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In today’s edition,
- Donald Trump and Greenland
- TSMC’s AI boom raises questions
- Meta moderates: Free speech wins?
- Vanguard tops ETFs again
- Bitcoin miners adapts
Market Snapshot
U.S. equities fell this week driven by persistent inflation fears and political uncertainty. The Russell 2000 entered correction territory for the fifth time in six weeks. Also, initial optimism over potential tariff easing by the incoming Trump administration faded after President-elect Trump dismissed those reports.
Economic data heightened concerns as the December ISM Services PMI rose to 54.1, and Federal Reserve Governor Michelle Bowman indicated inflation remains above the 2% target, suggesting higher interest rates could persist.
The Labor Department reported a robust addition of 256,000 jobs in December, significantly surpassing expectations and maintaining the unemployment rate at 4.1%, with wages up 3.9%. Treasury yields surged, with the 10-year note reaching its highest level since November 2023.
By week’s end, the Dow Jones fell 1.31%, the S&P 500 dropped 1.09%, and the Nasdaq ended down 1.21%. Analysts anticipate continued market volatility as investors await upcoming earnings and Fed updates.
Stock market closing data for the week of Jan 6th to Jan 10th, 2025
Special Coverage: Donald Trump’s Greenland Strategy
When President-elect Donald Trump suggested buying Greenland, what was his goal?
He pointed out Greenland’s importance for U.S. security. Trump highlighted the Pituffik Space Base. It’s key for missile warnings and space monitoring.
This base houses 200 U.S. troops and 450 allies. It’s just 1,500 km from the North Pole. This shows Greenland’s role in watching Arctic trade and countering Chinese and Russian influence.
Why does the U.S. need Greenland more now?
With climate change, new shipping routes are opening. This makes Greenland crucial for control and security.
Moreover, it has vital resources. Greenland contains 43 of the 50 minerals critical for the U.S., including rare earth elements for military and green technologies.
There’s an estimated 52 billion barrels of oil off its coast. This has spiked interest, boosting drilling sites from 12 to 170 in a decade.
How is Denmark reacting to the U.S. interest in Greenland?
Denmark has refused to sell Greenland. However, it is investing $2 billion to bolster Greenland’s defense. This includes new ships, drones, and an expanded Arctic Command.
The aim is to enhance security and show commitment to Greenland’s autonomy while boosting military ties with the U.S. Former adviser John Bolton stressed the need to keep China and Russia out, highlighting Greenland’s strategic role.
What does Greenland offer economically to the U.S. and its people?
In 2021, Greenland’s GDP was about $3 billion, boosted by $500 million from Denmark. As resource extraction grows, so does its economy. It’s valued at $50 billion, making it appealing to the U.S.
However, the challenge lies in ensuring fair wealth distribution among its 56,000 residents. Any U.S. proposal would need open talks and possibly a vote to respect Greenlanders’ rights and ensure fair sharing.
Is it wise for the U.S. to chase Greenland aggressively?
Acquiring Greenland could boost U.S. security by securing military bases and Arctic resources. Yet, it might strain U.S.-Denmark relations and set a tricky precedent.
As the Arctic opens up, Greenland’s global role will grow, influencing security and relations.
News Summaries
In 2024, Vanguard continued its lead over iShares in US ETF inflows for the fifth consecutive year. Vanguard attracted $308.2 billion, while iShares brought in $292.5 billion. This success was largely due to Vanguard’s US equity funds, especially the Vanguard S&P 500 ETF (VOO), which alone drew $117 billion. iShares, however, had strong performances too. Its Core S&P 500 ETF (IVV) garnered $86.5 billion, and the Bitcoin Trust (IBIT) secured $37.5 billion, making it the third best-selling ETF of the year. The overall ETF market reached a record $1.1 trillion in inflows in 2024, up from $901 billion in 2021. Equity funds led this growth with $773.2 billion, and active ETFs more than doubled their 2023 inflows to $295 billion. Other major firms like Invesco, State Street Global Advisors, and JPMorgan also reported significant inflows, highlighting the ongoing growth and diversification of the ETF sector.
Taiwan Semiconductor Manufacturing Co. (TSM) reported a 39% revenue jump in Q4, reaching NT$868.5 billion ($26.3 billion). This marked a 34% annual increase for 2024, surpassing its 30% target. TSMC’s valuation is now nearly $1.1 trillion. This surge is driven by expectations of increased AI server and data centre spending from major tech firms. Notably, Microsoft plans to invest $80 billion in data centres, and Hon Hai has reported strong AI server sales. However, some analysts express concerns about growth sustainability. TSMC’s dependency on Apple is another factor. Apple faces weak iPhone demand in 2025, but could attract buyers with new AI features. On the geopolitical front, US restrictions on certain Nvidia chips introduce uncertainties for TSMC’s key customers. Looking ahead, Morgan Stanley forecasts a low-20% sales growth for TSMC in 2025. This is as TSMC expands in Arizona, Japan, and Europe, focusing on advanced technology and maintaining margins.
Mark Zuckerberg announced changes to Meta’s content moderation. He cited Donald Trump’s election as a turning point. The aim is to ease rules that sometimes flagged accurate posts or deemed acceptable content as problematic. The changes fix issues like incorrectly blocking 10-20% of reported content and hiding valid stories. Initially, Meta’s Oversight Board was surprised but is now set to help refine policies. Advertisers are still wary, seeking safe environments. Critics fear fewer rules could increase harmful posts. However, Meta plans to continue targeting illegal content and ensuring transparency. Zuckerberg’s move, amidst others’ support for Trump, seeks to balance free speech with necessary protections.
From the World of Crypto
US Bitcoin miners are building up their reserves as profits fall and competition rises.
Companies like Mara Holdings, Riot Platforms, and CleanSpark have raised over $3.7 billion since November. They’ve done this by issuing low-interest convertible notes. Now, they’re buying Bitcoin, benefiting from its price surge to $100,000.
This strategy followed Donald Trump’s election win, during which he said Bitcoin would be “mined, minted and made in the USA.”
Yet, they face challenges. High energy costs and mining complexities are significant hurdles.
Despite these, miners keep going. The Bitcoin reward dropped from 900 to 450 coins daily in April. This cut hasn’t slowed them down.
CoinShares reports that mining one Bitcoin now costs US companies about $55,950 in Q3 2024. Including other costs, it rises to $106,000. With Bitcoin at $102,175, profits are slim.
However, the hash price, a key profitability measure, has jumped 32% since Trump’s win. This rise boosts miners’ confidence.
Mara Holdings has about 45,000 Bitcoins, worth over $4.4 billion. Others are diversifying. They’re leasing data centers to AI companies or moving operations abroad to find cheaper energy, targeting places like Kenya, the UAE, and Paraguay.
But the competition is fierce.
The Bitcoin network’s hash rate has reached a record high. More miners are entering the market, which could raise costs if Bitcoin prices drop.
Energy use is also a concern. Bitcoin mining now takes up about 2.3% of the US’s energy grid. In Texas, demand from large users is expected to rise by 60% by 2025.
To stay ahead, miners are also looking at the AI sector. Companies like Hut 8 and Core Scientific are leasing their setups to AI giants. They’re making the most of their hardware.
As energy prices and market conditions change, Bitcoin miners are adapting and finding ways to thrive.
