McAlinden Research Partners

It is with profound sadness we report the passing of Joseph J. McAlinden. https://lnkd.in/enY3p_BP

From our July 29 Intelligence Briefing: In an unprecedented recognition of legitimacy, two of the US’s three leading Presidential candidates promised to not only deregulate the domestic digital asset industry, but also to establish a strategic stockpile of #Bitcoin (BTC) within the US Treasury Department. Accompanying legislation, set to be introduced in the #Senate, would see excess reserves from the US #Fed re-allocated to accumulate a sum of 1 million #BTC. Such a stockpile would be meant to counterbalance the US’s ever-increasing debt load and be held in reserve over the course of decades. Bitcoin’s jump to a record valuation earlier this year has left many #digitalasset enterprises and investors flush with large sums of capital that can now materially influence November’s race for the #WhiteHouse. Though it is the Republican and Independent Presidential tickets that are appealing most aggressively to pro-#crypto interests in the upcoming election, Congress has exhibited an increasingly bipartisan bend toward creating coherent and less stringent regulatory frameworks for digital assets in the US.

From our July 18 Intelligence Briefing: Shares of US #Banks have surged in the wake of recent quarterly #earnings reports that showed a growing recovery in the investment banking and capital markets businesses of large #financial institutions. M&A and #IPO activity looks to be on pace for a steady turnaround from relatively weak 2022-2023 volumes, bolstering income from underwriting and advisory fees. For their smaller regional peers, optimism has emanated from a nearing of Fed rate cuts that will likely narrow unrealized losses held on their securities portfolios and stem the narrowing of net interest margins. Commercial deposits held by US banks have risen YoY across 17 consecutive weeks, continuing an easing of #liquidity concerns. Several of the largest banks are further shoring up their finances with a renewed debt haul that has seen tens of billions of dollars raised in July alone. Loan loss provisions were increased by some banks in the second quarter but data shows that the value of these #reserves – while still elevated near $200 billion – has largely moved sideways since the start of the year.

From our June 20 Intelligence Briefing: A final decision on whether #Boeing will be prosecuted for pending charges related to two #737 MAX crashes in 2018-2019 is expected by July 7. The initial prosecution of these charges was deferred in 2021 as part of a settlement with the Department of Justice (DoJ), but continued malfunctions affecting Boeing’s planes have allegedly constituted a violation of provisions in the arrangement. A felony conviction could imperil Boeing’s defense business and potentially open them up to further demands from the families of 737 MAX crash victims. These parties were not consulted by the Department of Justice as part of Boeing’s deferred prosecution agreement (DPA) in 2021, but have been able to secure favorable decisions in federal court that may entitle them to certain rights as “crime victims”. The DoJ disputes this classification, but it has apologized for leaving them out of their construction of the DPA. The position of the families regarding a DoJ prosecution of Boeing includes a request that the maximum possible fine, a sum which surpasses $24.7 billion, be levied. Further monetary damages pursued against Boeing, whether by the Justice Department or families of crash victims, will put the company in an even more precarious financial situation as their #credit rating spirals toward “junk” levels.

From our June 10 Intelligence Briefing: #DataCenter resources are becoming increasingly stretched amid a sudden and aggressive uptick in the adoption of generative #AI applications. The production of #GPUs that are largely responsible for supporting emergent #LLMs is quite slow relative to the quickly scaling utilization of AI, which is pushing cloud computing providers to seek partnerships with #cryptocurrency miners that hold an abundance of GPUs and ASICs that can be repurposed as high performance computing (#HPC) assets. This could help to stabilize Bitcoin miners’ volatile primary revenue stream. Miners have been diversifying into the dedicated data center business for at least two years now and have unique experience with power markets, which will now be a more critical consideration for data center operators running power-hungry AI chips. Just last week, cloud infrastructure provider CoreWeave inked an agreement with #Bitcoin miner Core Scientific to provide the company with 200MW of hosting capacity over the next 12 years. That was quickly followed up by a billion-dollar bid for the whole firm.

From Our June 3 Daily Intelligence Briefing: #Nuclear power facilities and #uranium are becoming deeply enveloped in the struggle for global influence and diplomatic might that is now being waged by the US and a key geopolitical adversary in Russia. After the initiation of an American ban on the import of Russian uranium products, Moscow is re-orienting the routes by which it will ship its nuclear fuels. The country aggressively shifted flows of fossil #fuel supplies eastward after its war in Ukraine turned away western buyers and now Russia will look to create?new markets for refined uranium in Central Asia, where it will assist in building the region’s first nuclear power plant. Russia is also consolidating its hold on what allies it still has on the periphery of the European continent, as Belarus will now assist in the construction of a Rosatom-backed nuclear power facility in Hungary. The next frontier in this growing tug-of-war will soon shift to?Saudi Arabia as the Kingdom seeks a partner to help deploy a civilian nuclear program. All of this is occurring just as #Japan prepares to fire up the world’s largest nuclear power plant for the first time since 2011.

#Nuclear power facilities and #uranium are becoming deeply enveloped in the struggle for global influence and diplomatic might that is now being waged by the US and a key geopolitical adversary in Russia. After the initiation of a US ban on the import of Russian uranium products, Moscow is re-orienting the routes by which it will ship its nuclear fuels. The country aggressively shifted flows of fossil fuel supplies eastward after its war in Ukraine turned away western buyers and now Russia will look to create?new markets for refined uranium in Central Asia, where it will assist in building the region’s first nuclear power plant. Russia is also consolidating its hold on what allies it still has on the periphery of the European continent, as Belarus will now assist in the construction of a Rosatom-backed nuclear power facility in Hungary. The next frontier in this growing tug-of-war will soon shift to?Saudi Arabia as the Kingdom seeks a partner to help deploy a civilian nuclear program. All of this is occurring just as #Japan prepares to fire up the world’s largest nuclear power plant for the first time since 2011.

The latest US #energy sector megadeal will make ConocoPhillips the single largest producer in South Texas’s Eagle Ford #shale basin and expand its presence in two other major shale patches. More importantly, it will improve the Conoco’s economies of scale, cutting costs by hundreds of millions of dollars, and helping it fund an aggressive #dividend boost and buyback scheme. Though some have suggested the ongoing wave of consolidation in #oil and #gas, particularly within US shale, is part of a bid for oil majors to increase output, there has been little movement in the country’s field production of crude oil for a period of almost eight months now despite persistently elevated crude prices throughout that period. #Capex budget growth has slowed significantly, and it seems likely that big oil may be more concerned with capturing assets to increase pricing power than output, thereby maintaining their margins.

The number of #solar panel installations in the US recently surpassed the 5 million threshold. Half of those installations were completed within the past four years, exhibiting how quickly solar capacity has scaled in just the past few years. Installations are expected to double by the end of the decade, but that pace could potentially be boosted significantly by the emergence of generative #AI applications and the expanding footprint of data centers powering them. Solar power backed the vast majority of new US energy capacity added last quarter, suggesting that an increased pace of grid expansion will also facilitate an uptick in solar installations. More of the panels installed on #American soil are coming from domestic firms than in years past, which has recently boosted a US-based panel manufacturer to the the top spot among its global peers for the first time in six years.

The cost of property and casualty #insurance is rising significantly faster than broader consumer price #inflation. Premiums on home insurance policies have risen at double the pace of annualized income growth since the early 2000s. Emerging trends could continue to exacerbate this imbalance. Theft, natural disasters, and litigation are all on the rise and piling pressure on insurers, forcing them to raise premiums. That is in addition to broader inflation increasing the cost of labor and materials associated with repairs and construction. Despite the increase in payouts to address claims, insurer shares have been on the rise lately, outperforming other portions of the financial sector in 2024.