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- US Takes A Dive Into Bitcoin Mining
US Takes A Dive Into Bitcoin Mining
AND Neuralink Unveils 'Telepathy'
BrownRice Capital
February 05, 2024
Welcome to BRC’s Breakdown.
‘It’s not as bad as it looks’ is what the Fed Chair Jerome Powell wants investors to believe as he held interest rates cut. Despite no clear indication of a rates cut, equities and crypto saw a leg up last week.
First, let’s see how the markets fared this week:
Equities markets globally continue to hold strong, while bonds have had a mixed week. US markets are up over 4% YTD. Commodities and crypto both had a fairly good week. In India, the NIFTY Small Cap 100 is up 7.5% YTD.
Here’s a preview of what we’ll cover:
Macro: Equities Keep Rising Globally, India’s Interim Budget
Around The World: RBI Likely to Keep Rate Unchanged
Crypto: U.S. Government's Dive into Bitcoin Mining
AI: The Future is Here: Neuralink Unveils ‘Telepathy!’
Equities Keep Rising Globally, US Employment Report, India’s Interim Budget
Globally, equity markets continued to move up. US markets are up over 4% YTD (both S&P 500 & NASDAQ) with a rally led by large caps. In contrast, the Russell 2000, a broad small-cap benchmark, is down over 3% YTD.
In India, the opposite has happened. While the NIFTY 50 (a large cap index) is up just 0.5% YTD, the NIFTY Small Cap 100 is up 7.5% YTD. And we’re less than 5 weeks into the year.
The US Employment report released on February 2 was very strong and resulted in markets pushing back the chances of the US Federal Reserve cutting the Fed Funds rate in their March meeting.
At 353k nonfarm jobs added the headline number in the January employment report was well above expectations, and November and December payrolls were revised up by 126,000 combined. The participation rate was unchanged, the employment population ratio increased, and the unemployment rate was unchanged at 3.7%.
A key improvement is – an improvement in average hourly earning wages from December to January. This is an indication of the trend of slowing wage inflation declining. If this continues, the prospects of the Fed cutting interest rates can diminish further.
Earnings season continued apace in the US with the FAANG reporting last week. Facebook (Meta) was the start with the stock price skyrocketing following the announcement of better-than-expected results, a stock buyback, and a dividend. META closed the previous week up by 20%.
At the mid-point of the fourth quarter earnings season, the overall performance of the S&P 500 relative to earnings estimates continues to be subpar. Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are below average - but that has mainly been due to financial services companies (who report in the early part of the season) posting poorer than expected earnings. In more recent days, companies across sectors like Health Care, IT, Energy and Consumer Discretionary have posted better than expected results.
RBI Likely to Keep Rate Unchanged
In India, the interim budget presented on February 1st was uneventful as expected. The government stuck to its previously announced plan to keep fiscal deficit (the shortfall of government income compared to expenditure) in check & expects FY25 deficit to be 5.1% of GDP (FY24 5.8%). Announcements were primarily on the expenditure side with new signature schemes like a large rooftop solar initiative.
Looking ahead, the RBI will announce the details of its Monetary Policy Committee meeting on February 8.
The Reserve Bank is likely to keep the short-term lending rate unchanged as retail inflation is still near the higher end of its comfort zone, say experts. It is almost a year since the Reserve Bank has kept the short-term lending rate or repo rate stable at 6.5%. The benchmark interest rate was last raised in February 2023 to 6.5% from 6.25% to contain inflation driven mainly by global developments.
The RBI directive that got the most attention last week was – the ban on Paytm Payments Bank (PPBL) from opening new accounts. This sent the stock of One97 Communications, the 49% owner of PPBL, down by over 40% in three trading days. We’ve made a video about it, you can check it out below.
U.S. Government's Dive into Bitcoin Mining
The U.S. Department of Energy (DOE) has set its sights on the crypto world, specifically honing in on Bitcoin mining. An "emergency" data collection has been ordered by the Energy Information Administration (EIA), aiming to assess electricity usage among selected U.S.-based miners over the next six months.
Why the urgency? The recent surge in crypto prices has prompted concerns about increased mining activity and its impact on electricity consumption. The EIA, citing a potential "public harm" from crypto mining, aims to gather data to guide future decisions.
While the EIA claims to be policy-neutral, the crypto community is wary, questioning whether this survey may influence future regulations. The survey delves into routine questions about mining facilities, chip types, and electricity consumption. Results are expected monthly until July, with the possibility of an extension.
As the debate on Bitcoin's environmental impact intensifies, some see it as a catalyst for positive change. Institutions like MIT and KPMG suggest Bitcoin could balance electricity grids, subsidize renewable energy, and contribute to greening the economy.
The real challenge lies in assessing the value of Bitcoin beyond its market price. The ongoing survey, initiated amid the crypto boom, may shape perceptions of Bitcoin's costs and benefits. However, skeptics argue that the EIA's preconceived notions about the risks of Bitcoin to the public may skew the survey's objectivity.
The Future is Here: Neuralink Unveils ‘Telepathy!’
Elon Musk just dropped a mind-blowing update: Neuralink has achieved a groundbreaking feat by successfully implanting its cutting-edge brain chip in a human for the very first time!
In Musk's latest revelation, he shared that the patient is 'recovering well' after the surgery, marking a significant step towards merging the potential of human minds with technology.
What's Inside the Chip? Musk highlights the promising aspect of "neuron spike detection," indicating that the chip's sensors are now capturing individual brain cell activity. This is like unlocking the secrets of the brain, paving the way for unparalleled advancements.
Musk also spilled the beans on Neuralink's debut product – 'Telepathy.' This groundbreaking innovation aims to empower paralyzed individuals by allowing them to control devices with their thoughts. Imagine the possibilities for those who have longed for the freedom to interact with the world through sheer mental command!
Why does it matter? Did anyone predict telepathy on their 2024 bingo card? Neuralink's relentless pursuit is not just about pushing the boundaries of brain hardware; it's about revolutionizing lives. The initial patient trials are focused on quadriplegic individuals aged 22+ grappling with spinal injuries or ALS. This could be a game-changer, bringing us one step closer to providing new abilities for paralyzed patients and ultimately making this cutting-edge technology more accessible to everyone.
Interesting Reads
Apple Vision Pro is here. Can this be VR’s iPhone moment?
The best products polarize people when they are launched & eventually they capture the imagination and adoption of the majority. Apple Vision Pro is clearly polarizing (Pun unintended). It might just be a matter of time before it gets mainstream acceptance & adoption.
Watch the review here.
How An Indian Broker Is Put Up Hoardings To Prevent Derivatives Trading
What kind of broker advises its clients against trading via futures and options, a high volume game, and instead advises for investing via Systematic Investment Plans (SIPs)?
This broker.
Baby. Boomer. Bitcoins. The new class of crypto investors.
With the rise of Bitcoin ETFs, investment managers are airing advertisements to entice baby boomers (those born between 1946 to 1964) to invest in crypto via Bitcoin ETF.
Read about it here.
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