MicroStrategy buys 205 bitcoin for $10 million

The world’s largest publicly-traded business intelligence company now owns close to 91,064 bitcoin as of March 5, acquired at an aggregate purchase price of about $2.196 billion and an average purchase price of around $24,119 per bitcoin. (bit.ly/38avqNW)

Bitcoin was trading at $47,663 on Friday, down 18.3% from a record high of $58,354.14 hit on Feb. 21.

MicroStrategy spent last year steadily amassing more bitcoin after making its first investment in August as the cryptocurrency soared in value. It has since made multiple purchases of the digital currency.

The company bought 328 bitcoin for about $15 million in cash on March 1. (reut.rs/3sRe2Wv)

MicroStrategy’s shares fell 1% in pre-market trading.

Bitcoin rises 5% to $50,942.58

Bitcoin rose 5% to $50,942.58 on Wednesday, adding $2,426.23 to its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, has risen 83.7% from the year’s low of $27,734 on Jan. 4.

Bitcoin has fallen 12.7% from the year’s high of $58,354.14 on Feb. 21.

Bitcoin’s price soared this year as major firms, such as BNY Mellon, asset manager BlackRock Inc, credit card giant Mastercard Inc, backed cryptocurrencies, while those such as Tesla Inc Square Inc and MicroStrategy Inc invested in bitcoin.

Ether, the coin linked to the ethereum blockchain network, rose 7.18 % to $1,595.64 on Wednesday, adding $106.84 to its previous close.

GlobalFoundries pours $1.4 billion into fab expansion amid chip demand boom

WASHINGTON (Reuters) – GlobalFoundries will invest $1.4 billion this year to raise output at three factories in the United States, Singapore and Germany, as a global shortage of semiconductors has boosted demand for chips, its chief executive said.

The U.S.-based company, a unit of Abu Dhabi’s state-owned fund Mubadala, may also bring forward its initial public offering to late 2021 or the first half of next year, from a previous target of late 2022 or early 2023.

It is aiming for revenue growth of 9% to 10% from just over $5.7 billion last year.

Automakers and electronics producers are facing a global shortage of chips which has fueled manufacturing delays.

“The adoption of technology that would normally have taken a decade happened in one year in 2020 because of COVID-19,” GlobalFoundries CEO Thomas Caulfield told Reuters.

Before the pandemic, the chip industry was projected to grow 5% over a five-year horizon and now it has accelerated to grow at twice that rate, he said.

While the supply crunch has resulted in car makers such as Volkswagen, Ford and General Motors cutting output, an increase in supply would create further demand.

GlobalFoundries said the $1.4 billion, which will be divided evenly among its fabs in Dresden, Germany, Malta, New York and Singapore, will begin to ramp up output through 2022 to produce chips from 12 to 90 nanometers.

About a third of the investment will come from clients seeking to lock in supply over several years, Caulfield said, forecasting a 20% rise in production next year following an expected 13% increase in 2021.

If demand continues to rise GlobalFoundries could build a new plant adjacent to its Malta, New York, plant after securing a purchase option agreement for about 66 acres of undeveloped land last year.

But a decision to break ground there would hinge on the U.S. Congress funding a set of measures to incentivise chip manufacturing in the United States known as the Chips Act, which was approved last year.

“It’s not a question of ‘if,’ it’s just a question of ‘when,’… And a key element of going forward will be the funding of the Chips Act,” Caulfield said.

U.S. President Joe Biden, who took office in January, has pledged to support the effort, and senators are looking at providing emergency funding for the law as part of a bigger package to counter China’s rise, as chipmaking has shifted to Asia.

GlobalFoundries is the world’s third-largest foundry by revenue behind Taiwan Semiconductor Manufacturing Co Ltd and Samsung Electronics Co Ltd but ranks second when factoring out the part of Samsung’s foundry business that makes chips for other elements of the South Korean firm.

Robinhood now a go-to for young investors and short sellers

(Reuters) – Robinhood, the online brokerage used by many retail traders to pile in to heavily shorted stocks like GameStop Corp, has made an ambitious push into loaning out its clients’ shares to short sellers as it expands its business.

The broker had $1.9 billion in shares loaned out as of Dec. 31, nearly three times the $674 million a year earlier, and it was permitted to lend out $4.6 billion worth of securities under margin agreements, around five times bigger than the prior year, according to an annual regulatory filing here late on Monday.

The size of the jump highlights Robinhood’s rapid growth over the past year as the number of retail investors has soared in the work-from-home environment during the pandemic and as retail brokers have largely eliminated trading fees, a model Robinhood helped pioneer.

Menlo Park, California-based Robinhood is expected to go public this year with a valuation of more than $20 billion.

Securities lending is common among brokerages, which can earn income by lending shares to hedge funds and others, who then sell the shares back into the market, betting the share prices will drop so they can buy them back at a lower price when it is time to return them, pocketing the difference.

Shares that are in heavy demand from short sellers, like GameStop, which had 140% short interest in January here, command the biggest premium from the lender.

What makes Robinhood notable is that many of the stocks its users invest in are among the most sought-after by people who want to bet against them, said one senior financial executive involved with hedge funds.

It was unclear how great a benefit the securities lending was to Robinhood’s revenue and income, which it does not disclose.

Robinhood declined comment on the filing and did not immediately respond to a request for comment on the details of which stocks it loans out.

In January, retail investors coordinated through trading forums on social media in an attempt to punish hedge funds by buying up shares of GameStop and other heavily shorted names, like AMC Entertainment, driving up their prices and forcing short sellers to close out positions at big losses.

On Jan. 28, at the height of the retail trading mania, Robinhood, along with several other brokers, restricted the buying of GameStop and other so-called meme stocks due to a massive spike in collateral requirements needed to clear the trades, angering many of its customers.

The trading restrictions sparked congressional hearings, regulatory probes and have placed greater scrutiny on short selling.

In response, Vlad Tenev, Robinhood’s chief executive officer, called for shorter stock settlement times, which would reduce clearing collateral requirements.

He also said the idea that more shares of a stock can be shorted than there are available to trade, as was the case with GameStop, is a “pathology” that could destabilize the financial markets.

Robinhood positioned itself for growth in securities lending in October 2018 by launching its own clearing broker, which acts as a go-between with the clearinghouse that settles its trades, and allows it to hold its customers’ assets. The broker can then lend out securities its customers buy on margin.

At present, less than 3% of Robinhood’s funded accounts are margin-enabled, Tenev recently told Congress here.

Wall Street set for higher open as bond markets calm – PMIs in focus

European shares jumped on Monday as bond yields stayed below their recent spikes, while risk assets also rallied and Wall Street futures indicated the optimism would continue into the U.S. session.

The rise in European shares followed solid gains in Asian stock markets and saw the STOXX 600 up 1.2% by 1202 GMT. London’s FTSE 100 1.1% higher and Germany’s DAX up 0.7%.

The MSCI world equity index, which tracks shares in 49 countries, rose 0.4%, recovering from the previous session’s multi-week low.

The much-anticipated $1.9 trillion COVID-19 relief bill was passed in the U.S. House of Representatives on Saturday, and now moves to the Senate.

In the bond market, key yields fell from highs seen last week when market participants became wary that when economies re-open from coronavirus lockdowns a combination of massive government stimulus and pent-up consumer demand will cause inflation to accelerate.

The U.S. 10-year treasury yield was down around 3 basis points at 1.429% at 1207 GMT, having dropped from Thursday’s one-year high of 1.614% – although it did edge up slightly overnight.

Germany’s benchmark 10-year Bund yield was down around 5 basis points, also below last week’s spike.

Graphic: Germany 10-year –

Reuters Graphic

“I think more than anything, people were spooked at the speed of the rise, rather than anything else,” said Michael Hewson, chief market analyst at CMC Markets UK.

“The markets are pricing in a (U.S.) rate hike for next year, and a couple in 2023, and that’s what the Fed needs to push back against – and they haven’t done that aggressively enough.”Slideshow ( 2 images )

He said markets were being boosted by expectations that U.S. Federal Reserve officials due to speak in coming days will provide stronger verbal signals against the rise in bond yields.

“There is little doubt in my mind that central banks will eventually lean quite hard against a sustained rise in yields,” wrote Deutsche Bank strategist Jim Reid in a note to clients.

“They simply can’t afford to see it happen with debt so high.”

PENT-UP DEMAND

PMI data for February is also in focus this week. Germany’s factory activity rose to its highest level in more than three years last month, driven by higher demand from China, the United States and Europe.

Manufacturing in Japan grew at its fastest pace in more than two years in February, as strong orders led to the first output rise since the start of the pandemic.

But China’s factory activity grew at a slower pace than in the previous month, missing market expectations, after COVID-19 related disruptions earlier in the year.

Oil prices jumped on Monday, with Brent crude futures and U.S. West Texas Intermediate (WTI) crude futures both up around 1% at 1221 GMT.

Front-month prices for both contracts touched 13-month highs last week. Both contracts ended February 18% higher.

The dollar rose, gaining 0.3% against a basket of currencies by 1222 GMT. The Australian dollar – which is seen as a liquid proxy for risk appetite – recovered some recent losses.

Wall Street looked set for a higher open, with S&P 500 futures up 1.1%. Nasdaq futures were up 1.3% at 1223 GMT, suggesting a recovery for tech stocks.

Bitcoin recovered some recent losses, up 5% at around $47,676 at 1227 GMT.

Also helping sentiment was news that deliveries of the newly approved Johnson & Johnson COVID-19 vaccine should start on Tuesday.

Bitcoin extends retreat from record high to hit lowest in 20 days

Bitcoin fell to its lowest since Feb. 8 in thin on Sunday, down 3.7% from Friday’s close as the pullback from a record high near $60,000 continued.

The world’s biggest and best-known cryptocurrency has risen as much as 70% since the start of the year, hitting a record high of $58,354.14 one week ago amid increasing confidence that it will become a mainstream investment and payments vehicle.

Berkshire Hathaway profit rises, helped by stock gains

Warren Buffett’s Berkshire Hathaway Inc on Saturday said quarterly operating income rose 14%, aided by improved results from its insurance businesses, while soaring prices of stock holdings such as Apple Inc led to a nearly $36 billion overall profit.

Fourth-quarter operating income rose to $5.02 billion, or approximately $3,252 per Class A share, from $4.42 billion, a year earlier.

Net income, reflecting the stock gains, rose 23% to $35.84 billion from $29.16 billion a year earlier.

For all of 2020, operating income fell 9% to $21.92 billion, while net income fell 48% to $81.42 billion.

Berkshire, whose shares trailed the broader market over the last decade and significantly in 2019 and 2020, repurchased about $9 billion of stock in the quarter, a sign Buffett considers his Omaha, Nebraska-based conglomerate undervalued.

For all of 2020, Berkshire said it bought back $24.7 billion of its own stock, topping its old record $5 billion in 2019.

“At a discount of 40% to intrinsic value, the repurchases looked extraordinarily compelling,” said Tom Russo, a partner at Gardner, Russo & Gardner in Lancaster, Pennsylvania, a longtime Berkshire shareholder. “Repurchases capture forever the benefits of Berkshire’s businesses for the remaining shareholders.”

Berkshire stock has risen 4.8% this year, beating the Standard & Poor’s 500’s 1.5% gain.

GameStop rally fizzles; shares still on pace for 130% weekly gain

GameStop  customers inside Wall Street shop

An early surge in the shares of GameStop Corp fizzled and left the video game retailer’s stock down more than 15% on Friday, throwing water on a renewed rally this week that has left analysts puzzled.

GameStop shares hovered around $94 after hitting $105 in late-morning trading. Despite Friday’s losses, the company’s stock is up about 135% for the week in the face of a broader market selloff that has sent the benchmark S&P 500 down about 2% over the same time.

Analysts have struggled to find an clear explanation for the rally, leaving some skeptical that it will continue.

“You might be able to make some quick trading money and it could be a lot of money, but in the end, it’s the greater fool theory,” said Eric Diton, president and managing director at The Wealth Alliance in New York. The theory refers to buying stocks that are over-valued in anticipation that someone else will come along to buy them at a higher price.

One catalyst that sparked GameStop’s rally in January – a high concentration of investors that had bet against the stock being forced to unwind their positions – does not appear to be as much of a factor this time.

Short interest accounted for 28.4% of the float on Thursday, compared with a peak of 142% in early January, according to S3 Partners.

Options market activity in the stock, which has returned to the top of the list in a social media-driven retail trading frenzy, suggested investors were betting on higher prices or higher volatility, or both.

Refinitiv data on options showed retail investors have been buying deep out-of-the-money call options, which are options with contract prices to buy far higher than the current stock price.

Many of those option contracts are set to expire on Friday, and would mean handsome gains for those betting on a further rise in GameStop’s stock price.

Call options, which would be profitable for holders if GameStop shares reach $200 and $800 this week, have been particularly heavily traded, the data showed.

“The actors are looking to take advantage of everything they can to maximize their impact and the timing is important,” said David Trainer, chief executive officer of investment research firm New Constructs. “The options expiration will contribute to their strategy on how to push the stock as much as they can and maximize their profits.”

Bots on major social media websites have been hyping GameStop and other “meme stocks,” although the extent to which they influenced market prices is unclear, according to analysis by Massachusetts-based cyber security company PiiQ Media.

GameStop’s stock is still far from the $483 intraday trading high it hit in January, when individual investors using Robinhood and other trading apps drove a rally, forcing many hedge funds that had bet against the video game retailer to cover short positions.

Other Reddit favorites were also lower, with cinema operator AMC Entertainment down around 5.5%, headphone maker Koss off about 25% and marijuana company Sundial Growers down less than 1% in Friday trading.

ECB’s Stournaras calls for increasing bond buying to calm markets

Greece’s Yannis Stournaras became the first European Central Bank policymaker on Friday to openly call for increasing the pace of ECB bond purchases to stem a rise in borrowing costs.

With euro zone bond yields set for their biggest monthly rise in three years, the ECB is under some pressure to make good on its promise to keep borrowing costs easy for the coronavirus-stricken bloc through its Pandemic Emergency Purchase Programme (PEPP).

“In my view, there is an unwarranted tightening of bond yields, so it would perhaps be desirable for the ECB to accelerate the pace of PEPP purchases to ensure favourable financing conditions during the pandemic,” Stournaras told Reuters in an interview.

“In my view there’s fundamental justification for a tightening of nominal bond yields in the long end,” the Greek central bank governor said.

Stournaras said ECB policymakers should instruct the Executive Board, which runs day-to-day business including bond purchases, to intervene accordingly when they meet on March 11.

He added that they may also alter the ECB’s policy message “slightly”, although he said no material change was needed as the central bank still had almost 1 trillion euros left to spend in its PEPP arsenal.

Germany’s 10-year yield, the region’s benchmark, fell to its lowest for the day at -0.287% after Stournaras’ comments. It was still set for its biggest monthly gain since January 2018, however, with a 24 basis-point rise.

Earlier on Friday, ECB board members Philip Lane and Isabel Schnabel had said bond yields warranted monitoring but stopped short of calling for more purchases.

“At this stage, an excessive tightening in yields would be inconsistent with fighting the pandemic shock to the inflation path,” Lane said in an interview with Spanish newspaper Expansión.

“But at the same time, it is crystal clear that we are not engaged in yield curve control, in the sense that we want to keep a particular yield constant”.

Schnabel was even more cautious, saying that a gradual rise in bond yields would even be welcome if it reflected higher inflation expectations, showing that the ECB’s stimulus is working.

“Even gradual increases in real yields may not necessarily be a cause of concern if they reflect improving growth prospects,” Schnabel added.

Bots hyped up GameStop on major social media platforms – Analysis finds

Bots on major social media platforms have been hyping up GameStop and other “meme” stocks, according to an analysis by Massachusetts-based cyber security company PiiQ Media, suggesting organized economic or foreign actors may have played a role in the Reddit-driven trading frenzy.

Shares in GameStop soared last month after Reddit users banded together to squeeze hedge funds that had bet against the video game retailer and other companies. Reddit Chief Executive Steve Huffman told Congress this month that bots, artificial or fake accounts with automated content, had not played a “significant role” in GameStop Reddit message traffic.

PiiQ Media’s analysis of Twitter Inc, Facebook Inc, Instagram and YouTube posts, however, found that bots used the platforms to push GameStop and other “meme” stocks, although it is unclear how influential they were in the overall saga.

A startup that focuses on social media risks, PiiQ said it examined patterns of keywords such as “Hold the Line” and GameStop’s stock symbol, “GME” across conversations and profiles prior to the Jan. 28 frenzy, through Feb. 18. For comparison, it also assessed posts on an unrelated set of stocks.

PiiQ said that it identified very similar daily “start and stop patterns” in the GameStop-related posts, with activity starting at the beginning of the trading day, followed by a large spike at the end of the trading day. Such patterns are indicative of bots, said Aaron Barr, co-founder and chief technology officer of PiiQ.

“We saw clear patterns of artificial behavior across the other four social media platforms. When you think of organic content, it’s variable in the day, variable day-to-day. It doesn’t have the exact same pattern every day for a month,” he said.

Based on its authenticity scoring system, PiiQ estimates there are tens of thousands of bot accounts hyping GameStop, the meme stocks, and Dogecoin, a cryptocurrency swept up in the frenzy. Thousands of fake accounts can be purchased for as little as $200, it said.

The company did not analyze Reddit data, but Barr said he would expect to see a similar pattern of activity on Reddit, indicating bot-like or coordinated management of conversations.

A representative for Reddit did not comment beyond Huffman’s testimony. Representatives for YouTube, Facebook and its Instagram subsidiary did not respond to requests for comment. The social media platforms generally try to weed out harmful bots, said Barr.

A spokesperson for Twitter said that “bots” had become a catch-all term that can often mischaracterize the nature of the account. The company notes bots can be used on its platform for creative or innovative purposes.

The Securities and Exchange Commission is probing the GameStop saga, and this month suspended trading in a handful of companies because some “social media accounts may be engaged in a coordinated attempt to artificially influence” their stocks.

In addition to traders, organized criminals may use social media to stoke asset prices, and undermining the integrity of U.S. markets is a known goal of hostile state actors, said Barr. But it is unclear how successful, if at all, these types of influence efforts are, he said.

“Measuring the effect of those campaigns is often illusive.”