—— Intel Gets $20 Billion in US Grants; Bitcoin Drops to 2-Week Low; Demand for Bespoke Bentley Skyrockets; Citi Cuts London Investment Bank Jobs; Alibaba Sells $317 million of XPeng Shares; Astera Soars 46% After $713 Million IPO; Fed Maintains 3 Rate Cuts Expectation
1. Intel Gets $20 Billion in US Grants
The United States government has pledged significant financial support to Intel Corp., with $8.5 billion in grants and potentially up to $11 billion in loans, aimed at facilitating the expansion of semiconductor manufacturing capacity. This represents the largest award from a program intended to bolster the domestic chip industry.
Intel’s investment in the US, totaling over $100 billion, will primarily focus on upgrading semiconductor production facilities in Arizona and Ohio, with additional efforts in Oregon and New Mexico. The funds will also be allocated towards research and development of equipment and advanced packaging technologies.
Furthermore, Intel intends to leverage investment tax credits from the Treasury Department, potentially covering up to 25% of capital expenditures.
President Joe Biden is expected to visit an Intel campus in Phoenix to announce the preliminary agreement.
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2. Bitcoin Drops to 2-Week Low
Bitcoin experienced a decline to a two-week low and then partially recovered losses as demand for dedicated US exchange-traded funds (ETFs) diminishes and investors express doubts about the Federal Reserve’s ability to quickly lower interest rates.
The digital asset has seen a near-daily decrease since reaching a record high of nearly $73,798 on March 14, prompting speculation about whether Bitcoin has reached a temporary peak. Bitcoin dropped by up to 4.6% before stabilizing around $63,350 on Wednesday.
Interest has waned for US spot-Bitcoin ETFs, which debuted amid significant hype on January 11. Despite garnering a total net inflow of $11.7 billion thus far, the group experienced its largest outflow on Tuesday.
Withdrawals from the Grayscale Bitcoin Trust accounted for a $326 million outflow, while subscriptions declined for competing offerings from firms such as Fidelity Investments and BlackRock Inc., according to data compiled by Bloomberg.
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3. Demand for Bespoke Bentley Skyrockets
Bentley, the luxury carmaker, achieved its second-largest annual profit by offering custom features ranging from wood trim to bespoke paint jobs.
Last year, a record seven out of 10 buyers opted for personalized features exceeding €40,000, with some customers doubling the price of their cars by commissioning numerous add-ons.
Examples include one customer using wood from their own forest for the interior and another adding €400,000 worth of carbon fiber to their vehicle. Additionally, Bentley delayed the release of its first all-electric model.
The carmaker reports that last year, seven out of every ten customers paid more than €40,000 for additional features.
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4. Citi Cuts London Investment Bank Jobs
Citigroup Inc. is reducing jobs in its investment banking division in London, joining other Wall Street firms in downsizing due to the prolonged downturn in global dealmaking, now in its third year. Approximately 20 employees will be affected by the cuts, primarily junior staffers ranging from analysts to directors, though some managing directors will also be impacted.
The reduction comes amidst a decline in global dealmaking volume, which remains about 17% lower than the same period in the first quarter of 2019. Economic uncertainty stemming from central banks’ interest rate policies has contributed to CEOs’ reluctance to pursue deals.
Citigroup’s investment banking revenue is projected to reach $829 million in the first quarter, based on analyst estimates from Bloomberg.
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5. Alibaba Sells $317 million of XPeng Shares
Alibaba Group Holding Ltd. has reportedly raised $317 million by selling approximately 33 million shares of XPeng Inc., a Chinese electric vehicle maker, in the US market.
Taobao China Holding Ltd., an Alibaba subsidiary, priced the American depositary shares (ADRs) at $9.60 each, with the stake initially marketed at a range of $9.60 to $9.75 per ADR. This pricing represents a 2.9% discount to XPeng’s ADR closing price of $9.89 on Tuesday. On Wednesday, XPeng’s ADRs traded at $9.50 each in New York, experiencing a drop of nearly 4%.
The decision to sell the shares was disclosed in a US Securities and Exchange Commission filing by the Alibaba unit earlier on Wednesday. These US-traded shares were originally acquired in September 2019 as part of a pre-IPO investment in XPeng.
In December, Alibaba sold 25 million of XPeng’s shares. On Tuesday, XPeng terminated its agreement with Taobao China, which involved nominating a director chosen by Alibaba.
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6. Astera Soars 46% After $713 Million IPO
Astera Labs Inc. saw its shares soar 46% higher on its first day of trading after the semiconductor connectivity company and its investors successfully raised $713 million in an upsized initial public offering. The stock opened at $55.17 each, well above the IPO price of $36. This surge reflects investors’ enthusiasm for AI-related stocks.
Astera, based in Santa Clara, California, and backed by investors including Intel Corp. and Sutter Hill Ventures, priced its shares above the marketed range, leading to a market value exceeding $8 billion. With stock options and restricted share units factored in, Astera’s fully diluted value stands at about $9 billion.
Earlier, the company had raised the price range to $32 to $34 and increased the number of shares in the IPO.
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7. Fed Maintains 3 Rate Cuts Expectation
Federal Reserve officials maintained their outlook for three interest-rate cuts this year and signaled a potential slowdown in reducing their bond holdings, indicating they are not overly concerned about a recent increase in inflation.
The benchmark federal funds rate was left unchanged in a range of 5.25% to 5.5%, the highest since 2001, marking the fifth consecutive meeting without a change. Policymakers indicated a plan to cut rates this year, but the number of reductions for 2025 was reduced to three from the previous forecast of four, according to the median projection.
Fed Chair Jerome Powell, speaking after the decision, avoided specifying whether rates would be lowered in upcoming meetings in May or June, reiterating that the first reduction is likely to occur “at some point this year.” Powell downplayed recent inflationary trends, stating that confidence in achieving the Fed’s objectives remains intact and that rate cuts are still expected.
Chair Jerome Powell mentioned that while the data supports the Fed’s cautious approach to the first rate cut, policymakers are still seeking further evidence that inflation is moving towards their 2% goal.
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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.