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In today’s edition,
- Google & Samsung’s XR push
- Xiaomi’s EV momentum
- Broadcom’s AI surge
- EM currency decline
- Bitcoin’s new chapter
Market Snapshot
Equities had a mixed week, with the Nasdaq Composite rising modestly to clear the 20,000 mark, while other major indexes declined. Large-cap stocks outperformed smaller caps, and growth stocks extended their lead over value stocks, driven by gains in Tesla (+9.63%) and Alphabet (+8.74%).
Economic data shaped market sentiment, with consumer inflation rising 0.3% in November, keeping core inflation steady at 3.3% year-over-year. Labor market data pointed to softening conditions, as initial jobless claims jumped to a two-month high of 242,000 and continuing claims remained near three-year highs.
The data solidified expectations of a Federal Reserve rate cut next week, with futures pricing a 97.1% probability. Meanwhile, U.S. Treasuries and corporate bonds faced pressure as yields rose, reflecting cautious sentiment across fixed-income markets.
Stock market closing data for the week of Dec 9th to Dec 13th, 2024
News Summaries
Google and Samsung are teaming up to re-enter the smart glasses and virtual reality (XR) space, aiming to compete with Apple and Meta. Samsung will launch a device in 2025 under “Project Moohan,” powered by Google’s Android XR, a system tailored for headsets and glasses. This collaboration offers a high-fidelity experience at a price “significantly” lower than Apple’s $3,500 Vision Pro, which has seen limited traction. Google’s XR efforts build on AI advancements, enabling natural interactions and enhanced device understanding. While earlier attempts like Google Glass and Daydream stumbled due to privacy concerns and technical limits, Google is leveraging its Gemini AI platform to improve functionality, including prototypes like Project Astra for real-world applications.
Xiaomi’s share price has more than doubled this year as the company steadily gains ground in China’s electric vehicle (EV) market, challenging established players like BYD and Tesla. Its EV segment now makes up 10% of revenue, with strong sales of the SU7 sedan and plans to launch the YU7 SUV in 2025. Analysts expect sales to double by then, thanks to competitive pricing (250,000–330,000 yuan) and Xiaomi’s cost management skills honed from its smartphone business. While valuation remains a concern—trading at 27 times forward earnings, above the 5-year median of 21—most analysts are optimistic, with 42 out of 44 recommending a buy. With China’s EV sales projected to top 11 million units this year, Xiaomi seems poised for growth, despite fierce competition from rivals like Huawei and macroeconomic uncertainties.
Broadcom’s shares jumped 20%, making its market value $1 trillion. This followed a 220% rise in AI revenues for 2024 and forecasts of 40-50% growth until 2027. CEO Hock Tan noted the AI market’s potential, suggesting it could grow from under $20 billion to $60-90 billion by 2027. This growth, he said, would be fueled by ongoing investments from major AI customers. The company’s stock surged 90% in 2024, reflecting the high demand for AI chips. Only Nvidia outpaced this, with a 180% increase. Meanwhile, JPMorgan analysts raised Broadcom’s price target to $250, highlighting its strong AI prospects. They noted that companies like OpenAI are looking for alternatives to Nvidia, which boosts Broadcom’s market position.
Emerging market currencies have experienced their steepest sell-off since 2022, with the JPMorgan EM currency index dropping over 5% in the last quarter, driven by a surging US dollar. Factors include the Federal Reserve’s high interest rates and policy concerns in countries like China, Brazil, and Mexico. The Mexican peso fell 2.1% this quarter, influenced by tariff threats, while China’s offshore renminbi declined 3.7%, amid slowing growth and anticipated rate cuts. Broader challenges like Brazil’s fiscal issues and South Korea’s political uncertainty further pressured EM currencies. With limited investor confidence and a revival of the “TINA” (There Is No Alternative) narrative favoring US investments, JPMorgan’s EM gauge is heading for its seventh annual decline.
From the World of Crypto
Bitcoin has soared past $100,000, up 135% this year, as cryptocurrencies collectively hit a $4 trillion market cap, exceeding the size of the UK or French stock market.
But what is driving this surge?
Institutional investors, like hedge funds and asset managers, are now key players in the space. For example, BlackRock’s Bitcoin ETF, with an AUM of over $50 billion, has become one of the largest in the hedge fund world. A recent survey found that nearly half of traditional hedge funds now invest in digital assets, compared to just 21% two years ago.
This rally is unlike the hype-fueled booms of 2017 and 2021. Those earlier rallies focused on speculative ideas such as decentralized finance (DeFi) and Web3. Now, interest in these trends has waned. Funding for related startups has plummeted from $34 billion in 2021 to $7 billion this year.
Similarly, crypto ETFs like VanEck’s have fallen significantly, and NFT markets, while showing some recovery, remain far from their peak values.
The growing role of institutional investors is changing how crypto behaves.
Research indicates Bitcoin’s performance is now closely linked to traditional markets. This shift mirrors the strategies of institutions that combine crypto with other assets. As a result, Bitcoin is more affected by Federal Reserve policies and market sentiment. Unlike early adopters who aimed to hold long-term, institutions are quick to take profits or cover losses. This creates a more active market.
Looking ahead, more institutions are likely to adopt Bitcoin, especially if regulatory issues ease.
This shift could strengthen crypto’s position in mainstream finance. However, it also makes Bitcoin more vulnerable to traditional market swings. For those hoping Bitcoin would revolutionise finance, this might feel like a setback. Still, the profits are hard to ignore.
