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General News

Global Stocks Retreat from Record Highs; Dollar Extends Gains

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By Hussein Sayed, Chief Market Strategist at FXTM

 

Equity markets kicked off 2021 on a solid footing. Investors clearly shrugged off the global surge in coronavirus cases and the US Capitol riots. Instead, the focus remains on vaccine optimism and massive stimulus that may come with a Biden administration that is backed by the House and Senate.

 

Last week President-elect Joe Biden promised a hefty stimulus rollout worth trillions of Dollars, which we will learn more about on Thursday when details are announced. That had greater influence on markets than the surprising 140,000 job losses in December that we saw in Friday’s Non-Farm Payrolls report.

 

Expect markets to continue ignoring the political turmoil in Washington as Democrats, with the support of some Republicans move toward impeachment proceedings against President Donald Trump as soon as today.

 

What cannot be ignored is the rise in US government bond yields. Last week alone, US 10-year Treasury yields rose 20% making a high of 1.125%. This move in bond yields will likely prompt investors to re-think their strategies for 2021, especially if we see a bigger upside move in the weeks and months ahead.

 

The equity rally seems to have paused at the start of the week. Futures of all three US major indices are pointing towards a pullback today after all reached new records on Friday. While it is extremely difficult to call for a correction in the current environment in which a synchronised combination of fiscal and monetary policies is taking place, investors need to start thinking about protecting their portfolios.

 

What we are experiencing in equity markets might not be a bubble similar to the one in late 1999, but there is no doubt that valuations are extremely overstretched. Negative real interest rates have encouraged this massive flood into almost all asset classes, particularly growth stocks, low rated corporate debt and even cryptocurrencies as of late.

 

The higher bond yields go from here the more difficult it becomes justifying a P/E multiple of 40 on the Nasdaq 100 or a 1.5% dividend yield on the S&P 500. If the Federal Reserve does not take steps to increase purchases of longer-term maturities, we could have 10-year yields well above 1.5% by year end. This means US inflation data is likely to become the most watched indicator over the coming months. According to US 10-year break-even rates, markets now expect inflation to be above 2% on average. While the Fed does not seem in a hurry to raise interest rates, shifting economic dynamics may force them to act sooner rather than later.

 

Shorting the Dollar was the most recommended trade in currency markets heading into 2021. However, rising yields could now lead to a rethinking of this strategy. If the yield curve becomes steeper and differentials become much wider, expect to see a strong recovery in the Dollar despite the new billions in expected stimulus. According to the latest CFTC data, we are already seeing a trimming of long positions in major currencies against the Greenback.


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Ugo Onwuaso is an ICT enthusiast. He believes technology should be used for general good. He holds a Master of Public Administration (MPA) degree from the Lagos state University. Dear Reader, Your support matters. But we believe that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. That is why, we have devoted our energy to independent reportage of technology and finance and how they affect lives. Our incisive and analytical view of how technology news affects the daily life help individuals and organizations make up their minds. Quality journalism costs money. Today, we're asking that you support us to do more. Kindly support our effort to deliver technology and finance journalism to everyone in the world. Donate as little as N1,000. Bank transfers can be made to: UBA Plc 1017156876 Communication Week Media Ltd

General News

OpenAI Sues Elon Musk Claiming Bad-Faith Tactics

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OpenAI is suing Elon Musk over claims he has tried nonstop to slow down its business for his own benefit.

OpenAI Sues Elon Musk Claiming Bad-Faith Tactics

Elon Musk

The company accuses the Tesla boss of using “bad-faith tactics” against OpenAI to help him control cutting-edge AI technology.

Musk sued OpenAI chief executive Sam Altman last year in a bid to stop him from changing its corporate structure. Mr Musk co-founded OpenAI with Mr Altman but left several years ago.

Meanwhile reporters has approached his lawyer for a response to OpenAI’s lawsuit, which was filed on Wednesday.

The countersuit opens up a new front in the high-stakes battle between two Silicon Valley heavyweights.

“Elon’s nonstop actions against us are just bad-faith tactics to slow down OpenAI and seize control of the leading AI innovations for his personal benefit,” “Today, we countersued to stop him.”

Last week, a federal judge in Oakland, California, set a March 2026 trial date in Mr Musk’s suit in a bid to fast-track the legal fight.

US District Judge Yvonne Gonzalez Rogers previously declined to grant Mr Musk an injunction that would temporarily halt OpenAI’s conversion from a non-profit to a for-profit company.

She also said that she expected Mr Musk to give evidence in the case.

Musk alleges that OpenAI strayed from its founding mission as a non-profit to develop AI for the benefit of humanity and is therefore in breach of contract.

He left the company in 2018.

“This is about control. This is about revenue. It’s basically about one person saying, ‘I want control of that startup’,” said Ari Lightman, professor of digital media and marketing at Carnegie Mellon University.

Lightman said it has been a distraction from making AI safe and equitable.

“That takes a backseat with all this rigmarole over control and monetization,” Lightman said.

OpenAI claims Musk has “been spreading false information about us,” in a X post on Wednesday, adding “Elon’s never been about the mission. He’s always been about his own agenda.”

Musk’s xAI is a competitor to OpenAI, but has so far lagged behind. Last month, xAI aquiired Musk’s social media platform X formerly Twitter.

Musk claims the combined company, XAI Holdings, is valued at more than $100 billion.

In February, Musk made an unsolicited bid for OpenAI, offering to buy it for $97.4 billion, which Mr Altman rejected by posting: “no thank you but we will buy twitter for $9.74 billion if you want.”


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General News

FG Unveils e-Visa, Digital Entry Cards to Strengthen Border Security

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In a major step toward strengthening border security and modernising travel protocols, the Federal Government has announced the introduction of automated landing and exit cards as part of its wider e-Visa solution. The new system, set to take effect on May 1, 2025, aims to eliminate travel bottlenecks while enhancing national security.

The initiative was unveiled during a joint press briefing held in Abuja on Wednesday by the Minister of Aviation and Aerospace Development, Festus Keyamo and the Minister of Interior, Dr. Olubunmi Tunji-Ojo.

The ministers emphasised that the project is a collaborative effort involving key agencies, including the Nigeria Immigration Service (NIS), the Federal Airports Authority of Nigeria (FAAN), and the Nigeria Civil Aviation Authority (NCAA), all of which will play a critical role in the rollout of the e-Visa and the new digital travel documentation.

“What we are doing here today is a further testament to the determination of this government to foster cooperation between key ministries that have mandates that overlap,” Keyamo stated. “Today is another example of that kind of cooperation and collaboration, and this has to do with the introduction of the e-Visa.”

Speaking on the importance of the new initiative, Minister Tunji-Ojo highlighted its significance to Nigeria’s security framework.

“This initiative has a very serious effect on our national security architecture. Prior to now, we have always had the exit and landing card in a manual way — travellers had to fill a paper form. But now the narrative has changed with the introduction of the e-Visa and automated exit and entry cards,” he said.

He explained that the process will now be completed digitally before boarding, with travellers required to fill out the landing and exit cards online and present them to airlines before being allowed to board.

“Nigeria is a country of 230 million brilliant people and we have to lead in terms of technology. In view of that, we are automating the visa process. The responsibility of coordinating and issuing regulations to the airlines lies with the NCAA,” Tunji-Ojo added.

“This shows our commitment to the protection of our country, to border security, and to ensure that our sovereignty as a nation is well respected.”

The interior minister further noted that the e-Visa system is designed not only to strengthen border controls but also to simplify entry processes for visitors.

“The e-Visa will make it easier for people to come into Nigeria while enhancing the security of our country,” he said.

 


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General News

AFD Commits €3m to Africa’s Financial Inclusion

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The Agence française de développement (AFD) is contributing an additional €3 million to the African Development Bank (AfDB)-managed Africa Digital Financial Inclusion Facility (ADFI) to help accelerate financial inclusion in Africa.

The additional funding brings the total amount to €5 million, with the goal of assisting the ADFI partnership in catalysing digital financial solutions across Africa by increasing investment in scalable and replicable initiatives that provide access to credit and other financial services that promote investment and entrepreneurship in underserved communities.

Recent data from the AFD suggest that about half of the continent’s adult population, notably women, youth, farmers, small businesses, and rural communities, do not have access to digital financial solutions.

The ADFI, founded in 2019 by the AfDB, the Gates Foundation, and the Luxembourg Ministry of Finance, aims to accelerate the mobilisation of financial and human resources to align financial systems with the United Nations’ Sustainable Development Goals, ensuring that vulnerable populations, particularly those in climate-affected regions, have access to financial tools that will help them adapt and thrive.

Mohamadou Ba, head of the AfDB’s financial intermediation and inclusion division, commented: “Digital financial solutions are key to improving the quality of life of people in Africa and reducing the gender access to finance gap. We welcome the Agence française de développement’s renewed support of the catalytic role ADFI has been playing in accelerating greater access and usage of digital financial solutions and financial inclusion across the continent.”

Audrey Brule-Françoise, head of AFD’s financial systems division, added: “Developing digital financial services is a key pathway to reach financially excluded populations in Africa.”


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