United Airlines CEO Oscar Munoz says the partial US government shutdown has not had a significant financial impact yet, but warns that this could change dramatically if the furlough drags on much longer.
“There is some impact there,” Munoz told CNBC Wednesday (Jan. 16). “It’s not discernible and it’s not significant. Clearly the longer this goes, of course there’s going to be impact. And we do worry about that.”
Munoz made the remarks a day after the CEO of Delta Air Lines said it expects to lose $25 million in revenue for January due to the shutdown.
So far, Oscar Munoz says he’s unable to predict the exact economic impact the shutdown will have because he doesn’t know how much longer it will last.
UAL Stock is Flying High
However, the shutdown has not hurt the United Airlines (UAL) stock price so far.
Shares of United Continental Holdings ― the parent company of United Airlines ― closed Wednesday at $86.36, up 6.3%, on heavy volume of 10.8 million shares. Average daily trading volume is 4 million shares.
UAL shares have been inching up for the past five trading sessions amid a mild overall stock market rally. The Dow Jones Industrial Average closed today at 24,207 ― up 141 points.
21st US Govt Shutdown is Now the Longest
The aviation industry has been particularly hard-hit by the government shutdown. Some 51,000 employees of the Transportation Security Administration are working without pay amid the ongoing impasse between Congress and US President Donald Trump.
The shutdown started on Dec. 22, 2018, and is now in its fourth week. This is the 21st shutdown the US government has undergone over the years and is now the longest.
Trump has asked the Democrat-led House of Representatives for $5 billion to build a wall along the US-Mexico border. The Democrats responded by calling the wall “immoral” and saying they won’t offer any money for it.
Both sides have accused the other of acting in bad faith. As recently as 2015, Democrats favored immigration reform and a border fence, but that all apparently changed once Donald Trump took office. The Republicans, meanwhile, failed to pass border wall funding during two years of unified government.
Canadian Air Workers Send Pizza to US Peers
Even in the midst of a slowdown, aviation workers showed that their sense of humor remains intact.
As CCN reported, Canadian air traffic control workers sent pizzas to their US counterparts last week as a gesture of goodwill and support.
“It’s nice to see that there’s solidarity out there,” said former air traffic controller David Lombardo.
That’s how we roll: Cheesy Surprise: Canadian Air Traffic Controllers Send Pizza to US Peers Amid Shutdown https://www.ccn.com/cheesy-surprise-canadian-air-traffic-controllers-send-pizza-to-us-peers-amid-shutdown/ …
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Cheesy Surprise: Canadian Air Traffic Controllers Send Pizza to US Peers Amid Shutdown
Canadian air traffic controllers showed support for their American counterparts who are working during the US government shutdown by sending them pizza ccn.com
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Meanwhile, JPMorgan CEO Jamie Dimon suggested that the shutdown could cut the United States’ economic growth to zero if it continues through March 31.
“Someone estimated that if it goes on for the whole quarter, it can reduce growth to zero,” Dimon told reporters. He did not cite who the source for the claim was.
Despite the government turmoil, Dimon remains bullish about the US and global economy. The billionaire banker insists that there is no recession ahead, and urged everyone to “take a deep breath.”
China’s economy is facing some of its toughest challenges in years. On Wednesday, a day after several Chinese government institutions vowed further stimulus to aid its financial sector, the People’s Bank Of China injected a net $83 billion (560 billion yuan) into open market operations via reverse repo operations — to counter its declining economy.
In an official statement, China’s central bank states:
At present, it is the peak of the tax period, and the banking system’s overall liquidity is falling rapidly.
Unfortunately, the injection has failed to impact the Chinese stocks and money market rates as they closed on Wednesday with little to no change.
China Must Prepare for Economic Difficulties?
While injections are not unusual for this time of the year, this one is significantly heftier than the typical ones and comes after an announced large cut in banks’ reserve ratios. The reduction is expected to free up a total of $116 billion for new bank lending. Chinese authorities have reportedly urged financial institutions to keep supporting struggling firms and even dangled incentives, while banks are concerned over delinquencies after a long regulatory crackdown on risky lending.
“The news is clear—the economy needs help,” Trinh Nguyen, a Natixis economist, told Reuters.
Moreover, according to the same news outlet, a state radio on Wednesday quoted the country’s Premier, Li Keqiang, saying that China must prepare for economic difficulties in 2019 as its financial sector faces increasing pressure.
According to another publication in South China Morning Post, eight of the 12 provinces in China that have reported growth targets for 2019 have updated them downwards. All targets are either the same or lesser than the ones for 2018:
These moves, coming days after the Chinese government released its latest trade data that nearly shocked analysts with an unexpected December drop in exports and imports, paint a clear picture of the dire situation the economy is in.
Better Times Ahead?
Property prices in China remained resilient in December while the construction sector also appears to be slowly picking up due to fast-track approvals of additional infrastructure projects.
Moreover, on Tuesday, several Chinese government institutions pledge new stimulus to support its slowing economic growth while promising that it won’t resort to “flood-like” incentives again. These stimuli result in a rapid increase in growth rates while leaving a mountain of debt behind.
According to Ken Cheung, a senior Asian FX strategist at Mizuho in Hong Kong, “while the (PBOC’s) net injection is big, it’s little versus what a rate cut would release, which is what people in the market are watching for.”
As the US-China trade war continues fueling uncertainty with full force, it is unclear whether the world’s second-largest economy will be able to take control over its rapidly declining economic growth.
Major Global Economies Struggle
The year has seen a rocky start for several other economies. Take Germany for example, whose financial sector, the fourth largest in the world, has also been experiencing a decline for the past 12 months after nine years of consecutive growth.
Besides shrinking car sales and exports to China, Germany’s biggest bank — Deutsche Bank — has also been under scrutiny for corruption and money laundering. Last November, 170 law enforcement officials raided the bank’s headquarters in Frankfurt to look for information regarding the exposed Panama Papers.
Moreover, on Jan 2nd, the European Central Bank took control over Italy’s Carige bank. The event occurred following the resignation of the majority of the bank’s board members. In the statement, the ECB notes that the “temporary administrators are tasked with safeguarding the stability of a bank by closely monitoring its situation.” Amid a struggling Italian economy, the event has raised concerns for another banking collapse in the country.
The US government is experiencing its most extended shutdown period while J. P. Morgan Chase faces the risk of a potential class-action lawsuit due to manipulation of precious metals markets.
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The NY Fed recently updated its recession-risk model – up to 21.4% in December, from 15.8% in November and 14.1% in October. The odds have doubled in the past year and haven’t been this high since August 2008.
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To top it all off, the NY fed has recently updated its recession-risk model, and it doesn’t look as good as one might think. The number has grown to 21.4% in December, from 15.8% in November, and 14.1% in October.
Whether the global economy will keep thriving under its current and upcoming hardships or cryptocurrencies will come to the rescue, as touted, remains to be seen.
Automotive giant Ford has entered a partnership with IBM, Huayou Cobalt, and LG Chem to build a blockchain platform to monitor the supply of cobalt from the Democratic Republic of Congo as part of an attempt to ensure that child labor does not make up any part of its supply chain.
Ford & IBM Partner to Monitor Cobalt Mines
Announced on Wednesday, the project, which will be managed by the global responsible-sourcing consultant RCS Group, will use IBM’s proprietary blockchain platform to monitor cobalt supplies used in the production of lithium-ion batteries.
The move comes at a time when other primary production industries are also exploring blockchain technology as a potential solution for effective supply chain tracking to ensure that minerals sourced from conflict zones or using child labor in poor countries such as the DRC do not enter the global market. In October, CCN reported that Alrosa, the world’s second largest diamond mining company joined Tracr, a blockchain-based supply chain monitoring system developed by diamond mining giant De Beers Group.
Like the Ford project, Tracr was developed to ensure that diamonds entering the global market from poor West and Central African countries are not sourced from conflict zones, which indirectly prolongs armed conflicts by funding local warlords. Like rare-earth metal mining, diamond mining in some parts of Africa also has a problem with child labor which is being tackled with the deployment of blockchain implementation alongside IoT tracking.
Challenges Involved in Tracking Metals
Unlike diamonds, which move as individual pieces from mine to market, metals present an altogether different challenge for the monitoring project because they are often smelted together, at which point it becomes nigh on impossible to identify what came from where. To deal with this challenge, IBM says it is looking into the possibility of AI-aided chemical analysis to identify the geographical origin of cobalt so as to ensure that “clean” cobalt is not smelted with “dirty.”
The challenge of sanitizing the cobalt supply chain is particularly important because lithium-ion batteries are set to achieve an even higher level of demand as the world increasingly looks toward electric vehicles in addition to the vast number of everyday electronic devices which are dependent on lithium-ion cells.
According to RCS, the challenge posed by artisanal miners – unregistered local panhandlers – will be dealt with by bringing them into a blockchain network of validated participants so that it is possible to get a picture of who is mining what and where cobalt supplies are coming from.
Speaking to Reuters, IBM General Manager, Global Industrial Products, Manish Chawla said:
There is no fool-proof method, but you have to keep the ball moving forward, to keep raising the level of accuracy.
Binance has frozen some of the funds that were stolen from crypto exchange Cryptopia during the high-profile hack that occurred earlier this week.
Binance Puzzled Why Hackers Keep Sending Funds to its Exchange
Binance CEO Changpeng Zhao announced the news in an early morning tweet on Wednesday.
Just checked, we were able to freeze some of the funds. I don’t understand why the hackers keep sending to Binance. Social media will be pretty fast to report it, and we will freeze it. It’s a high risk maneuver for them.
I Dream Of Alts@ShaftedTangu
Hey @cz_binance Binance has stolen tokens from Topia hitting it sir. Can you lock it down? https://etherscan.io/address/0x99f9fc8852a1bedc914669e61040ad6fc3455442#tokentxns …
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Zhao questions why attackers keep on sending the stolen funds to Binance, given that word quickly spreads and the crypto exchange is not shy about halting the flow of stolen funds.
Cryptopia said in a tweet that the breach occurred on Monday. Based in New Zealand, Cryptopia said the hack caused it to suffer “significant losses.”
The breach moved at least $2.4 million worth of ethereum (ETH) to several unknown wallets. Also, it moved roughly$1.2 million worth of Centrality (CENNZ).
Still, it’s unclear who was behind the hack that resulted in the redistribution of the stolen funds through Binance and other exchanges. Some have even suggested that Cryptopia may have made the transfers for security reasons.
Cryptopia said Tuesday in a tweet:
We cannot comment as this matter is now in the hands of the appropriate authorities. We will update you as soon as we can.http://www.police.govt.nz/news/release/investigation-involving-crypto-currency-company …
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Investigation involving crypto-currency company
Police were advised late yesterday of an issue involving potential un-authorised transaction activity at the Christchurch based crypto-currency trading company Cryptopia.
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Zhao Creates His Own Debacle
The day after Cryptopia announced the hack, Zhao posted a message on Twitter that received considerable backlash. In that tweet, he appeared to advise crypto holders to store their holdings on exchanges instead of on personal storage devices like USB drives or hardware wallets.
That tweet did not sit well with some. Some took Zhao’s tweet to mean that the risk of self-storage is significantly greater than the risk of storing cryptocurrency on “reputable” exchanges like Binance, for example. However, Zhao later said he was not necessarily advising investors to store funds on exchanges.
Are Hacks Becoming the Norm?
CCN recently pointed out that more than $731 million was lost to exchange hacks in the first half of 2018 alone. Most of that loss, $500 million, resulted from the Coincheck hack of January 2018. There have not been any more exchange hacks on the scale of the 2014 Mt Gox hack of that upended the crypto space.
Still, breaches are a serious risk to the long-term stability and adoption of cryptocurrency. Continued breaches with basic hacking tools and methods could erode trust and confidence from investors in the public market.
Increasing rates of Chinese capital outflows over the past few months are presenting the cryptocurrency space with an unprecedented opportunity as citizens of one of the world’s most strictly regulated jurisdictions find ever more ingenious ways to get around financial movement restrictions.
China’s Capital Restriction Problem
In theory, China has perhaps the most stringent capital restrictions of any major world economy. Regulations state that individuals are not allowed to move more than $50,000 out of the country and companies are only allowed to exchange yuan for other currencies with approval from authorities. This is a rule that dates back to the era when Chinese industrialization was being developed under the principle of national self-reliance and conservation of scarce foreign reserves. These days, critics claim that such capital restrictions serve no purpose other than to coerce wealthy Chinese nationals to toe the communist party line under threat of losing their assets forcibly domiciled in the country.
In practice, even the Chinese government has a limit to how effectively or extensively it can enforce such regulations. Over the past 10 years, a vast number of Chinese elites have found ways to move their money abroad, with their extensive real estate holdings even becoming a subject of political controversy in Vancouver and London due to perceived inflationary pressure on local housing markets. This is not to mention a significant number of well-funded Swiss bank accounts held by Chinese nationals.
Opportunity For Crypto
While the central government with its tremendous surveillance capacity is not unaware of the various creative ways Chinese nationals use to export capital beyond the $50,000 limit, it is only likely to carry out a thorough crackdown in the highly unlikely event that foreign reserves become depleted. With over $1 trillion in American bonds on its books, such a scenario is extremely remote, and this creates a juicy opening for cryptocurrencies.
Chinese trade data from last month shows that capital outflows increased significantly. The last time a surge of this level happened, bitcoin embarked on a prolonged bull run starting from $200 and eventually culminating at its $20,000 all-time high as Chinese traders and exporters used cryptocurrency to move large amounts of money out of the country.
Going by last month’s trade data as well as the current rise of the Yuan, it is likely that over the next few months, Chinese money will make its way into crypto, which may herald the start of another Bitcoin bull run.
Another Federal Reserve president has spoken out on interest rates. Neel Kashkari says there is no need for interest rate hikes right now but that the US Federal Reserve does not exist to protect investors.
Though the stock markets are exhibiting “nervousness,” says Kashkari, investors have to figure out what to do next.
We are not here to protect investors from losses. This is a capitalistic economy we live in and if investors take risks, they should bear the consequences of those risks.
But, says the Minneapolis Federal Reserve chief:
We pay attention to the stock market.
No Reason to Apply Economic Brakes
Kashkari, echoing Atlanta Federal Reserve President Raphael Bostic’s recent comments, believes it’s time to stop interest rate hikes:
I don’t see any reason that we need to tap the brakes pre-emptively on the economy, let’s let the job market continue to strengthen and wages and inflation pick up and we can always raise rates then.
Bostic said last week that, amidst uncertainty:
The appropriate response is to be patient in adjusting the stance of policy and to wait for greater clarity about the direction of the economy and the risks to the outlook.
After a slew of interest rate hikes in 2017 and 2018 and a declining equities markets at the end of 2018, the US Federal Reserve took the pressure off the markets early this January. Federal Reserve Chair Jerome Powell said:
We will be patient as we watch to see how the economy evolves.
The markets responded, with five days of consecutive gains.
Federal Reserve United and Independent
Federal Reserve Vice Chairman Richard Clarida has since said the Federal Reserve could be “very patient.”
Kashkari’s comments on investors come in defense of US President Donald Trump’s attacks on the central bank. He says the Federal Reserve is “united” in its independence and focus on data.
Donald J. Trump
I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!
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Federal Reserve Chair Powell knocked back Trump’s criticisms as the market struggled in late 2018, saying he would not resign. The Federal Reserve is an independent body, and despite Trump’s comments, he cannot fire Powell or force him to quit.
With further interest rate hikes in the near future now very unlikely, investors appear more confident despite other concerns. The Dow Jones Industrial Average ended the day up 141 points or 0.59%.
CCN had a chance to speak with Paul Puey, founder of Edge Wallet and veteran crypto entrepreneur. Edge Wallet was previously called Airbitz. In the early days of crypto, Airbitz was a Bitcoin-only wallet that featured a directory of brick and mortar businesses which accepted Bitcoin. It was one of the only mobile wallets which allowed the user to own their private keys without having to see them.
While it was very popular as Bitcoin wallets go, the era of Ethereum and beyond made it necessary to adapt to people who expect to be able to use more than one cryptocurrency.
Edge is AirBitz for the Multi-Asset Age
Today, its descendant is called Edge, a modern multi-asset wallet, modular in design, which is focused on user-friendliness.
Puey says that the Airbitz codebase was so ingrained in the Bitcoin architecture that they had no choice but to rebuild much of it from scratch, keeping intact the core security model: Edge servers never see your private key, you own your coin and can take your private key with you between devices and even wallets.
The security model is what we rallied around. It was contrary to a lot of the enterprise models. So we called it the Edge security model of securing data. When we transitioned to Edge, we said this is the model we’re going to use, while also making it a platform for other apps to use.
Puey also explains during the call that while the business directory was one of the most popular features of Airbitz back when it took a lot of manpower to maintain. “As soon as we added one Bitcoin business, three more would stop accepting it – and we wouldn’t even know about it,” he tells us.
“You could find out pretty easily when a company started accepting cryptocurrency, but nowhere could you find out when a merchant stopped accepting it.”
CCN remembers a very notable example of this: Rakuten made headlines across the cryptoworld when it acquired a Bitcoin wallet company and integrated Bitcoin on its flagship store. Then one day it stopped accepting crypto and no one noticed. Same thing with Expedia and others.
In-Person Crypto Usage Still Ways Off
This sparks a discussion about the lack of in-person adoption of cryptocurrencies. Puey believes that the real problem is reliable point-of-sale systems which seamlessly integrate cryptocurrencies.
Businesses don’t want to have to care about what method of payment their customers are using. They want convenience and integration with their existing inventory and business management systems. Puey believes that a crypto-native firm, rather than a firm already embedded in the point-of-sale industry, will be the ones to make this a reality.
Where we are today is definitely not where we expected the industry to be from the perspective of merchant adoption when we entered the space back around 2013/2014. While we believe firmly that that is how we will interact with crypto going forward, we’ve realized we’re in a different phase. It is in a phase of speculation because, number one, many people just don’t know what will succeed. Sure, Bitcoin’s on top, but there are a whole lot of bets saying it could be another currency. And in that sense, people have a little bit of discomfort saying well, okay, we’re going to really hang our flag on this or that one.
Acceptance Is Only the First Part of the Merchant Conundrum
This reporter said that FIO (Foundation for Interwallet Operability) should help with businesses having to choose a cryptocurrency. Puey disagreed, saying that while FIO might make it easier to accept funds, it doesn’t make it easier to integrate cryptocurrencies into a business model. He said:
This is the biggest answer to your question. The biggest missing piece in merchant adoption is that there are no tools to incorporate cryptocurrency into their entire business model. The point of sale is only the start of it. And even there, there are no great options available.
The essence of the thing is that the killer app for merchants will be a superior point-of-sale system that can do it all – to include dealing with the post-payment aspects of accepting cryptocurrency. Some grand combination of Node40, a cash register, and a smart payment kiosk which supports all relevant forms of payment is required.
Simply developing such a product would not be enough, either. The merchant would also have to see an advantage in using it – such as lower fees and a wider customer base. While it’s far from impossible, in today’s market it simply isn’t where the focus is.
Augur Uses Edge
Puey says that Augur makes use of Edge code without Augur users necessarily needing to know as much. Augur is not their only partner, but it’s one of their more recognizable name brands.
On the business-to-business side of things, Edge is a code development powerhouse, creating enterprise-grade software on a security model that is philosophically consistent with crypto natives. They work on the borderline: users can be their own bank but still have a degree of convenience that’s hard to attain with standard wallet implementations.
One of our flagship partners, Augur, integrates our Edge platform inside of their app. It lets people use Augur much like Airbitz, where you just create an account and login. Private keys are created, encrypted, and backed up automatically.
He says that Edge is infinitely expandable at this point. Blockchain development teams can use the Edge SDK to build mobile products. Edge can more easily integrate new blockchains than it could have in the Airbitz days, when even forks of Bitcoin were hard to do.
Every blockchain is now a plugin. In most cases you can just find another blockchain that’s similar to it, copy and paste, and change the code to query that blockchain, and create and sign transactions on it.
Being open source, companies are able to use a white label version of the product, and Puey says that several currently are.
Core Member of the Foundation for Interwallet Operability
Edge is part of the Foundation for Interwallet Operability, along with wallets like Mycellium and BRD. As we previously wrote about FIO:
The Foundation for Interwallet Operability is a standards body of sorts and it governs the FIO Protocol, a protocol that “will provide an enhanced layer of usability features for existing and future wallets and exchanges.” Its goal is to increase blockchain adoption and the userbase of cryptocurrencies generally by encouraging ease-of-use of lack of friction in wallet and exchange designs.
Puey says of Edge’s membership in FIO:
As one of the founding members of FIO, all of the wallets that are founding members are getting the implementation of FIO added to the wallet. So by the time it hits mainnet, you’ll have FIO support on almost half a dozen major wallet sin the industry. […] The idea of sending to a name is not a new idea in the industry. Many different projects have tried to do this. But their biggest issue is they had a faltering on business development. They didn’t convince the industry to adopt those standards. And I think this is what FIO did right. They really focused on the business development.
Enabling Easier Acquisition and Storage of Cryptocurrencies
Edge, since it was called Airbitz, has always focused on the user experience. Their core belief is that mass adoption doesn’t happen when the user is required to do too many things they are not used to doing.
They strive to serve as many use cases as possible. The Edge wallet integrates Changelly and other exchange platforms. It also has Simplex, which enables users to acquire cryptocurrencies with credit cards and bank accounts.
Puey says when a user goes to make an exchange, the wallet will figure out which platform is best to use for their use case. It checks between Changelly, ShapeShift, and ChangeNow to see which service will best meet the user’s needs. Users who don’t want to create accounts are directed to exchanges that don’t require them, although Puey says most will in the long run. While Edge is not the only wallet to have built-in exchange capabilities, it is one of the few which US users can use with no friction.
Edge is available for Android and iOS. It is not available for the desktop at present time, although its open SDK could be used to develop a wallet for desktop compatible with Edge private keys.
According to a report from Credit Karma, US bitcoin investors who decided to exit the bitcoin market lost $1.7 Billion. Unrealized losses, belonging to those who didn’t sell, account for $5.7 billion.
Credit Karma GM Jagjit Chawla believes many Americans don’t know they can qualify for a crypto tax reduction as a result of their losses.
“Even though those who sold their bitcoin at a loss can typically claim a tax deduction we found that before taking our survey, 61% of respondents who lost money on bitcoin didn’t actually realize they could get a tax deduction for bitcoin losses.”
A US citizen who locks in their crypto losses could claim up to $3,000.
Anything over that amount can be carried over to next years’ tax returns, offsetting potential gains tax.
Selling Bitcoin “a Taxable Event”
Many bitcoin investors and traders don’t know that selling bitcoin could be considered a taxable event. While most people are aware of the potential ramifications of underreporting income, what many don’t know is that not reporting losses could result in missing out on valuable deductions.
With crypto investors suffering losses throughout 2018 as prices fell by up to 90%, this seems fairly important.
TaxToken – Streamlining Crypto Tax
TaxToken is a BaaS startup that assists investors and traders keep track of their crypto tax.
Incorporating blockchain technology and artificial intelligence, TaxToken can automate the crypto tax filing process.
This means quick, easy, and mistake-free crypto tax filing.
TaxToken co-founder Nathan Nichols recognizes the issues many people have had when dealing with crypto tax.
“TaxToken was founded on one principle – it shouldn’t be difficult to file your cryptocurrency taxes. TaxToken is humbled and excited to officially launch our cryptocurrency accounting software and play our role in developing the blockchain ecosystem.”
By automatically syncing with users exchanges and wallets, TaxToken provides an easy to use system that imports ICO’s, trade history, airdrops, mining, and payments.
The information is then available on an easy to read dashboard that offers users a complete review of their transactions, which are available for download.
The Credit Karma report suggests that investors who are made aware that they can deduct losses are more likely to take the steps needed to file their crypto tax, even if they lost money.
After shelving a focus on processor chips for the cryptocurrency mining market, Nvidia is looking to robotics and artificial intelligence for future success.
Nvidia’s Seattle Robotics Research Lab
Nvidia has officially opened a 13,000 ft. robotics research lab in Seattle. The lab will have 20 Nvidia roboticists as well as 30 academic experts.
The lab is working on a dozen robotics projects including “cobots” that will work alongside humans.
Heading up robotics for Nvidia is Dieter Fox, a researcher, and professor in robotics. He says:
“We want to develop robots that can naturally perform tasks alongside people.”
The lab has a specially designed IKEA kitchen to test its “kitchen manipulator” robot that utilizes AI and deep learning to perform tasks.
“By pulling together recent advances in perception, control, learning, and simulation, we can help the research community solve some of the greatest challenges in robotics.”
And of course, sooner or later this will translate into Nvidia products. Robotics and AI is a longer game than Nvidia’s last jump into cryptocurrency. This foray was achieved by focusing its existing chip-making capabilities to mining. Nvidia stepped back out of its cryptocurrency focus in 2018
Nvidia has an AI research lab in Toronto, Canada as well as 200 scientists under its NVIDIA Research umbrella. These experts are also working on computer vision, self-driving cars, and graphics.
Chipmaker Nvidia Worst Performer on the S&P 500 Last Year
Nvidia struggled towards the end of 2018 amidst lower demand for its graphics processor unit (GPU) mining chips. It joined technology stocks and the wider markets in a troublesome end to 2018.
There are reports that SoftBank could sell its stake in Nvidia. By late December Nvidia’s share price was 54% down, making it the worst performer on the S&P 500. Its data center product sales to cloud providers like Amazon failed to meet expectations. Nvidia’s share price had previously risen over its AI and Crypto hype.
Semiconductor stocks are under pressure with Samsung reporting falling chip sales. Though there has been some rebound from December lows Todd Gordon from Trading Analysis said this week:
“The bounce back in the semis since the lows has been a little bit of an underperformance compared to the Nasdaq.”
Gordon is recommending shares in Advanced Micro to investors; however Erin Gibbs of S&P Global Market Intelligence says Nvidia stock may be in for a comeback:
“I actually like Nvidia, and one of the reasons is because it’s so beaten up it really looks unlikely for [Nvidia] to get much cheaper at this point. We’re looking at about 50 percent profit growth for 2019.”
Though Gibbs also warns that the semiconductor space as a whole has flipped from a 5% rise in expected profits six months ago to an expected fall of 7%. She added:
“Overall, the semiconductor industry is the one industry that we do not recommend to buy.”
It’s a “Buy” for Nvidia Shares
William Stein, an analyst at Sunset Robinson Humphrey, is bullish on both the semiconductor industry and Nvidia believing the outcome of trade talks between the U.S and China will make a difference. Stein says:
“We believe a constructive resolution will lift semis, but a delay or destructive resolution will take most lower.”
Stein believes Nvidia stands out as a growth opportunity in the semiconductor space. And, that the release of the Nvidia’s GeForce RTX 2060 gaming graphics card will boost the company’s earnings.
Overall, according to CNN, analyst’s consensus on Nvidia stock is to buy. With 22 out of 37 confident in the stock. Earnings reports from Nvidia are expected on February 13.
Nvidia is not the only technology corporation looking to new markets to boost performance. Amazon is reportedly developing a new game streaming service to compete with Microsoft and Google.
According to multiple sources, BNP SA, known by many as the largest bank in France, reportedly made a loss of $80 million in derivative trades connected to the United States.
The sources confirmed that Antoine Lours, the Head of U.S index trading at BNP, is yet to return to his position at the bank. Lours has been away on vacation since Christmas when he initiated trades on the S&P 500 Index.
Increasing tensions between the United States and China over tariffs and trade disputes caused U.S stock prices to slump over the holiday. Although the stocks did regain their ground, the high volatility concerned many traders and investors, causing massive stock selloffs.
U.S. Trading Desk Shutdown
It hasn’t been the perfect start of 2019 for BNP Paribas. In addition to the $80 million lost over trades gone awry, the bank will close down its U.S. commodities derivatives desk. The commodities division consisted of 16 traders who traded commodities such as agricultural products, metals, and energy. The decision to close is in line with an earlier decision made by the bank to cease financing oil sands and shale projects.
According to an unnamed source, the decision indicates a series of adjustments made by the bank, aiming at protecting its profitability.
Jean Pierre Lambert, Analyst at London-based Keffe, Bruyette & Woods, said:
“The bank seems to be adopting enhanced discipline on costs and profitability at its markets activities.”
Opera Trading Desk
The bank will also be shutting down Opera Trading Capital, its proprietary trading division. The division, which makes risky bets with BNP’s capital, is being shut down after last year’s market volatility saw it struggle to make profits. The business is reportedly funded with over $600 million. The bank is reportedly closing it so its resources can be reallocated to client-focused businesses.
Major Banks Call Grim Results
BNP’s key trading business saw a 10% drop in revenue over three-quarters of 2018, while Citigroup Inc. also reported a 21% drop in trading fixed income, commodities and currency on Monday. JPMorgan Chase &Co. followed on Tuesday, claiming that its trading business was greatly affected by “challenging market conditions.”