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- View Full Coverage on Google News
Tag Archives: Booming
South Korea’s booming arms industry rolls out the big guns in bid for global reach
Changwon, South Korea
CNN
—
With a blinding yellow flash and a concussion that shakes bones, K9 self-propelled howitzers launch artillery shells onto a hill that’s just been hit by rockets fired from helicopters. Then K2 tanks roar in, speeding up roads and firing as they go.
This is part of DX Korea, a four-day South Korean defense expo held in September at a firing range in Pocheon, about 30 kilometers (18.6 miles) from the North Korean border.
The display – presented to a crowd of 2,000 people including military officials from more than two dozen countries – is one way South Korea sells weapons.
And President Yoon Suk Yeol wants to sell more of them – enough for Seoul to jump four places up the ranks to become the world’s fourth-biggest arms exporter.
“By entering the world’s top four defense exporters after the United States, Russia and France, the (South Korean) defense industry will become a strategic industrialization and a defense powerhouse,” Yoon said.
To do that, South Korea will have to outsell – in ascending order – the United Kingdom, Italy, Germany and finally China, which held 4.6% of the export market in the 2017-2021 period, according to the authoritative Stockholm International Peace Research Institute (SIPRI).
That’s no easy task, yet Seoul is already well on its way. From 2012 to 2016, it had just 1% of the global market. It more than doubled that in the following five-year period, capturing 2.8% – by far the largest increase among any of the world’s top 25 arms exporters.
In 2021, it sold $7 billion worth of weapons overseas, according to the Export-Import Bank of Korea.
And the South Korean defense industry believes it has the arsenal to grab an even bigger slice of the pie.
South Korea’s weapons exports have ballooned in recent years, but the country has been building its arms industry for decades, spurred on by its troubled relationship with its northern neighbor.
As of 2020, military expenditures represented 2.8% of South Korea’s gross domestic product, according to SIPRI, well above the 2% threshold considered a minimum by many US allies.
“The North Korean threat has given us a good reason, a motivation to make sure that our weapons are very good,” says Chun In-bum, a former lieutenant general in the South Korean Army.
Technically, the Korean War never ended, because the document that stopped the combat in 1953 was an armistice, not a peace treaty.
In the first decades after the fighting ended, South Korea’s defense was heavily dependent on American troops and weaponry.
Things began to change in the 1970s, when the US was distracted by the war in Vietnam and the Cold War with the Soviet Union.
South Korea began to take more responsibility for its own defense and invested $42 million in US military aid in factories to produce M-16 rifles, according to the Korea Development Institute (KDI).
By the end of the decade, Korean researchers under the direction of the country’s National Defense Science Institute had succeeded in making all basic weaponry, according to a 2014 KDI report.
With the ever-present threats from the North, Seoul initiated a National Defense Tax to pay for the development of a modern military, including the armored systems and other military equipment that Korean defense companies are marketing today.
Back on the hillside after the live-fire demonstration, prospective customers listened intently to the pitches of the South Korean representatives.
Delegations had arrived from as far afield as Mexico, Thailand, Nigeria and the Philippines. An Indian general asked for the ranges of a weapon on display. Qatari officers inspected a K2 up close.
Conspicuously, none of the potential customers were from Ukraine.
But that doesn’t mean South Korea’s arms industry isn’t seeing a role in Ukraine’s war with Russia.
A US defense official told CNN this month that Washington intends to buy 100,000 rounds of artillery ammunition from South Korean arms manufacturers to provide to Ukraine.
The rounds will be transferred to Ukraine via the US, allowing Seoul to stick to its public pledge that it would not send lethal aid to the war-torn country.
In a statement issued after the planned purchase was first revealed in The Wall Street Journal, the South Korean Defense Ministry said it had not changed its position on shipping weapons to Ukraine, and that it believed the “end user” of the ammunition was the US.
Russian President Vladimir Putin had said late last month that South Korea had decided to send “arms and ammunition” to Kyiv, which would “ruin our relations” with them – a claim denied a day later by President Yoon.
A South Korean presidential decree that enforces the country’s Foreign Trade Act says its exports can only be used for “peaceful purposes” and “shall not affect international peace, safety maintenance, and national security.”
South Korea is also a signatory to the United Nations’ Arms Trade Treaty, ratified in 2014 with the intention of keeping close control on who gets weapons and under what conditions they can be used. Ukraine is a signatory but hasn’t ratified it.
But the planned US ammunition transfer isn’t the only way the influence of South Korea’s arms industry will be felt in Ukraine.
In September, South Korea signed a deal with Poland for its biggest arms sale ever, in which it will supply Warsaw with almost 1,000 of Hyundai Rotem’s K2 tanks, more than 600 of Hanwha’s K9s, and dozens of fighter jets from Korean Aerospace Industries.
The deal will enable Poland to replace many of the weapons that Warsaw has sent to Kyiv.
“Poland needed weapons to defend themselves, and that’s exactly what we’re providing,” Chun says. “We Koreans understand that without weapons to defend yourself, the end result is a tragedy.”
The constant threat of a North Korean attack is one reason military production lines were established in the southern port city of Changwon, the cradle of South Korea’s modern arms industry.
The city is in a natural basin, surrounded by mountains on all sides, making it easier to defend. The city’s main road, Changwon-daero, has a 14.9-kilometer (9.25-mile) stretch that can double as a runway in times of national emergency.
At its southern end is the Changwon National Industrial Complex, established in the 1970s and home to the Hanwha Defense and Hyundai Rotem factories, where artillery pieces and tanks trundle off the assembly lines.
Overseas orders are rolling in this year, notably the landmark deal with Poland which the Korea Defense Industry Association estimates to be worth $15.3 billion.
Hanwha puts its share of that agreement at $2.4 billion, its largest contract for the K9.
Poland is one of nine countries – alongside South Korea, Turkey, Finland, India, Norway, Estonia, Australia and Egypt – to buy the howitzer from Hanwha.
Lee Boo-hwan, an executive vice president of Hanwha Defense’s overseas business division, says the company wants to be a long-term partner to countries that buy its weapons. To that end, it is setting up new manufacturing facilities in Australia, Egypt and Poland.
“My workers are very happy to share our technology,” Lee says. “It is our main strategic focus to enter (new) markets.”
It’s also about continuously updating and improving the product, he says, and that’s happening inside South Korea.
The company has already prototyped the K9A2 tank, which situates the crew outside the turret to make them less vulnerable to attack, and is developing “a more futuristic, next generation version,” Lee says.
“It is fully automated operation, unmanned platform,” with artificial intelligence to let it learn on the battlefield, he says.
At a sprawling, modern complex in Changwon, Hanwha’s robots churn out the artillery pieces for K9s at the rate of one unit every three to five days.
A combination of robots and humans combine on a seven-station assembly line to put together what will eventually be 47 metric tons of steel, machinery and electronics.
One robot, more than two stories high, welds the turrets, the brightness of the white-hot procedure lighting up the cavernous assembly building.
Further down the line, another robot bores holes in the green-painted steel, switching bits automatically as it goes about its work with an accuracy of 1/100th of a millimeter, thinner than a human hair, according to a Hanwha Defense official.
Once the robots are done, it is the turn of Hanwha’s workers. Each hull as it goes along the line bears the pictures of 11 of them.
“We provide excellence by name,” says Lee, the Hanwha executive vice president.
At each assembly station, there’s a “tollgate,” with green, yellow and red lights. Any worker can stop the line with a red light and summon engineers if they spot a problem.
At the final stop is the bore sighting, where the accuracy of the K9’s gun is tested on a target at the far end of the workspace.
The completed units then go outside for performance testing, causing the ground to vibrate as they roar along a paved road near their top speed of 67 kilometers per hour (42 mph).
Test drivers spin the tracked howitzer one way then the other, the rubber pads on the tracks leaving donuts on the concrete.
As the drivers put the units through their paces, Lee explains how Hanwha customizes K9s for its overseas customers: those bound for northern climates like Norway get extra heat sources for the crew; those made for hotter places like India or Egypt get more air conditioning. Some of the factory’s K9s are headed for Poland this year.
Jack Watling, senior research fellow for land warfare at the Royal United Services Institute in London, says South Korea is the perfect testing ground.
Its seasons range from deep-freeze winters to monsoons and summer heat of 30 degrees Celsius or higher – and it has both flat and mountainous terrain.
“That is a pretty unique set of complex variables in terms of having a vehicle that’s reliable across climatic conditions,” Watling says.
And that’s attracted foreign buyers, he says.
Just a few miles from where the K9 artillery pieces are being tested, the K2 tanks at the Hyundai Rotem factory are being put through their paces.
Again, the latest customer is Poland.
“This is our first time directly exporting our (K2),” says Kim, the Hyundai Rotem VP.
Orders from South Korea’s military keep the K2 assembly line busy enough – but the Polish order means Hyundai Rotem can add capacity.
This is essentially like buying a new car off the lot. In the tank world, you can’t quite drive your new K2 home that day, but you get the idea.
“The most important thing is that it is currently being produced,” Kim says.
Hanwha Defense has its eyes on one market in particular – the United States, the world’s largest defense market.
“We want to enter the US market with support from a US local company and also, we want to contribute to the US Army and the US local defense industry,” says Lee, the Hanwha VP.
In 2021, US military spending was $801 billion. But South Korean weapons and ammunition exports to the US accounted for only $95 million, according to the US Commerce Department.
Overall, US military spending was more than the next nine countries combined, according to SIPRI. South Korea ranked 10th.
But the South Korean defense industry should be seen as a partner that complements its American counterpart, rather than competes with it, Chun says.
That massive US military budget includes huge expenditure on top-shelf items. That’s not what Seoul is selling, he points out.
“There are portions of a spectrum of weapons that the United States does not make, because they feel they don’t need to. It doesn’t make a profit for their industry. That’s what we’re targeting. The systems that we have sold to Poland are exactly those kind of systems,” he says.
“I’m hoping that the United States understands that this is a partnership,” Chun adds.
“The United States makes the greatest and best weapons in the world,” he says, “but they don’t make all of them.”
Some Surprising Good News: Bookstores Are Booming and Becoming More Diverse
Many stores have also seen a bump in profits. In a survey of booksellers earlier this year, the association found that some 80 percent of respondents said they saw higher sales in 2021 than in 2020, and nearly 70 percent said their sales last year were higher than 2019, Ms. Hill said.
At Blue Willow Bookshop in Houston, revenue was up by 20 percent in 2021, and the store made more money last year than it did in 2019, according to the owner, Valerie Koehler. Mitchell Kaplan, the founder of Books & Books, an independent chain in South Florida, said sales were up more than 60 percent in 2021 compared to 2020.
Many of the new stores that opened during the pandemic are run by nonwhite booksellers, among them The Salt Eaters Bookshop in Inglewood, Calif., which specializes in books by and about Black women, girls and nonbinary people; the Libros Bookmobile, a Latina-owned mobile bookstore in a converted school bus in Taylor, Texas, which stocks fiction in Spanish and English, and Reader’s Block, a Black-owned bookshop in Stratford, Conn.
Terri Hamm decided to open Kindred Stories in Houston, when her daughter, who is now 14 years old, said she was bored by the books her mother was bringing her home to read. An avid reader, she gravitates toward books about Black girlhood.
“It dawned on me that she didn’t have a space in Houston to discover and explore all the amazing works in the market that are written by Black voices,” Ms. Hamm said. “There wasn’t a space curated with her in mind.”
The rapid growth of physical bookshops is especially surprising at a time when brick and mortar stores face crushing competition from Amazon and other online retailers. Many bookstore owners are also confronting new uncertainty from a grim outlook for the overall economy — labor shortages, supply chain snafus, rising rents and interest rates, higher costs of goods, and a looming recession that could drive down consumer spending.
China Plans New Restrictions in Its Booming Live-Streaming Sector
SINGAPORE—China is planning new curbs on the country’s $30 billion live-streaming industry, according to people familiar with the matter, renewing a regulatory campaign aimed at reining in technology companies and exerting greater influence over the content consumed by its young people.
Chinese authorities are drafting new regulations to cap internet users’ daily monetary spending on digital tipping, said people familiar with the situation. Officials are also planning to set a daily limit on how much live-streamers can receive from fans and are considering imposing tighter censorship over content, some of the people said.
Metaverse is booming, bringing revolution to real estate
Mark Zuckerberg might claim the Metaverse is the future — but in the eyes of others, the future has already begun. Science fiction author Neal Stephenson coined the term “Metaverse” back in his 1994 novel, Snow Crash. Within the pages, the main character, Hiro Protagonist, navigates through the virtual world.
Since 2003, millions have also worked, played and socialized in the Metaverse within the online Second Life world. While the game, with a heyday in the first decade of the 2000s and featuring some blocky graphics is a far cry from the modern Metaverse vision laid out by companies like Meta and Microsoft, the idea of a virtual metaverse where people interact is not a new idea.
Currently, Decentraland is arguably the most well-known modern-day metaverse, incentivizing a global network of users to buy and sell digital real estate, explore, interact and play games. The Decentraland Foundation came into existence in 2015 and the project’s initial coin offering (ICO) in 2017 netted about $26 million at the time. While Decentraland is expansive and features plenty to do, the platform has drawn many eyes to the lucrative, and ever-growing digital real estate industry.
On Nov. 25, media reports revealed the nonfungible token (NFT)-based Metaverse Group real estate company bought a plot of Decentraland “land” for $2.43 million to help with plans to get into the digital fashion industry.
Related: What is metaverse in blockchain? A beginner’s guide on an internet-enabled virtual world
Metaverse monetization shaking up the real estate industry
It’s becoming increasingly clear that commercial real estate in the metaverse is going to play a huge part in the global real estate industry in the years to come. In fall 2021, Tokens.com inked a letter of intent to buy a 50% stake in a digital real estate portfolio owned by Metaverse Group, which then plans to market the offerings as the first REIT for digital real estate. The Metaverse Group believes that a public listing could come in 2022 or 2023.
The popularity of buying and selling digital property means companies like the Metaverse Group work, for the most part, on the same type of tasks related to buying, selling and marketing as a traditional real estate company. As prices rise and buyers seem frenzied over virtual land — some express skepticism that investing in digital real estate will prove to be prudent down the road.
Related: Blockchain metaverse ecosystems gain traction as brands create digital experiences
Yet despite the high prices, interest in metaverse real estate continues to grow, especially as the coronavirus pandemic has driven more people online and made them more apt to virtually socialize. Those interested in metaverse real estate also have competition, namely celebrities who have not been shy about touting their digital real estate activity.
In late September, The Sandbox announced a partnership with legendary rapper Snoop Dogg to set up his mansion and NFT collection in the metaverse. In the next month, Paris Hilton struck a partnership with Decentraland and Genies to serve as one of the main artists of the first Metaverse Festival that took place in late October.
How real estate investors are pivoting to virtual properties
The attention and interest given to the Metaverse have not escaped other companies besides Meta, formerly Facebook, and Microsoft, who are also eager to jump in on the action.
Like traditional real estate which often maintains value even during tough economic times, metaverse properties continue to boom despite ebbs and flows with Bitcoin (BTC) and other cryptocurrencies.
The popularity of NFTs coupled with increased interest in online environments contrasts with the limited amount of land in virtual worlds within the metaverse — keeping prices high. For example, Decentraland has only 90,000 land pockets.
Related: NFTs find true utility with the advent of the Metaverse in 2021
Investment firms are even dipping their toes into the Metaverse and continue to learn more about how they can get involved. High prices, popularity and the ease of buying and selling virtual land (in contrast to traditional real estate) mean the Metaverse will be more than a buzzword. Like the domain name scramble during the early ages of the internet, savvy investors and buyers who snap up properties in prime locations will look very smart as more and more people jump into the metaverse.
As the Metaverse continues to grow and expand — so will digital real estate. Savvy buyers and investors would be smart to stay ahead of the curve and assume the metaverse real estate boom is here to stay.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Dror Lupu holds a B.A. in economics from The Academic College of Tel-Aviv. He is the CEO at Rentible.io, a next-generation DApp for managing real-estate rentals and advancing decentralized property and technology to a mainstream audience. He filled senior management and consultancy positions in successful technology startups across different fields, with a main focus on PropTech and blockchain-based utility ventures.
Bills booming after Josh Allen’s historic night
Previous rank: No. 1
The 49ers’ defense is worthy of respect, but there isn’t a unit in the league that can stop the Packers as presently constituted. Green Bay will be a fully functioning machine when it returns from its bye: Three starting offensive linemen will be back from injury (including rookie center Josh Myers and two-time All-Pro left tackle David Bakhtiari, who each had a Week 18 tune-up), blocking for a quarterback who’s been invincible since November. Aaron Rodgers’ stats over his last seven games represent Madden-on-“Rookie”-level dominance: 1,929 passing yards, 20 touchdowns and zero interceptions. Davante Adams is Rodgers’ obvious No. 1 target, but Allan Lazard has developed into a legit No. 2: Lazard had five receiving touchdowns in Green Bay’s final five games, trailing only Adams (six) for most in the league during that span. Throw in a balanced running attack, and … well, you don’t want none of this.
Stocks week ahead: Big banks are booming. Now here come earnings
Bank stocks are off to a solid start in 2022, extending gains from the second half of last year.
The Invesco KBW Bank ETF (KBWB), which has Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM), US Bancorp (USB) and Citigroup (C) as its top holdings, is up more than 8% already this year and has gained more than 19% in the past six months. That’s better than the broader market.
JPMorgan Chase, Citi and Wells Fargo will tell investors how they did during the fourth quarter and what to expect in 2022 when they report earnings on Friday.
US Bancorp and Bank of America release their earnings on Wednesday, January 19. So does investment banking powerhouse Morgan Stanley (MS). Goldman Sachs (GS) is due to report earnings on Tuesday, January 18.
Banks will benefit from rising rates, provided that they don’t go up too rapidly and hurt demand for mortgages, credit cards and other loans. Although higher rates make lending more profitable for banks, there is a limit to how high rates could go before they cool off the red hot housing market.
Financial firms are also thriving thanks to the boom in the stock market, which has helped boost trading activity. The stock surge has also fueled more demand for mergers and initial public offerings, and led to a jump in lucrative investment banking fees.
Together, the trends could supercharge bank earnings. Analysts are predicting that JPMorgan Chase’s earnings per share soared nearly 70% in 2021.
Wall Street is also forecasting substantial profit increases for Citi, which is now under the leadership of new CEO Jane Fraser and Wells Fargo, which is finally starting to recover after years of underperforming due to its fake accounts scandal.
But investors want to hear what these banks have to say about the rapidly spreading Omicron variant of coronavirus and how that could impact the markets and economy for the rest of the year.
Several top Wall Street firms, including JPMorgan Chase, Goldman Sachs and BlackRock, have delayed plans to have their workers return to their trading floors, despite pressure from Eric Adams, the new mayor of New York City, to get people back into Big Apple offices.
Investors will also be curious to hear what JPMorgan Chase CEO Jamie Dimon and other top bank execs have to say about the recent spike in long-term bond yields.
There are worries the Federal Reserve may hike rates more aggressively than expected this year in order to tamp down inflation. If that happens, it could put a chill in both the housing and stock markets.
All eyes on the economy
Speaking of inflation, the US government will report its December consumer price index figures Wednesday.
CPI rose 6.8% over the 12 months ending in November to a nearly four-decade high. Even after excluding volatile energy and food prices, core inflation was up 4.9% over the past year to its highest reading since June 1991.
The market is worried that inflation pressures may not ease anytime soon. The Fed now seems to share those jitters. The central bank raised its forecasts for overall and core price increases for 2022 at its meeting last month.
The minutes of the Fed’s December meeting showed that the central bank was concerned about “surprisingly high inflation” due to “lingering supply bottlenecks.”
Still, American consumers have kept spending, although higher prices might be starting to squeeze some budgets. The government will release retail sales figures for the crucial holiday month of December on Friday.
Retail sales skyrocketed more than 16% in the 12 months ending in November, but growth slowed from October to November.
Up next
Monday: US wholesale trade; Tilray (TLRY) earnings; Tokyo Stock Exchange closed for market holiday
Tuesday: Brazil consumer inflation; Albertsons earnings
Wednesday: US CPI; Jefferies (JEF) and KB Home (KBH) earnings
Thursday: US jobless claims and producer prices; Delta Air Lines (DAL) and Taiwan Semiconductor (TSM) earnings
Friday: US retail sales, industrial production and consumer sentiment (U. of Michigan); JPMorgan Chase, Citigroup, Wells Fargo and BlackRock earnings
Dow Jones Futures Await Jobs Report After Market Rallies; DocuSign Dives; Tesla Rival Reports Booming EV Sales
Dow Jones futures tilted higher Friday morning, along with S&P 500 futures and Nasdaq futures, erasing overnight losses with the November jobs report due. More states reported some omicron Covid cases while DocuSign tanked on weak guidance.
X
The major indexes got a much-needed bounce Thursday, reclaiming key levels and shrugging off early Apple stock weakness and an FTC lawsuit vs. Nvidia. But the stock market rally remains under pressure.
D.R. Horton (DHI) and some other homebuilders flashed buy signals but generally there were few quality stocks offering attractive entries.
Meanwhile Tesla (TSLA) pulled back modestly on a bad day for EV makers. Lucid (LCID) and Rivian (RIVN) fell solidly. China-based Nio (NIO), Xpeng (XPEV), and Li Auto stock tumbled, with XPEV stock and Li Auto (LI) falling well below recent buy points intraday. The SEC said Thursday it’s moving forward on a law that requires foreign companies to open up their books to U.S. review or face delisting.
China EV giant BYD Co. (BYDDF) released booming November sales figures, dwarfing the sales of Nio, Xpeng and Li Auto. Unlike Nio stock, Li Auto and Xpeng, BYD trades over the counter in the U.S.
FTC Sues To Block Nvidia-ARM Deal
The Federal Trade Commission said Thursday afternoon that it will sue to block the $40 billion Nvidia (NVDA) takeover of U.K.-based ARM Holdings. Nvidia stock took the FTC-ARM news in stride, rising 2.2%. ARM designs wireless chips for Apple (AAPL) and many of Nvidia’s rivals.
Investors may have seen a high chance that regulators around the world would object to the biggest-ever chip deal.
DocuSign Dives, Marvell Rallies
After the close, Marvell Technology (MRVL), a chipmaker that’s been holding up well, reported earnings. So did Ulta Beauty (ULTA) and two former software leaders, Asana (ASAN) and DocuSign (DOCU). MRVL stock surged overnight, signaling a new high, while ULTA stock moved toward possible buy points. But ASAN stock and DocuSign tumbled in extended trade on weak guidance. Asana lost more than 10% while DOCU stock dived more than 30%.
Tesla and Nvidia stock are on IBD Leaderboard. Tesla stock, Nvidia and D.R. Horton are on the IBD 50. D.R. Horton also was Thursday’s IBD Stock Of The Day.
The video embedded in this article discussed Thursday’s market action and analyzed DHI stock, XPEV stock and Airbnb (ABNB).
Jobs Report
The Labor Department will release the November jobs report at 8:30 a.m. ET. Economists expect to see nonfarm payrolls up by 543,000 with the jobless rate edging down to 4.5%. It’s unclear if economists or investors want a “strong” or “weak” jobs report.
The most important job report data point may be labor force participation. If Americans stream back into the work force, that could ease labor shortages that are limiting economic growth while pushing up inflation via higher wages. The labor force participation rate is expected to tick up to 61.7% of all Americans age 16 and up.
Concerns about lasting inflation are a big reason why Fed chief Jerome Powell and other policymakers are signaling they could step up the pace of the bond taper, perhaps as soon as the Dec. 14-15 meeting.
The jobs report, based on mid-month surveys, won’t show any impact of the omicron Covid variant.
Even if omicron turns out to be no big deal from a health perspective, if it deters people from re-entering the labor force, it could have a meaningful impact on the economy.
In a best-case scenario, the omicron variant has little impact while workers flood into the labor force.
Dow Jones Futures Today
Dow Jones futures were 0.1% above fair value. S&P 500 futures rose slightly and Nasdaq 100 futures climbed 0.1%. All erased modest overnight lows.
Futures turned lower Thursday evening after New York reported five omicron Covid variant cases. Hawaii reported an omicron case Thursday night, saying it was the result of “community spread,” with the infected person not a recent traveler.
Minnesota reported an omicron case earlier Thursday after the CDC reported the first U.S. case, in California, on Wednesday.
Crude oil prices rose nearly 3% Friday morning.
The November jobs report will surely move Dow Jones futures and Treasury yields shortly before Friday’s open.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally Thursday
The stock market rally had some early wobbles, at least on the Nasdaq, but picked up steam and closed near session highs.
The Dow Jones Industrial Average jumped 1.8% in Thursday’s stock market trading. The S&P 500 index climbed 1.4%. The Nasdaq composite advanced 0.8%. The small-cap Russell 2000 rose 2.8%.
Apple stock fell as low as 157.80 Thursday morning — well off Wednesday’s intraday peak of 170.30 — on a report that the Dow Jones tech titan warned suppliers that iPhone demand was weakening. But AAPL stock pared losses, closing off just 0.6% to 163.76.
U.S. crude oil futures rose 1.4% to $66.50 a barrel, rebounding from intraday losses as OPEC+ signaled it’ll go ahead with plans to slowly increase production vs. pausing due to the omicron variant impact. But the the cartel is ready to meet ahead of schedule if conditions change. Still, oil prices have plunged since Thanksgiving.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.6%, as did the Innovator IBD Breakout Opportunities ETF (BOUT). The iShares Expanded Tech-Software Sector ETF (IGV) bounced 1.7%. DOCU stock and Asana are IGV holdings. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.3% as key holding Nvidia stock’s rise offset some other chip losses. MRVL stock also is an SMH holding.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) edged up 0.4% and ARK Genomics ETF (ARKG) 1.5%. Tesla stock remains the top holding across ARK Invest’s ETFs. ARK Invest also holds some BYD stock and has taken a new position in Xpeng.
SPDR S&P Metals & Mining ETF (XME) rebounded 2.3% and Global X U.S. Infrastructure Development ETF (PAVE) just over 3%. U.S. Global Jets ETF (JETS) soared 6.1% in a big day for travel-related stocks. SPDR S&P Homebuilders ETF (XHB) ran up 3.4%, with DHI stock and other builders powering higher. The Energy Select SPDR ETF (XLE) rose 2.9% and the Financial Select SPDR ETF (XLF) 3%.
Five Best Chinese Stocks To Watch Now
D.R. Horton Stock
DHI stock rose 5.1% to 102.78. Shares are now back in buy range after breaking out of a double-bottom base with a 99.75 buy point, according to MarketSmith analysis. Investors could view 104.44 as a handle entry as well.
Toll Brothers (TOL) and Century Communities (CCS) also cleared entries on Thursday, though luxury builder Toll reports next week. Lower interest rates are supporting builders, along with solid job and wage gains.
EV Stocks
Tesla stock lost nearly 1% to 1084.60 on Thursday, closing a fraction below its 21-day line. Shares reversed lower on Wednesday, losing 4.35%. But TSLA stock seems to be several weeks into a possible base. On Thursday, Elon Musk sold more than 934,000 Tesla shares worth just over $1 billion, according to overnight filings.
Rivian stock slid 4.25% to 110.77. It’s working on an IPO base, but is a long way from the 179.57 buy point. Lucid stock, after more than doubling from late October to the Nov. 17 peak, skidded 5.3% to 48.41, but found support near its 21-day. Fisker (FSR) sank nearly 4% to 18.99. FSR stock’s breakout from a 20.71 buy point has now failed.
China EV startups also weakened. Xpeng stock, which broke out on earnings late last month and hit a nine-month high Wednesday morning, tumbled 5.6% to 48.29. Shares closed just above their 48.08 buy point after rebounding near their 50-day moving average. Li Auto stock, another recent breakout that reversed from a nine-month high on Dec. 1, slumped 3.4% to 33.91. It’s now below a 34.93 entry, though it found support at its 21-day line.
Nio stock, the laggard, skidded 5.5%, losing sight of its 200-day line.
A move by the SEC on a delisting law, which essentially only affects U.S.-listed Chinese stocks, could have helped spur selling in Nio, Xpeng and Li Auto. The SEC announcement comes days after Beijing denied a report that it was gearing up to largely end the structure of most overseas listings of Chinese firms. As a practical matter, it could be years before delistings are an imminent threat.
BYD Sales Keep Soaring
China EV giant BYD reported 91,219 new energy vehicles sold in November, up 241% vs. a year earlier. That includes 46,137 EVs, up 153%, while plug-in hybrids shot up 500% to 43,984. That’s the sixth straight month that BYD has increased EV/hybrid sales by roughly 10,000.
Nio, Xpeng and Li Auto reported strong November deliveries on Dec. 1 but that didn’t help the stocks.
Toyota also reportedly will make a small EV car for the China market, using BYD Blade batteries.
BYD stock was not yet active Friday morning. On Thursday, BYDDF stock dipped 0.6%, still holding near record highs.
BYD stock, which is Hong Kong listed, largely moves during Hong Kong trading. However, the over-the-counter BYDDF stock presumably wouldn’t be affected by delisting concerns. XPEV stock and Li Auto both have a secondary listing in Hong Kong, with Nio soon to join them.
In related news, China ride-hailing giant Didi Global (DIDI) said late Thursday that it will delist from U.S. exchanges and list instead in Hong Kong. Didi came public in late June, but Chinese regulators almost immediately imposed major restrictions on Didi’s operations, part of an overall crackdown on private enterprise, but especially data-centric firms. Didi stock rose early Friday.
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Market Rally Analysis
The stock market rally got a bounce. The Dow Jones rallied back above its 200-day line while the Nasdaq and S&P 500 reclaimed their 50-day lines. The Russell 2000 remains below its 200-day.
A rebound wasn’t a huge a surprise, given the spike in volatility Wednesday.
It’s nice for stocks to go up and close near session highs. But it’s unclear how meaningful Thursday’s action was. After all, the market rebounded Monday following Black Friday’s initial omicron sell-off and volatility surge, but selling quickly resumed. If the major indexes were to fall back through Wednesday’s lows, it would be a very bad sign for the stock market rally.
Market breadth improved Thursday, but has deteriorated over the past few weeks.
There aren’t many good-looking charts right now after the recent whipsaw selling.
Energy and financial stocks bounced back, but are generally damaged. Travel-related stocks were big winners Thursday, but after huge losses in recent weeks.
Wednesday morning’s chip breakouts have largely fizzled, though they aren’t broken per se. Xpeng and Li Auto stock have had a chilly start to December.
Homebuilders and REITs look healthy, but if the market rally turns into a correction they’ll likely come under pressure. Alternatively, if the market rally strengthens and Treasury yields power higher, DHI stock and REITs may lag or even decline.
Software stocks are a mess. While Snowflake (SNOW) rebounded on earnings, many more have extended big sell-offs. DocuSign and ASAN stock are just the latest examples.
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What To Do Now
It’s still a market rally, albeit “under pressure,” and not a market correction, so investors don’t need to see a follow-through day. But the general concept — waiting for clear strength before moving seriously into the market — makes sense in the current environment.
One good day doesn’t signal a fundamental shift from the weakening market trend of the past few weeks. It’s better to wait for some follow up. For investors who waited for the mid-October follow-through to confirm the new market rally, there were still several weeks to take advantage of the solid uptrend.
As a practical matter, few stocks are flashing buy signals right now. And could you trust a morning breakout or buy signal to hold up by the close? On the flip side, you can’t count on stocks finding support, even though Apple stock did on Thursday.
It’s also unclear if some of the groups and sectors holding up the best right now would lead if the market revs highs.
Holding onto some long-term winners with overall modest exposure is a sound strategy for now. But overall, investors should still be thinking defensively.
The goal for active investors isn’t to try to make money in all markets, but to take advantage of rallies and minimize losses in corrections. If you want to be a big winner, be a small loser.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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Disinformation for Hire, a Shadow Industry, Is Quietly Booming
In May, several French and German social media influencers received a strange proposal.
A London-based public relations agency wanted to pay them to promote messages on behalf of a client. A polished three-page document detailed what to say and on which platforms to say it.
But it asked the influencers to push not beauty products or vacation packages, as is typical, but falsehoods tarring Pfizer-BioNTech’s Covid-19 vaccine. Stranger still, the agency, Fazze, claimed a London address where there is no evidence any such company exists.
Some recipients posted screenshots of the offer. Exposed, Fazze scrubbed its social media accounts. That same week, Brazilian and Indian influencers posted videos echoing Fazze’s script to hundreds of thousands of viewers.
The scheme appears to be part of a secretive industry that security analysts and American officials say is exploding in scale: disinformation for hire.
Private firms, straddling traditional marketing and the shadow world of geopolitical influence operations, are selling services once conducted principally by intelligence agencies.
They sow discord, meddle in elections, seed false narratives and push viral conspiracies, mostly on social media. And they offer clients something precious: deniability.
“Disinfo-for-hire actors being employed by government or government-adjacent actors is growing and serious,” said Graham Brookie, director of the Atlantic Council’s Digital Forensic Research Lab, calling it “a boom industry.”
Similar campaigns have been recently found promoting India’s ruling party, Egyptian foreign policy aims and political figures in Bolivia and Venezuela.
Mr. Brookie’s organization tracked one operating amid a mayoral race in Serra, a small city in Brazil. An ideologically promiscuous Ukrainian firm boosted several competing political parties.
In the Central African Republic, two separate operations flooded social media with dueling pro-French and pro-Russian disinformation. Both powers are vying for influence in the country.
A wave of anti-American posts in Iraq, seemingly organic, were tracked to a public relations company that was separately accused of faking anti-government sentiment in Israel.
Most trace to back-alley firms whose legitimate services resemble those of a bottom-rate marketer or email spammer.
Job postings and employee LinkedIn profiles associated with Fazze describe it as a subsidiary of a Moscow-based company called Adnow. Some Fazze web domains are registered as owned by Adnow, as first reported by the German outlets Netzpolitik and ARD Kontraste. Third-party reviews portray Adnow as a struggling ad service provider.
European officials say they are investigating who hired Adnow. Sections of Fazze’s anti-Pfizer talking points resemble promotional materials for Russia’s Sputnik-V vaccine.
For-hire disinformation, though only sometimes effective, is growing more sophisticated as practitioners iterate and learn. Experts say it is becoming more common in every part of the world, outpacing operations conducted directly by governments.
The result is an accelerating rise in polarizing conspiracies, phony citizen groups and fabricated public sentiment, deteriorating our shared reality beyond even the depths of recent years.
The trend emerged after the Cambridge Analytica scandal in 2018, experts say. Cambridge, a political consulting firm linked to members of Donald J. Trump’s 2016 presidential campaign, was found to have harvested data on millions of Facebook users.
The controversy drew attention to methods common among social media marketers. Cambridge used its data to target hyper-specific audiences with tailored messages. It tested what resonated by tracking likes and shares.
The episode taught a generation of consultants and opportunists that there was big money in social media marketing for political causes, all disguised as organic activity.
Some newcomers eventually reached the same conclusion as Russian operatives had in 2016: Disinformation performs especially well on social platforms.
At the same time, backlash to Russia’s influence-peddling appeared to have left governments wary of being caught — while also demonstrating the power of such operations.
“There is, unfortunately, a huge market demand for disinformation,” Mr. Brookie said, “and a lot of places across the ecosystem that are more than willing to fill that demand.”
Commercial firms conducted for-hire disinformation in at least 48 countries last year — nearly double from the year before, according to an Oxford University study. The researchers identified 65 companies offering such services.
Last summer, Facebook removed a network of Bolivian citizen groups and journalistic fact-checking organizations. It said the pages, which had promoted falsehoods supporting the country’s right-wing government, were fake.
Stanford University researchers traced the content to CLS Strategies, a Washington-based communications firm that had registered as a consultant with the Bolivian government. The firm had done similar work in Venezuela and Mexico.
A spokesman referred to the company’s statement last year saying its regional chief had been placed on leave but disputed Facebook’s accusation that the work qualified as foreign interference.
Eroding Reality
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New technology enables nearly anyone to get involved. Programs batch generate fake accounts with hard-to-trace profile photos. Instant metrics help to hone effective messaging. So does access to users’ personal data, which is easily purchased in bulk.
The campaigns are rarely as sophisticated as those by government hackers or specialized firms like the Kremlin-backed Internet Research Agency.
But they appear to be cheap. In countries that mandate campaign finance transparency, firms report billing tens of thousands of dollars for campaigns that also include traditional consulting services.
The layer of deniability frees governments to sow disinformation more aggressively, at home and abroad, than might otherwise be worth the risk. Some contractors, when caught, have claimed they acted without their client’s knowledge or only to win future business.
Platforms have stepped up efforts to root out coordinated disinformation. Analysts especially credit Facebook, which publishes detailed reports on campaigns it disrupts.
Still, some argue that social media companies also play a role in worsening the threat. Engagement-boosting algorithms and design elements, research finds, often privilege divisive and conspiratorial content.
Political norms have also shifted. A generation of populist leaders, like Rodrigo Duterte of the Philippines, has risen in part through social media manipulation. Once in office, many institutionalize those methods as tools of governance and foreign relations.
In India, dozens of government-run Twitter accounts have shared posts from India Vs Disinformation, a website and set of social media feeds that purport to fact-check news stories on India.
India Vs Disinformation is, in reality, the product of a Canadian communications firm called Press Monitor.
Nearly all the posts seek to discredit or muddy reports unfavorable to Prime Minister Narendra Modi’s government, including on the country’s severe Covid-19 toll. An associated site promotes pro-Modi narratives under the guise of news articles.
A Digital Forensic Research Lab report investigating the network called it “an important case study” in the rise of “disinformation campaigns in democracies.”
A representative of Press Monitor, who would identify himself only as Abhay, called the report completely false.
He specified only that it incorrectly identified his firm as Canada-based. Asked why the company lists a Toronto address, a Canadian tax registration and identifies as “part of Toronto’s thriving tech ecosystem,” or why he had been reached on a Toronto phone number, he said that he had business in many countries. He did not respond to an email asking for clarification.
A LinkedIn profile for Abhay Aggarwal identifies him as the Toronto-based chief executive of Press Monitor and says that the company’s services are used by the Indian government.
‘Spamouflage’
A set of pro-Beijing operations hint at the field’s capacity for rapid evolution.
Since 2019, Graphika, a digital research firm, has tracked a network it nicknamed “Spamouflage” for its early reliance on spamming social platforms with content echoing Beijing’s line on geopolitical issues. Most posts received little or no engagement.
In recent months, however, the network has developed hundreds of accounts with elaborate personas. Each has its own profile and posting history that can seem authentic. They appeared to come from many different countries and walks of life.
Graphika traced the accounts back to a Bangladeshi content farm that created them in bulk and probably sold them to a third party.
The network pushes strident criticism of Hong Kong democracy activists and American foreign policy. By coordinating without seeming to, it created an appearance of organic shifts in public opinion — and often won attention.
The accounts were amplified by a major media network in Panama, prominent politicians in Pakistan and Chile, Chinese-language YouTube pages, the left-wing British commentator George Galloway and a number of Chinese diplomatic accounts.
A separate pro-Beijing network, uncovered by a Taiwanese investigative outlet called The Reporter, operated hundreds of Chinese-language websites and social media accounts.
Disguised as news sites and citizen groups, they promoted Taiwanese reunification with mainland China and denigrated Hong Kong’s protesters. The report found links between the pages and a Malaysia-based start-up that offered web users Singapore dollars to promote the content.
But governments may find that outsourcing such shadowy work also carries risks, Mr. Brookie said. For one, the firms are harder to control and might veer into undesired messages or tactics.
For another, firms organized around deceit may be just as likely to turn those energies toward their clients, bloating budgets and billing for work that never gets done.
“The bottom line is that grifters are going to grift online,” he said.