Auquan's Weekly Wrap | 11 - 15 July: What you might have missed
Recap of the week's market activity: Consumer debt default risks, electronics companies profit pressures, copper demand slowdown, global polysilicon shortage, Alibaba Taiwan cloud services shut down, and more.
Consumer Debt Default Risks
Source: Reuters/Neil Hall.
Large banks have started to report sharp falls in profits this quarter due to the increased loan loss reserves and the rising threat of a global recession. JPMorgan also pointed out the need to build capital reserves amidst quantitative tightening, Russia's war on Ukraine and record high inflation which threaten the global economy.
- JPMorgan profit falls 28%, Dimon cautious on global economy
- Morgan Stanley second-quarter profit falls
- U.S. banks profits to tumble on higher bad loan reserves
- Data shows more New Zealanders missing regular repayments
- Bracing for the Storm: Consumer Debt Is Up, Savings Are Down
Inflation Crisis: Electronics Profit Pressure
Source: Reuters/Ann Wang.
Electronics companies are feeling the effects as record global inflation and China's Covid-19 curbs are leading to a fall in consumer demand for mobile phones and other electronic gadgets.
Some semiconductors companies like TSMC are posting record profit, yet with signals that there's a cooling of demand from consumer electronic customers who are expected to decrease their chip inventories over the next few quarters into 2023.
- TSMC Profit Beats Estimates in Sign of Strong Tech Demand
- Profits to drop at Currys as inflation to weigh on customer demand
- Samsung’s subdued profits reflect fading pandemic electronics surge - 'as higher inflation damps consumer demand for mobile phones and other electronic gadgets'
Global Copper Demand Slowdown
Source: Andrey Rudakov/Bloomberg.
Despite the copper prices have been at surge since the start of the pandemic, due to the rising interest rates and fears that a recession would hit demand for metals, the copper prices have been plummeting. Copper is believed to be an indicator of economic health as it's one of the main materials for a wide range of industries; from consumer goods and infrastructure projects to the electrification of green energy initiatives.
- Copper Selloff Deepens, Drops Below $7,000 First Time Since 2020
- Barrick sees lower prices for copper in Q2
- Copper dips below $4 per pound, suggesting the global economy is in trouble
- Goldman Goes Cold on Copper as Power Crisis Sparks Bearish Pivot
- Copper price hits a 20-month low on recession fears
Themes to Watch Out
Cholesterol CRISPR Treatment
Source: Charlotte Pollet for Bloomberg Businessweek.
In a first, a patient in New Zealand has undergone gene-editing to lower their cholesterol by using a version of the gene-editing tool CRISPR. This DNA editing may lower blood cholesterol and may be a step that may foreshadow wide use of the technology to prevent heart attacks and other common diseases.
- Verve begins human tests of first 'base editor,' aiming at heart disease
- Editing cholesterol genes could stop the biggest killer on earth
- Analysis | Crispr for the Masses Gets a Little Closer to Reality
- A One-and-Done CRISPR Gene Therapy Will Aim to Prevent Heart Attacks
- Will we be able to check cholesterol using gene editing technology or will it be too dangerous and costly to even try?
- High Cholesterol Treatment Utilizes Gene Editing
Global Polysilicon Shortage
Source: Martin Leissl/Bloomberg.
The key solar panel material has seen prices rise for the sixth week in a row due to plant outages, putting solar panels on the threshold of becoming too costly. The extreme shortage is due to worsen with a major manufacturer in Xinjiang unexpectedly shutting for repairs, along with other producers outside the region scheduling maintenance in the coming quarter.
- Green Tech Boom Threatened as Solar Prices Surge to Decade High
- Solar Polysilicon Prices Climb Again as Extreme Shortage Builds
- Polysilicon Price Hits 11-Year High on Surging Solar Panel Demand
- Polysilicon maker predicts 5-year shortage of solar raw material
Alibaba Taiwan Cloud Services Shut Down
Source: Taiwan News.
Alibaba Cloud has prevented users in Taiwan from connecting to its cloud services, disconnecting the country from its private network. This service halt could potentially be one of many to come as tensions in the South China Seas grow with China looking to increase its influence in the area. This could also mean a takeover the world’s foremost chip manufacturing hub.
Foxconn China Chip Investment Restriction
The world's largest contract electronics maker Foxconn has a China-listed unit Foxconn Industrial Internet Co Ltd - and planning to spend 9.8 billion yuan ($1.46 billion) for a stake in chip conglomerate Tsinghua Unigroup. However, Taiwan's government would need to approve this, and has become increasingly cautious about China's ambition to boost its semiconductor industry: Taipei prohibits companies from building their most advanced foundries in China to ensure they do not offshore their best technology.
- Taiwan says Foxconn needs govt approval for any China chip firm investment
- Taiwan's Foxconn says is shareholder of troubled Chinese chip firm
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