Reporter: Cai Ding, Wen Qiao, Tan Yuhan Editor: Wang Yuelong, Lan Suying, Sun Yuting, Liu Qingyan
● This Friday (April 12), inflation concerns and geopolitical uncertainty hit investor sentiment, and gold plunged after hitting a new high of $2,448.8. What is the logic of gold's repeated record highs? How long can this wave of market last? The reporter of "Daily Economic News" contacted Zhan Dapeng, research director of Everbright Futures Nonferrous Metals.
● Recently, the "de-NVIDIA" of technology companies has accelerated. Around April 10, Meta and Google released self-developed chips one after another. In fact, in addition to this, Microsoft, Tesla, and Amazon have also successively released custom chips that can handle AI tasks. Can Nvidia defend its supremacy?
Israel has sounded the air defense siren many times, Biden has warned Iran that it will not succeed, and the fund under the "Sister Wood" invests in OpenAI.
Crazy gold! plunged after hitting a new high of $2448.8
Is Wall Street arguing that gold has peaked?
This Friday (April 12), the U.S. stock market experienced a big shock, with the three major stock indexes closing down across the board, and the Dow Jones falling nearly 500 points. Precious metals such as gold, which had been soaring all the way in the early stage, were not spared, and after hitting a record high, a wave of "diving" was staged, which can be described as a real "crazy 24 hours".
By the end of the day, COMEX gold futures and London spot gold had both retreated by about $100 from their highs on the day, with a retracement of nearly 4%. Spot silver retreated nearly $2 from the day's high, with a retracement of about 6%.
Behind the tremor is persistent concerns about inflation in the United States and geopolitical uncertainty, which has hit investor sentiment hard. U.S. President Joe Biden said on April 12 that he did not want to disclose security information, but expected Iran to attack Israel "soon," according to CCTV News. Biden also warned Iran not to do so, saying that the United States would help Israel defend itself and that Iran would not succeed.
Despite the huge volatility, the precious metal, led by gold, is still showing an upward trend from the data of this week and since April. But after witnessing the "rise and rise", investors are now full of questions: how long can this strong trend of gold last, and is there any investment value?
In this regard, Wall Street institutions, including UBS, Citigroup and Bank of America, have also recently issued their expectations, among which Bank of America analysts are the most optimistic, raising the gold price target for next year to $3,000 per ounce.
Zhan Dapeng, research director of Everbright Futures Nonferrous Metals, said in an interview with the reporter of "Daily Economic News", "The gold market is not sensitive to bearishness recently, and the bullish market has risen rapidly, which I think is a manifestation of overheating in the market, and the risk of chasing higher is increasing." ”
Gold 24 hours
On April 12, the global market was shaken. The three major U.S. stock indexes closed down across the board, and the Dow fell nearly 500 points, falling for the fifth consecutive trading day. At the close, the Dow fell 1.24%, the S&P 500 fell 1.46%, and the NASDAQ fell 1.62%.
Gold and other precious metals, which had soared all the way, also "stepped on the brakes" on the same day, and staged a "big dive" market in the intraday. COMEX gold and London spot gold soared to a record high of $2448.8 / ounce and $2431.52 / ounce respectively during the day, as of the close of the day, COMEX gold futures closed down 0.53% at $2360.2 / ounce, and London spot gold closed down 1.19% at $2344.25 / ounce, both down about $100 from the day's high, with a retracement of nearly 4%.
The same was true for spot silver, which fell 1.65% to $27.97 an ounce on the day, reaching about $29.80 earlier in the day, and retreating nearly $2 from its high, with a retracement of about 6%.
Behind the "huge earthquake" in the market are concerns about inflation in the United States and geopolitical uncertainty.
On the geopolitical front, U.S. President Joe Biden said on April 12 that he did not want to disclose security information, but expected Iran to attack Israel "soon," according to CCTV News. Biden also warned Iran not to do so, saying that the United States would help Israel defend itself and that Iran would not succeed.
On the same day, John Kirby, spokesman for the US National Security Council, also said that the US side believes that "the potential threat from Iran is real and credible" and that the United States is paying close attention.
According to a report by Fox News, citing a US Department of Defense official, the United States is transferring "more assets" to the Middle East with the aim of "strengthening regional deterrence and strengthening the protection of US troops."
On the 12th local time, the Chief of the General Staff of the Israel Defense Forces, Hezi Al-Halevi, made a comprehensive assessment of the Israeli army's preparations to deal with "all scenarios". Al-Halevi said the Israeli military continues to closely monitor the situation on Iran and other fronts, while preparing to coordinate and cooperate with the US military to deal with existing and potential threats. He said the troops were ready to respond to any situation.
In terms of inflation, the data showed that the CPI in the United States increased by 3.5% year-on-year in March, an increase of 0.3 percentage points from February, exceeding market expectations and the largest increase in the past six months. Core CPI, which excludes food and energy costs, rose 3.8% year-on-year in March, 0.1 percentage points higher than expected. Coupled with the previously released strong non-farm payrolls data, the market's expectations for the Fed's "first cut" of the year were postponed to September, and the number of rate cuts this year was reduced from three to two.
However, Zhan Dapeng, research director of Everbright Futures Nonferrous Metals, explained to the reporter of "Daily Economic News": "The PPI in the United States in March was lower than expected year-on-year, indicating that the rebound in inflation in the United States is limited, which also eases the market's worries about the postponement of the Fed's interest rate cut." ”
What is the logic of gold's repeated surges?
Although precious metals have experienced a large retracement on April 12, judging from the performance of the week and April, the rally of precious metals is still good. Wind data shows that in the 12 days of April 1~12, COMEX gold and London spot gold both rose for 7 days, with a cumulative increase of 4.67% and 5.01% respectively, and from the beginning of the year to April 12, the two rose by 13.92% and 13.65% respectively. In comparison, COMEX gold rose 13.45% in 2023, and spot gold rose 13.11% in 2023.
Zhan Dapeng told reporters that this round of gold hit a record high and its financial attributes are related, one is that the Federal Reserve's monetary policy has gradually turned from this year, and the market expects that this is the beginning of another round of monetary easing, and the real interest rate in the United States is expected to fall, and the rise in gold is just in the rush; The complex and volatile geopolitical environment in recent years has also boosted the willingness of overseas investors to be bullish on gold.
According to CNN, gold is considered a highly resilient investment, and when (the Federal Reserve) cuts interest rates, the price tends to rise because gold bars are more attractive than assets such as bonds. At the same time, the report said that the continued buying of central banks led by China is also one of the driving forces for the continued rise of gold. Central banks see gold as a long-term store of value and the best safe-haven asset in times of economic and international instability.
According to data released by the People's Bank of China last Sunday (April 7), China's gold reserves were 72.74 million ounces at the end of March and 72.58 million ounces at the end of February, marking the 17th consecutive month of increasing gold reserves. According to the World Gold Council, for the whole of 2023, the People's Bank of China (PBOC) ranked first in the world in net gold purchases among central banks.
In addition to China's central bank, the central banks of India, Turkey and other countries have also increased their gold reserves in recent months. UBS said in a research note on April 9 that central banks may want to "diversify" their dollar reserves in favor of gold amid heightened geopolitical uncertainty.
JPMorgan Chase & Co. further noted in a research note last month that countries that are not aligned with the United States are more likely to increase their gold reserves to "move away from the dollar", thereby reducing the threat of sanctions.
According to the Galaxy Securities Research Institute, the amount of gold increased by global central banks in 2023 is the second-highest on record, slightly lower than in 2022. Central bank purchases of gold have been a key driver of gold prices, and this trend will continue in 2024. Global official gold reserves increased by 39t in January 2024, more than double the amount in December 2023, and global central banks have achieved a net increase in gold for the eighth consecutive month.
Wall Street is fiercely debating the future of gold, and Bank of America is the most optimistic
Gold frequently hits record highs, can investors still "get on the bus" at this time?
A team of UBS analysts, led by Giovanni Staunovo, said in a recent note that gold's rally "came faster and more forcefully than we already had bullish expectations."
The Staunovo team has raised its forecast for gold prices by 11% to US$2,500/oz by the end of the year. The team believes that the Fed's rate cut later this year, as well as a recovery in demand for gold-backed ETFs, will boost gold prices again.
The Staunovo team believes that once the Fed starts cutting interest rates this year, gold-backed ETF investors will join this "gold rush" and ETF holdings should start to rise, "as these buyers' actions tend to be more in tandem with interest rate adjustments." This could even trigger a resurgence in demand for gold-backed ETFs. ”
Goldman Sachs also raised its forecast for gold prices by the end of the year to $2,700 an ounce from $2,300. In addition to Goldman Sachs and UBS, Citi analysts also raised their gold price targets late last week, raising their price targets for gold over the next three months by 9% to $2,400 an ounce.
A team led by analyst Aakash Doshi said, "We believe the likelihood of a bull scenario in which gold will average close to $2,500 an ounce in the second half of 2024 has increased." It has not been long-term demand or a response to a weaker dollar that has driven gold prices to record highs in recent weeks, but this could be a significant driver for gold if the Fed chooses to cut interest rates in June or July. ”
Bank of America is more optimistic, with the bank believing that the gold price will soar to $3,000 an ounce in 2025. In addition to strong purchases by central banks, Bank of America expects investors to return to the gold market once the Fed starts cutting interest rates.
However, it is worth noting that data released by the World Gold Council on April 9 showed that despite the record high gold price, the global physical gold ETF recorded the tenth consecutive month of outflows in March, with a net outflow of US$823 million for the month. In other words, there is a "divergence" between the current gold price and the size of the gold ETF.
Citigroup explained that this may be because long-term investors who entered the market early are now selling their gold-backed ETFs for a profit, which is why the net inflows into gold-backed ETFs are relatively weak. In addition, despite the ongoing outflows, the price of gold has not been affected much, suggesting that there are other buyers in the market buying the gold.
For the future trend of gold, Zhan Dapeng also expressed his views to reporters. He said, "Recently, the gold market is not sensitive to bearishness, and bullish is rising rapidly, which I think is a manifestation of overheating in the market, and the risk of chasing higher is increasing." ”
He believes that recent data and events show that gold prices are gradually overdrawing interest rate cut expectations trading, with the certainty of the postponement of interest rate cuts increasing, gold in the short term or driven by market sentiment although there is still a surge performance, but in the medium term pressure correction trend is inevitable.
He pointed out that for investors, it is necessary to pay close attention to two indicators in the future, one is the trend of risk assets in overseas financial markets such as U.S. stocks and Bitcoin, if overseas risk assets are irrationally higher, or drive market risk appetite, optimism or continue to boost the gold market;
Meta and Google have successively released self-developed chips
Can Nvidia defend its supremacy?
In this era driven by data and computing power, NVIDIA has almost monopolized the AI chip market with its high-performance GPU chips. With the intensification of AI competition and the shortage of chip supply, technology giants including Meta, Google, and Amazon have begun to explore self-developed chips.
On April 10, local time, Meta announced the latest version of its self-developed chip MTIA. MTIA is a family of custom chips designed by Meta specifically for AI training and inference work. The day before, Google also announced the launch of Axion, a data center chip based on the Arm architecture.
The technology giants are investing in chip research and development, which is not only concerned about getting rid of supply dependence, but also behind the pressure of cost. Take NVIDIA's star chip product H100 as an example, the current price has soared to 25,000 ~ 30,000 US dollars. According to Meta's plan to obtain 350,000 H100 by the end of the year, the minimum cost of this chip is $8.75 billion.
Will their entry shake Nvidia's dominance in the chip market?
Tech companies stage "de-NVIDIA"
On April 10, local time, Meta announced the launch of the latest version of its self-developed chip, MTIA v2, which is designed for the ranking and recommendation system of Meta's social software. Early test results show a significant performance improvement in the latest version compared to Meta's first-generation AI inference accelerator MTIA v1, announced in May last year, and is three times better than the original version.
The day before, Google also announced the launch of Axion, a data center chip based on the Arm architecture. According to Google, the Axion chip has 30% better performance than general-purpose ARM chips, 50% better than the current generation x86 chips produced by Intel, and 60% more energy efficient. Google plans to use Axion for a variety of Google-owned services, such as YouTube advertising and big data analytics.
In fact, in addition to Meta and Google, Microsoft, Tesla, and Amazon have also successively released custom chips that can handle AI tasks.
In January this year, Bloomberg quoted people familiar with the matter as saying that OpenAI CEO Sam Altman is planning to use billions of dollars to build a semiconductor wafer factory with a certain scale.
Analysts at CFRA, a market research institution, believe that large technology companies are facing pressure on chip costs and need to rely on self-developed chips to alleviate them. According to Fortune magazine, for large tech companies with funds, self-developed chips can also help reduce dependence on external chip manufacturers such as Nvidia and Intel, while also allowing companies to customize personalized hardware based on their own AI models.
With the release of ChatGPT, a top-notch AI tool, the generative AI market has also sparked a race from major technology companies, and computing power is the core engine behind the booming development of this field.
In this context, high-performance GPU chips such as NVIDIA's A100, H100, A800 and H800 have also become the object of competition for major AI companies, especially H100. In July last year, foreign media revealed that NVIDIA's H100 GPU for AI computing was in short supply. At the time, Nvidia GPUs were shipped for 11 months, and most Nvidia customers had to wait nearly a year to get their GPUs. However, supply bottlenecks have now eased.
Moreover, the price of such a "fragrant dumpling" is naturally not low. According to reports, the price of H100 has now soared to $25,000~$30,000.
In order to build a supercomputer to support the OpenAI project, Microsoft is said to have spent hundreds of millions of dollars to connect tens of thousands of Nvidia A100 chips together on the Azure cloud computing platform. It is estimated that even maintaining the basic operation of ChatGPT would cost about $16 billion per year.
In March this year, Meta also announced the details and roadmap of its layout of AI infrastructure, saying that it plans to obtain about 350,000 H100 GPUs from NVIDIA by the end of this year, and the total computing power owned by the company will be close to the computing power provided by 600,000 H100. Even at the lowest selling price of $25,000, the cost of the 350,000 H100s is about $8.75 billion.
Nvidia's hegemony no longer exists?
According to the New York Times, Nvidia sold 2.5 million chips last year, almost monopolizing the market. According to research firm Omdia, Nvidia accounts for more than 70% of the entire market. Driven by strong chip demand, Nvidia's stock price rose about 240% last year, and from the beginning of 2024, its stock price has risen by more than 83%, closing at $881.86 per share on Friday.
Some analysts believe that as tech giants enter the chip field, Nvidia's dominance may be threatened. In a recent interview with Barron's, Cathie Wood pointed out that competitors such as Google, Amazon, Microsoft, and Tesla have personally developed chips, which will drag down Nvidia's future revenue growth.
Alvin Nguyen, a senior analyst at consulting firm Forrester, believes that "although the chips designed by companies such as Google, Meta and Amazon will not be as powerful as Nvidia's top-of-the-line products, it may benefit these companies." In particular, the waiting time for shipment will be shorter. ”
"From Meta's point of view, this gives them bargaining chips with Nvidia. Edward Wilford, an analyst at technology consultancy Omdia, said the same. "Outside of Nvidia, they have other options. ”
In addition, Nguyen believes that self-developed chips can be better adapted to the specific AI platforms of tech companies, thereby improving efficiency and saving costs by eliminating unnecessary features. This means that while NVIDIA GPUs excel in AI data centers, they may not perform as well as custom chips in certain workloads and in certain models as general-purpose hardware.
However, the development of AI chips for tech companies is a long-term process. Nguyen expects the chips to take about a year and a half to develop, after which it could take months to implement them on a large scale. For the foreseeable future, the entire AI space will continue to rely heavily on NVIDIA for its computing hardware needs.
Moreover, self-developed chips do not mean that tech giants can completely get rid of their dependence on Nvidia.
In fact, the core manufacturing of technology giants is not a new thing, Google has launched its own AI tensor processing unit since 2016, and Amazon Web Services announced the launch of its self-developed chip Trainium for training AI models in 2020, but until the outbreak of generative AI, only Nvidia is entrenched in the AI chip leader and has become the biggest "shovel seller".
According to the Fortune report, this is partly due to the limitations of the tech giants in terms of manufacturing capacity, and on the other hand, Nvidia has built the largest system-on-a-chip that offers higher performance and can be used with a wider range of software. The head of Amazon's chip business once said in an interview with foreign media, "Nvidia has excellent chips, and more importantly, they have an incredible ecosystem, based on this, it is very challenging for the market to accept a new chip." ”
According to research firm Gartner, the chip market is expected to more than double to about $140 billion by 2027. It's not just AI model providers who are eyeing this cake, but well-known chipmakers such as AMD and Intel are also accelerating the launch of AI chips with better performance to challenge Nvidia's supremacy.
Naturally, Nvidia will not sit still. In 2023, Nvidia launched its own cloud service where businesses can use their chips. In addition, the company is partnering with cloud providers such as CoreWeave based on the chip business to compete with Amazon, Google, and Microsoft.
Insider: The United States observed that Iran is preparing up to 100 cruise missiles
According to reference information, the website of the Wall Street Journal reported on April 12 that the United States quickly deployed warships in place to "protect" Israeli and American forces in the region, hoping to deter a possible "direct attack" by Iran on Israel.
According to the latest news from CNN, a source familiar with US intelligence revealed that the United States observed that Iran was preparing up to 100 cruise missiles.
According to CCTV News, on April 12, local time, rocket air defense sirens sounded several times in the Galilee region of northern Israel, near the Lebanese border.
The IDF issued a statement saying that about 40 rockets were fired from the direction of Lebanon towards northern Israel, some were intercepted, the rest landed in open areas, and no casualties have been reported so far.
On the same day, IDF Chief of Staff Hezi Halevi gave a comprehensive assessment of the Israeli army's readiness to respond to "all scenarios." He said the troops were ready to respond to any situation. After completing the assessment, Halevi also met with visiting U.S. Central Command Commander Michael Kurilla.
U.S. President Joe Biden said on April 12 that he did not want to disclose security information, but expected Iran to attack Israel "soon." Biden also warned Iran not to do so, saying that the United States would help Israel defend itself and that Iran would not succeed.
"木头姐"旗下基金投资Makeup
On April 12, local time, the fund of Cathie Wood, CEO of Ark Investment and well-known investor "Sister Wood", announced that Ark Venture Fund has invested in OpenAI, the maker of ChatGPT, Dall-E and Sora. However, the fund has not disclosed the size of its investments.
According to foreign media reports, Ark Investment said in an email sent to customers on the same day: "Since April 10, 2024, Ark Venture Fund has invested in OpenAI...... OpenAI is at the forefront of the Cambrian explosion of AI capabilities. ”
So far, OpenAI has raised huge sums of money, most of it from Microsoft Corp., which has invested $13 billion.
In addition, according to Bloomberg, Musk's AI startup xAI is also looking to raise $3 billion to $4 billion. According to the materials sent to investors, this would put the company's valuation at $18 billion.
U.S. stock earnings season welcomes a "black start"
JPMorgan Chase fell after reporting results, and Dimon once again warned of risks
On the evening of April 12 (Friday), Beijing time, a new round of the U.S. stock earnings season officially kicked off.
JPMorgan Chase & Co. reported that overall revenue in Q1 rose 8% year-on-year to $42.55 billion, mainly due to the Federal Reserve's high interest rate policy and an increase in loan size.
However, the company's stock price has seen a more obvious dive after the release of the earnings report, falling more than 6% as of the close. According to the preliminary assessment of the market, the main reason for the negative feedback from the market is the net interest margin (NII) data in Xiaomo's financial report and the increase in the guidance of expenses for the fiscal year.
According to the first quarterly report, Xiaomo's Q1 net interest margin income was 23.08 billion US dollars, although it increased by 11% year-on-year, but the net interest margin shrank by 4% quarter-on-quarter while the benchmark interest rate remained unchanged.
The company's CEO Jamie Dimon also explained that the main reason is the pressure on deposit rates and the decline in the size of deposits. Dimon also said that the company expects the trend of normalization of NII and loan loss provisions to continue.
"Many economic indicators remain in favour, but looking ahead, we remain alert to a range of significant uncertainties," Dimon said. ”
Over the past few months, Dimon has been warning that inflation could be more persistent than the market predicts, and mentioned in his annual shareholder letter on Monday that his company is ready for the U.S. benchmark interest rate to "fall to 2%" to "rise to 8% or higher."
S&P Global: The second-highest percentage of U.S. companies defaulting repeatedly since 2008
On April 12, local time, according to a new report by S&P Global Ratings quoted by Bloomberg, the proportion of US companies that repeatedly defaulted has reached the second highest level since 2008.
Nicole Serino, head of credit research and insights at the rating firm, said in a report that about 35% of total global defaults in 2023 were caused by companies that "defaulted again", a trend that also hindered the economic recovery. This is partly due to an increase in the number of issuers rated B- or below, and these companies have high debt levels.
In an interview, Serino noted that "the capital structure of these companies was built with lower interest rates and lower expected interest rates." And now you see that the bubble is getting bigger and bigger. ”
Higher-than-expected consumer inflation has lowered market expectations for the number of rate cuts the Fed will have this year. This prolonged environment of high interest rates will make it harder for highly leveraged, risky companies, especially those that have defaulted.
Foreign media: The exchange rate of the yen against the US dollar hit a 34-year low!
The Japanese government may intervene
According to a report by Kyodo News on April 10, the yen exchange rate against the US dollar plummeted in the New York foreign exchange market on the 10th, once falling to 153.24 yen per dollar, hitting a new low of about 34 years since June 1990. As of press time, the yen was trading at 153.28:1 against the dollar.
The U.S. Consumer Price Index (CPI) for March this year was released by the U.S. Department of Labor on the same day, and the year-on-year increase in the U.S. Consumer Price Index (CPI) for March this year was higher than market expectations, and expectations that the Federal Reserve will cut interest rates soon cooled. Long-term interest rates in the United States have also risen sharply, spurring investors to buy dollars and sell yen.
Japan's Vice Minister of Finance Mato Kanda told the media: "The current (foreign exchange market) is very volatile. Finance Minister Shunichi Suzuki said that Japan "will not rule out considering all options for an appropriate response", expressing the attitude of the government and the central bank not hesitating to buy yen to intervene in the foreign exchange market.
Although the Bank of Japan lifted its negative interest rate policy in March, it indicated that it will continue to pursue an accommodative monetary policy. As a result, the market strongly expects that the interest rate differential between Japan and the United States will not narrow for the time being, and the recent momentum of buying dollars and selling yen prevails. For Japan, which relies on imports for raw materials such as crude oil, a weaker yen exchange rate will lead to higher import prices, which could further hit the household economy.
Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Do so at your own risk.
Reporter|Cai Ding, Wen Qiao, Tan Yuhan
Editor|Wang Yuelong, Lan Suying, Sun Yuting, Liu Qingyan, Du Hengfeng
Proofreading|Cheng Peng
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