest Payment Comes Due

Chinese real-estate developer Evergrande is due to make an interest payment of $83.5m on an overseas bond. The firm has debts of over $300bn.

Brent Premium is 3.40 over WTI

Premium reflective of the November 2021 (X) futures contract. As might be guessed by the high levels and spreads, both curves are currently backwardated.

Brent is at almost 72 dollars a barrel and WTI is just under 68.5 dollars a barrel.

WTI October (V) is still trading; at a slight premium (24 cents) to November (X).

For a quick recap of month codes check out the CME Group's contract code table.

Goldman's Acquires Hague Based Investment Manager for 355 billion dollar European AuS Boost (With Caveats)

Goldman Sachs has agreed to acquire Hague-based NN Investment Partners for 1.6 billion Euros from NN Group NV.  The deal is expected to close end Q1 2022. The acquisition fits into GS' strategy to scale its European business. Assets under supervision will increase by approximately 355 billion dollars (some caveats over some mortgage assets which will continue to be managed by NN Group). GS has 2.3 trillion dollars in Assets under supervision globally.

UK Unveils Hydrogen Investment Plan (#2 in TP Plan)

The UK government has unveiled its plan for hydrogen investment to 2030. Further details in the policy papers. Low carbon hydrogen is a key part of the UK's strategy to go net-zero by 2050. It forms part of the government's Ten Point Plan for a "green industrial revolution" announced in November 2020 aimed at creating 250,000 jobs. Hydrogen sits at priority number two with an aim to generate 5GW from low carbon hydrogen by 2030 just below offshore wind, where the aim is to quadruple the UK's current production to 40GW by 2030. Number 3 is nuclear - advancing nuclear as a clean energy source.

Valuations in Softbank's Vision Fund Portfolio Hammered by China Regulatory Action

Ride-hailing app Didi Global listed in New York (NYSE:DIDI) but valuations were impacted by China regulatory action (investigation from the Cyberspace Administration of China), aimed at policing the huge datasets that Didi has access to, given its dominant market position in China. This has led to speculation of of a possible delisting.

Vision Fund CFO Navneet Govil (MBA, MEng from Cornell) has asserted the China thesis remains strong. Navneet former roles include SVP of Finance and Strategic Pricing at CA Technologies (which was acquired by Broadcom in July 2018).

Porfolio managers, such as Joshua Crabb of Robeco (part of ORIX Europe), have commented we are now in an age of unprecedented regulatory scrutiny over Tech not limited to China.

Crypto Exchange Wins "In-Principle Approval" from Singapore Regulator

The MAS, or Monetary Authority of Singapore, has granted an "in-principle approval" to Independent Reserve, for digital payment token services. Independent Reserve was started in Australia in 2013.

Legal and General Goes Long Science Investment

Legal and General are developing a science and innovation district as part of a £4bn partnership with the University of Oxford. Begbroke Science Park will be extended over an adjacent site of 14 hectares. Laura Mason, CEO of Legal and General (and an Oxford Engineering alumnus) announced the expansion as a boon to the life sciences and health sectors.

Massive £8bn Valuation as Wise Hits the London Stock Market, Win for Valar and a16z, and Post Brexit London

Wise, formerly known as Transferwise, founded in 2010, did a direct listing on the London Stock Exchange, in a move mimicking the approach used by Spotify in 2018. 

Nevertheless, Goldman Sachs, Barclays and Morgan Stanley were hired to advise on the listing. 

Estonian co-founders Kristo Kaarmann and Taveet Hinrikus have become paper billionaires. CNBC has described it as a "big win for post Brexit London".

Other winners include early investors like Peter Thiel's Valar Ventures (originally spun out of Thiel Capital) and Andreessen Horowitz (founded in 2009, a year before Wise, by Marc Andreessen and Ben Horowitz, both of Netscape fame).

Dark Pool Limits Lifted in the UK Post Brexit

In February 2021, more than 16% of trades in UK blue chips were done in dark pools with a higher proportion of FTSE 250 stock flow occurring in dark pools vs. FTSE 100.  

For comparison, around 10% of DAX trades have been flowing through dark pools, according to data from Rosenblatt Securities.

The UK has broadly stood by dark pools as a boon to the market; whereas the EU, wary of their opacity, instituted rules back in 2013 that limited trades that could go through dark pools, both in terms of stock names as well as venues. Post-Brexit, these caps will no longer apply in the UK.

High spreads on UK exchanges has been one of the driver of dark pool liquidity in the UK.

Research from the FCA suggests dark trading damages liquidity when volumes exceed 15% of total volume traded.

Brent Premium is $2 over WTI

 Brent rises to around $74 and WTI is around $72.

Amazon Swallows MGM for $8.45bn

MGM (Metro-Goldwyn-Mayer), the 97-year old Hollywood studio founded in 1924, and based in Beverly Hills, responsible for "Singin' in the Rain", and "Ben Hur" and owners of the James Bond and Rocky franchise, has been bought by Amazon, in its second-biggest acquisition to date.

Amazon's historically largest acquisition thus far has been the purchase of Whole Foods for $13.7bn in 2017. 

Kevin Ulrich, Chairman of the Board of Directors of MGM, and also CEO of New York based hedge fund Anchorage Capital, and former head of Goldman's distressed bank debt desk, stated it was "an inspiring combination".

Korea Takes on Taiwan in Semi Conductor Surge Investment

President Moon Jae-In of the South Korean government has announced that 510 trillion South Korean won ($452bn) will be invested in semiconductors by 2030.  1 USD is roughly 1100+ Korean won.

South Korea is currently world #2 behind Taiwan in manufacturing capacity. 

Samsung Electronics and SK Hynix are leading the investment. 

On the European side, as part of its Digital Compass plan, the EU declared in March its intent to increase its share of world manufacturing from 10% (2010) to 20% by 2030. 

On the US front, Intel has committed to build two new factories in Chandler, Arizona for $20bn. Hsinchu-headquartered Taiwan's TSMC is already building out manufacturing capacity in Phoenix, Arizona, as part of a $12bn build out.

Bitcoin Blow as Tesla States Non Acceptance

The environmental impact of bitcoin mining has been cited as the reason for Tesla going up against the cryptocurrency. Elon remains committed to crypto, though.

BADI Gains 1.8%

The BADI (Baltic Dry Index) gained 1.8% reflecting higher sea freight rates. The Panamax index gained 2%.

Iron Ore Futures Jump 10% for September Delivery on Dalian Exchange

The iron ore price has hit 1,326 yuan per tonne on the Dalian Commodity Exchange (DCE). Copper is also making all-time highs. Part of the cause is political tensions between Australia and China, driving Chinese steel mills to lock in supply in the event of new trade restrictions. The commodities rally overall has been driven by the boom in energy and infrastructure construction.

Treasury Secretary Yellen Hints at Higher Interest Rates

Janet Yellen, Treasury Secretary (since January 2021) and former Fed chair (2014-2018), has hinted at higher interest rates to prevent the US economy overheating.

Rick Rieder, Chief Investment Officer of Global Fixed Income at Blackrock, who joined the firm in 2009, and is a Wharton MBA, told CNBC that his "every client call...(is) talking about overheating" shortly after Yellen made her comments. Rieder oversees more than $2tr of Blackrock's $9tr AuM.

Greg Abel Named as the Next Warren Buffett

 Greg Abel, 55, is currently Vice-Chairman of Berkshire Hathaway.

So-called "Gamma Hammer" Fund Bets on Dampening Coronavirus Volatility

The fund nicknamed "Gamma Hammer" from Parametric (owned by Morgan Stanley following its acquisition of Eaton Vance) has been selling options in the wake of US stimulus and vaccine-driven expectations of a dampening in volatility.

Techie-Trader Duo Fleetingly Scores $100bn on NASDAQ

Founded in 2012 by Ex Airbnb Software Engineer Brian Armstrong and Fred Ehrsam, trader at Goldman Sachs, in an effort to simplify bitcoin trading, Crypto-exchange Coinbase's IPO heralds crypto's arrival on the stock market.

In 2020, 86% of Coinbase's revenue came from trading commissions. In Q1 2021, its transaction fee was 46bps. Competitors such as Gemini, Bitstamp, Kraken and Binance may pressure these fees downwards.

Biden's 2TR $ Infrastructure Plan includes $50bn for Domestic Semiconductor Manufacturing

Global semiconductor revenues grew 10% in 2020 with Intel (INTC), as usual, the largest vendor. Its stock price is up 37% YTD. MediaTek has also been doing well. 

NASDAQ traded Micron Technology (MU) that has traditionally focused on DRAM has also done well. It is part of the NASDAQ-GS (Global Select market) which is the highest "market tier" on NASDAQ. The other tiers are the "Global Market" and "Capital Market". Micron's President and CEO is Berkeley-educated Sanjay Mehrotra, co-founder of SanDisk (now Western Digital).

"Memory, GPUs and 5G chipsets" are leading the growth, according to Gartner data. US President Joe Biden wants to expand US production and also address China competition.

Oil is in "wait and see mode" says UBS as prices Hover Around $60 per Barrel

Traders are waiting to see if there will be a recovery in consumption from the COVID-19 pandemic. Giovanni Staunovo covers Commodities for UBS, the Asset Management division of which recently came up with its second "Commodity Carry" ETF. An increase in US drilling activity may counteract gains.

Deutsche Bank Sold $4bn Holdings Quick to Escape Big Hit from Archegos

The sale was triggered after Archegos defaulted on margin loans. The bank also navigated the Wirecard AG accounting scandal well (one of Germany's largest accounting scandals) by hedging their exposure,

Big Block Trades Signal Sell-Off Linked to Family Office Archegos run by Bill Hwang

An approximate $30bn of block trades executed through GS, MS and Deutsche Bank is believed to be linked to family office of Bill Hwang. Tencent, Baidu and GSX (Chinese EdTech) were among the names sold. Bill previously founded and managed Tiger Asia Management in 2001 converting his fund into a family office in 2013, following insider trading charges in 2012.

Who is Lex Greensill of Supply Chain Finance Fame?

Lex Greensill founded Greensill Capital in 2011 in Norwich, England.  The company, focused on supply chain finance and derivatives, and backed by Softbank's Vision Fund, filed for insolvency protection on 8 March 2021.

UBS Quits Darktrace IPO

UBS has quit cyber-firm Darktrace's proposed £4bn IPO citing compliance reasons.  

Mike Lynch, a founding investor in Darktrace, faces possible extradition to the United States, over HP's write-down on the takeover of Autonomy, the company he founded. An ex-Natural Sciences graduate, he currently runs Invoke Capital.

Darktrace has offices in San Francisco and Cambridge, UK. Its management team is led by Poppy Gustaffson (former CFO and qualified Chartered Accountant). Its clients include William Hill and AIG.