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Samsung electronics close to finalizing $17B chip plant
The Big Story 💥
Samsung Electronics Co Ltd is close to finalizing the construction of a $17 billion semiconductor factory in Williamson County in the U.S. state of Texas.
The factory will make advanced logic semiconductor chips and is likely to create about 1,800 jobs, Samsung previously said in filings to state officials.
Though no decision has been made, the Austin suburb of Williamson County is the frontrunner due to the subsidies on offer as well as the likelihood of stable sources of electricity and water.
A winter storm shutdown at Samsung's existing chip plant in Austin during the first quarter caused the equivalent of 300 billion to 400 billion won ($254 million to $339 million) of damage to wafer production.
Samsung previously said it would start construction on the new 6-million-square-foot (557,418-sq-meter) plant in January, with production up and running by the end of 2024.
The plan comes at a time when the global auto industry faces a significant semiconductor shortage. With the United States turning semiconductors into a strategic material, it is becoming a risk to be concentrated only in Asia.
In the global chip contract manufacturing industry, Samsung is second to TSMC which had 52.9% of market share compared to Samsung's 17.3% as of end-June.
Overnight Action 😴☕
Asia stocks declined today as rising bond yields stoked fears about inflation and as China Evergrande Group’s debt crisis intensified.
MSCI Inc.’s gauge of Asian stocks dropped more than 1% -- and is headed for its first quarterly slide in six. Japan fell more than 2%. Hong Kong and China also dropped on the deepening debt crisis at China Evergrande Group.
U.S. futures advanced after the S&P 500 closed 2% lower -- the most since May -- with concerns over the debt-ceiling impasse in Washington adding to investor angst.
The Nasdaq 100 tumbled the most since March as technology shares fared worse than economically sensitive stocks amid rising Treasury yields.
Ten-year Treasury yields stabilized.
Earlier, the yield on the 30-year note jumped almost 10 basis points. WTI crude retreated toward $74 a barrel. Brent crude pulled back from a three-year high above $80 a barrel. The dollar held gains.
During a Senate hearing, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen both warned that a U.S. default due to a failure to raise the debt ceiling would have catastrophic consequences. Republicans blocked a Democratic move in the Senate to raise the debt limit.
A global equity rally has stalled as investors reel from surging energy costs at the same time central banks are laying down plans to withdraw some of the pandemic stimulus.
U.S. consumer confidence dropped in September for a third straight month, suggesting concerns over the delta variant and higher prices continue to dampen sentiment.
Top 5 Moves 🆕📰
1. INEOS will launch an off-road vehicle in Europe
INEOS Automotive, a unit of chemicals and energy giant INEOS, will launch a rugged off-road vehicle in Europe in 2022 and North America in 2023 for farmers and other primarily rural uses. The company plans to initially launch with a utilitarian version of the Grenadier for business customers - which should make up the majority of sales of the four-wheel drive vehicle - and a more comfortable passenger version. The vehicle will also launch in parts of Africa and the Middle East in 2022. INEOS Automotive is also working on a pickup truck version of the Grenadier, which will be crucial for the North American market. In the U.S. market, pickup trucks make up a sizeable and a highly-profitable portion of total auto industry sales.
2. US stocks sell-off as yields continue surging
Wall Street closed sharply lower on Tuesday with the Nasdaq down 2.8%, the most since March as a spike in Treasury yields dragged tech shares down. The yield on the 10-year Treasury topped 3-months highs of 1.5% and the 5-year rate rose above 1% for the first time since February 2020 as investor's bets grew that the Fed will soon start reducing stimulus after the FOMC meeting last week. The Dow Jones declined almost 570 points and the S&P 500 fell 2%.
3. Vietnam posts record GDP slump
Vietnam’s economy shrank by the most on record as the country’s tough anti-virus policies impacted almost every corner of its economy, disrupting supply chains, shuttering factories and crimping output. Gross domestic product in the third quarter slumped 6.17% from a year earlier, the General Statistics Office said Wednesday, adding that it’s the worst performance since it started tracking the figure. That compares with a median estimate in a Bloomberg survey for growth of 2.25% and a revised 6.57% expansion in the second quarter.
4. CATL to acquire Millennial Lithium for $297 million
Contemporary Amperex Technology Co Ltd. has agreed to acquire Millennial Lithium Corp. in an all-stock cash deal valued at around C$377 million ($297 million) as the the world’s largest maker of electric-vehicle batteries continues to pursue a strong supply of a key battery-making mineral. Ningde, Fujian-based CATL will pay C$3.85 per common share of Millennial, payable in cash. That represents a premium of about 29% over Millennial’s 20-day average closing price in Vancouver trading, according to the statement. Millennial said in the statement it terminated the arrangement agreement with Ganfeng prior to the agreement with CATL.
5. Gold nears 7-week low
Gold traded near the lowest in almost seven weeks as bond yields rose and the dollar strengthened, with concerns about inflation rippling through markets. The benchmark 10-year U.S. yield rose to the highest since June on Tuesday, damping the appeal of non-interest bearing bullion, while a gauge of the greenback was near the highest since November. During a Senate Banking Committee hearing, both Treasury Secretary Janet Yellen and Fed Chair Jerome Powell maintained that the current high level of inflation in the U.S. is due to temporary supply-chain disruptions and should be expected to dissipate when those issues are resolved.
Crypto Outlet 🐳
Facebook will spend $50 million over the next two years on metaverse-related initiatives and partnerships. According to Zuckerberg, Facebook is even on its way to become a "metaverse company". Metaverse refer to shared online spaces in which users coexist and interact together. Examples include Ethereum-based Decentraland, but it was also shown in various media such as the movie "Ready Player One".
Morgan Stanley is bullish on crypto, and especially on the Silvergate stock, a company that provides commercial banking and lending services to crypto firms. The $100 price is, according to them, grossly undervalue, and should fetch at least $158, if not $300 in the long term.
Europe has officially become the largest crypto economy with over $1 trillion in transactions. Chainalysis recently came out with a report showing that the CNWE region accounted for 25% of the crypto activity between July 2020 and June 2021, seeing an uptick under all sub-categories, especially DeFi.
Most equity index are stuck, but one ETF is soaring
The iShares MSCI USA Momentum Factor ETF (MTUM) tracks outperforming stocks in the recent months. It just climbed for the fifth day in a row, surpassing the August peak to hit a fresh high. The biggest helper in the portfolio was Tesla, top holding at 2.2%, registering gains for 14 out of 16 sessions. Source: Bloomberg
@Bloomberg
AVIS rental stock is seeing a 34% upside in the past month;
Norway preps largest IPO in two decades with AutoStore;
Coal prices are soaring, miners struggle to boost output;
German elections won’t affect markets as much as China will. European natural gas, carbon permits, and power rising to record levels with little signs in any letdown. Euro area surveys are deteriorating, demand is soft, consumer purchasing power is squeezed, and central banks are acting hawkish.
Brent Crude Oil at $80: Trading the UK Fuel Crisis
Pandemonium is breaking out across the UK with around two thirds of petrol stations completely dry of fuel and the government putting the army on standby. What does this mean for Brent crude oil?
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