• Metadoro
  • Products
  • News and analysis

News and analysis

Check market insights shared by our community members
09.01.2025
VeChain Is Suffering on Rising Borrowing Costs

VeChain (VET) has fallen 12.7% this week, trading at $0.0445, underperforming the broader cryptocurrency market. Bitcoin (BTC), the leading cryptocurrency, has declined by 5.6% to $93,220, with bearish momentum building as it approaches key support at $89,000-$91,000. This decline is largely attributed to tightening monetary conditions in the United States, which continue to weigh on risk assets. Investor confidence is further shaken by significant net outflows from spot BTC-ETFs, which lost $583 million on Wednesday, marking the second-largest single-day outflow on record.

If BTC falls below the critical support level of $89,000-$91,000, VeChain is likely to extend its losses, with prices potentially declining another 10% to $0.0400. A sustained drop in BTC could push VET even lower, towards $0.0300. Conversely, a strong rebound in BTC prices to the $100,000 level could drive VET back up to $0.0500, representing a recovery of approximately 12% from current levels.

14.01.2025
Tezos Is Seen Hodling above $1.200

Tezos (XTZ) has declined slightly by 0.2% this week, trading at $1.249, following Bitcoin’s (BTC) drop to $89,158, which triggered widespread altcoin sell-offs due to concerns of a potential further decline in BTC to $80,000. However, Bitcoin managed to hold above the critical support level at $89,000-$91,000, offering some relief to the broader crypto market.

Speculation about a shift in U.S. trade policy has provided additional support to crypto assets. Reports suggest the new U.S. administration may pursue a gradual increase in tariffs rather than an abrupt hike, which could help alleviate inflationary pressures and lead to a less aggressive monetary stance from the Federal Reserve.

This development is a positive signal for the cryptocurrency market and may help Tezos maintain its position above the key support level of $1.200.

14.01.2025
Merck Becomes Interesting to Be Added to a Portfolio

Merck & Co (MRK) stocks have shown signs of becoming a compelling buy opportunity. Over the past six months, the stock has been in a downtrend, declining 29.8% to $94.50 per share. However, since mid-November, MRK has demonstrated a reversal of momentum, rebounding by 10.0% to reach $104.87 on December 5. Following a brief pullback and consolidation period, the stock has retested the downtrend resistance and appears poised to continue its upward trajectory.

With prices currently positioned to target $110.00, this represents a potential 9-10% upside from the present levels. Setting a stop-loss at $93.50 aligns with a prudent risk management strategy, providing protection against further downside while allowing for upside potential. The recent consolidation phase further supports the case for a breakout, making this an attractive moment to consider initiating or adding to a position in MRK.

06.02.2025
Perfect As the Enemy of Good

Here is the problem, which is nearly at a primary school level. A simple logical puzzle. A shopping street has two grocery stores. One of the stores is much more popular than the other. But both shops are full of customers every day. So both shops are raking in money. Sales output of a more popular store roughly doubled over the past year, from $14.5 billion to $30.8 billion - oh, yes, it's a very big shop - which led to tripling of its market value. Meanwhile, sales in the second store have already grown by 69%, albeit by its lower standards, namely from $2.3 billion to $3.9 billion. Please draw a conclusion, by what percentage the market value of the second store could increase, assuming that professional appraisers are rather objective. It seems ridiculous, but the correct answer is that the second store's market value lost 35% within the same year, and it even dropped by 50% from its peak price of the last spring. Holy Cow! That was a story of some failed expectations of mine. Since the big store is, of course, Nvidia, and the small one (and also, in fact, quite a prosperous marketplace) is Advanced Micro Devices (AMD). And their goods are not essential food, but chips for artificial intelligence (AI) related data centers, which are also in high demand.

Moreover, AMD shares reportedly tumbled 10% additionally on February 5, only because the firm's AI chip revenue failed to be exactly in line with elevated projections of Wall Street analyst pool, which somehow bet on a 80% pace of data centre growth to as much as $4.15 billion YoY. Okay, one might say that Nvidia's "store" sells 8 times more chips that everyone needs. And even remember that Nvidia chips are of better quality, that Nvidia occupies about 80% of global chip market share. Again, Nvidia's last quarter will be finally counted only by February 26, when Nvidia's financial report is scheduled, a month later than in AMD's case. Like most large investment houses, here I have provided growth metrics regarding the major data center segment, which is a proxy for the AI playground, where AMD struggles to compete with Nvidia. Well, AMD CEO Lisa Su admitted that her company's data center sales in the current quarter may go down about 7% from the just-ended quarter, but this announcement was exactly in line with an overall expected decline. Is it really such a big deal that AMD shareholders have to experience pain from seeing their chosen stock falling to a 14-month low, with further need for a 100% rally just to match last year's record prices?

The same Lisa Su declined to give the particular forecast for the company's AI chips, but she said that AMD expects "tens of billions" of dollars in sales "in the next couple of years". And I see no reason to doubt her words. AMD CEO added that the firm is now working to compete against Broadcom (AVGO) in collaborating with its customers like Meta and Microsoft to create custom AI chips for their purposes, as Broadcom helps its partners to design their own chips, contrary to mostly "off-the-shelf" processors by AMD and Nvidia. They know their weaknesses as opportunities for strengthening to work in that direction, so what's wrong with the market's adequacy of perception? Perfect Nvidia is the enemy of good AMD, according to the crowd's opinion. Besides AI chips, AMD is also one of the largest providers of personal computer chips. Until recently, this point was generally the source of their main income. Consumers continue to buy new PCs, which also can handle generative AI tasks, by the way.

Actually, AMD has been the only loss-making company in my large portfolio for a long time, so it even makes me smile now. At least, because it is only a matter of time before AMD's pogo stick ultimately uncoils to come loose. Record annual revenue and earnings have to entail recovering to record market value eventually. I am not sure this will happen in the first half of 2025, even though AMD forecasts its revenue rise between $6.8 billion and $7.4 billion for the current quarter, with the market consensus midpoint being slightly lower at $7.04 billion. If you don't believe me then analysts at Stifel are of the opinion that AMD is well positioned for AI compute and "It is likely" that some of its customers "are waiting for 325/350 systems, which should drive a much stronger second half". Again, the median estimate by the Wall Street's analyst pool was now declined to about $150 per share vs $166.5 before the last downside move, yet even $150 sounds much better compared to $112 on closing price this Wednesday or an intraday low at $106.56 during the last trading session. Anyway, there is a strong technical and psychological support zone near the round figure of $100, from where AMD stock had begun its cool ascension in late 2023.

10.01.2025
Dollar Strength Is a Given

The very first slice of statistical data on business activity from the United States this year reaffirmed an almost clear irrelevance and even potential hurtfulness of any immediate steps towards further lowering interest rates on U.S. Dollar-nominated loans from a purely economic point of view. The ISM Manufacturing PMI (Purchasing Managers Index), based on polls compiled from executives in over 400 industrial companies in late December, came out at 49.3 points vs 48.4 a month ago and 48.2 in average analyst estimates. This showed that a slowdown was occurring at a slower or even insignificant pace, keeping inflation risks on the table, especially when the price component increased from 50.3 to 52.5 with a similar rate of increase in new orders. Meanwhile, non-manufacturing PMI came out at 54.1 on Tuesday, compared to 53.5 in analyst polls and 52.1 a month ago, with a contribution of business activity components even jumped to a surprising 58.2 against declining from 57.2 in November to only 53.7 in December.

In other words, the economy is not cooling, and is rather in a positive acceleration, which in turn may lead to a recovery in wage rises and therefore to higher demand pressure, which may be reflected soon in higher producer purchase and output prices. Doubts of the major U.S. financial regulator are understandable at this point after its triple rate cut from 5.5% to 4.5% in 2024. The Federal Reserve (Fed) will now pay closer attention not only to consumer inflation measures, but also to producer prices (PPI), which is just going to be released on coming Tuesday, January 14. And so, this will become the next reference point in the further U.S. Dollar’s trajectory. The Greenback index (DX) is picking up steam since reaching a new record high for the last two years at 109.35, with its temporary pullbacks being limited by a 107.50 support area that previously served as a strong multi-month technical resistance.

In this context, the British Pound (GBPUSD) updated its lows since November 2023 to touch 1.2237 on January 9, EURUSD feels quite comfortable within a range between 1.02 and 1.0450, which corresponds to its 2-year bottom, and having a bias towards a possible further decline. The Aussie (AUDUSD) is one-step away from taking the path for a breakthrough to a quite unknown territory of its 5-year lows that were last time recorded when the initial outbreak of the Covid-19 happened.

A varying extent of the American Dollar strength is surely data dependent as the market community is eagerly waiting for the U.S. job data later today. The average expectations on new Nonfarm Payrolls is just a bit above 150,000 vs 227,000 in early December 2024 and nearly 160,000 for the previous four months on average. However, any value close to 150,000, plus or minus 20,000, or any higher number, may be considered as another positive sign for the Greenback, following the ADP national employment report which contained only 122,000 on Wednesday. The oppressive nature of average hourly wage in its dynamics, +0.4% each time from September to December, also matters.

The protective quality of investing more funds into the U.S. Dollar and U.S. bonds against tariff threats is switched on anyway, based on more than a 95% chance for the Fed to keep rates on pause at its January 29 meeting, according to CME's FedWatch tool. Federal Reserve officials never go against a well-established market consensus, when it is almost unanimous, for not to rock the boat of relative market trend stability. The central bankers' reluctance to shift the Fed fund rates lower before mid-March, if not early May, continues to play in favour of short-term speculative transactions on the foreign exchange market, bearing in mind all the listed currency instruments. Some intraday volatility may take place, especially in the case of appearing an abnormal two-digit non-farm value, but not a change in overall direction.

Perspective Automakers Stocks: General Motors

General Motors stocks are trading 40% off their peak prices. Investors are monitoring the company’s efforts in electric vehicle production, which is a new area for GM. The company’s management is expecting to raise EV production to 1 million vehicles by 2025 to get $50 billion in revenues. This is a very ambitious plan as GM is planning to increase Compound Annual Growth Rate (CAGR) by 12% over the next three years.

GM’s key partner in EV’s production, LG Energy Solutions, has recently expressed doubts about “some investments in the United States” given the uncertainty of economic growth in the U.S. General Motors also has some speculations about other possible partners. This contradictory incoming information is affecting GM’s stock prices.

Rival Tesla is lowering prices for its EVs and this is having an effect on the used cars market, making EVs more affordable worldwide. GM perspectives are looking clouded and uncertain until investors receive a clear sign that the company has the abilities to conquer the new market segment.

2039
Perspective Automakers Stocks: Ford

Ford shares are trading 75% off their peak prices. The company is suffering from a lack of auto parts. Nevertheless, the company is presenting better-than-expected revenues for the fourth consecutive quarter. The company has reported $41.8 billion in revenues vs the expected $40.73. Earnings per share at $0.51 missed expectations by $0.11. Ford’s CEO, Jim Farley, said the company missed about $2 billion in profits amid higher input costs, disrupted supply chains and a stronger Dollar. However, the management is planning to improve these results soon.

This sounds positive as management can see where it has missed profits and are likely to make necessarily corrections. They should target higher operational costs that have wiped out 60% of the missed profits as suppliers have failed to deliver auto parts according to the plan amid global deficit. Ford is planning to enhance the design of electric vehicles to use a wider range of microchips for car manufacturing.

The company has strong financial as it accumulated about $32 billion in cash and its equivalents that enabled the payment of quarter dividend of $0.15 per share and additional payments of $0.65 per share. The company has promised to pay 40% to 50% of net cash flow to its shareholders in the future.

3034
Perspective Automakers Stocks: Tesla

Tesla stock prices rose by 80% from the beginning of 2023, but are still 50% off their peaks. Despite high volatility, the company has stable business perspectives. Elevated demand for electric vehicles allows Tesla to sell all vehicles produced, and to increase production to meet demand. The major challenges for the company are the expected launch of the CyberTruck and the increase of TeslaSemi production.

Tesla continues to attract investors’ attention. Revenues are expected to rise by 26% year-on-year to $103 billion in 2023 amid rising demand and sales. Revenues for 2030 are estimated at $355 billion, and these numbers may become a reality as Elon Musk is planning to boost production to 20 million vehicles in 2030 from 1.37 million in 2022. Besides, the production in 2022 rose by 47% from 2021.

New models and subscription extensions for full autopilot (FSD) and premium services, new gigafactories construction, manufacturing of batteries, and opportunities to enter new markets, are the company’s growth drivers. In short, Tesla’s future is looking promising.

2634
B
GDP in Europe and U.S. Inflation Will Not Immediately Set the Trend for the Euro

Two important pieces of news will be published today: The Eurozone Gross Domestic Product (GDP) and US inflation. So, the EURUSD will definitely cause volatility. GDP figures are preliminary, while  inflation should support the US Dollar index until the next piece of important news, such as data on the U.S. labour market, is released. It is impossible to guess the reaction of the market. We may certainly expect high volatility. However, I believe that these figures alone will not lead to a change of monetary policy, as they will not define this policy. It would be better to wait for two or three months of inflation slowdown in the U.S. for the interest rate ceiling to be set. I expect the Euro may remain at the 1.0660 -1.0800 level range until Thursday, before retail sales and housing data in the U.S. is announced. Thus, the priority indication for intraday trading on the hourly chart would be an RSI indicator with a period of 14. You can follow overbought or oversold RSI readings to conduct trading.

1119
273

Join our community

Share your professional and amateur observations, exchange experiences, anticipate developments

Category
All
Stocks
Crypto
Etf
Commodities
Indices
Currencies
Energies
Metals
Instruments
Author
All
Metadoro
Contributors