PLANS CHANGED
Ark Investment, led by Cathie Wood, has made the decision not to launch an Ethereum Exchange Traded Fund (ETF) after previously submitting documents to the Securities and Exchange Commission (SEC) in collaboration with 21Shares. The firm will, however, continue its partnership with 21Shares for a Bitcoin spot ETF that was launched earlier this year. While Ark Investment remains a strong believer in Ethereum’s transformative potential and long-term value, the specific reasons for this shift in strategy remain undisclosed. Analysts have suggested that the competitive ‘fees war’ in the market, which challenges the profitability of ETF issuers, may have played a role in the decision. As a result, 21Shares will now proceed with the Ethereum ETF independently. Moreover, Ark Investment experienced significant outflows of $100 million in a single day, while Bitcoin ETFs are facing challenges in gaining traction among financial advisors due to concerns surrounding market timing, regulatory compliance, and a preference for stability and long-term growth among clients.
GAMESTOP’S RALLY
GameStop experienced a significant rally on Monday amidst speculations that Keith Gill, the figure behind the 2021 short squeeze, may hold a substantial position in the video game company. Gill made a reappearance by sharing a screenshot suggesting a large ownership of GameStop shares and call options, worth millions of dollars, fueling further excitement among retail traders. Concurrently, AMC’s shares have surged by 24%, while Reddit’s stock saw a 5% increase. Keith Gill’s reemergence on social media three weeks prior had already contributed to a remarkable upsurge in GameStop’s shares in May. This surge enabled GameStop to raise over $900 million through a stock offering.
SPENDING SHIFT
The American consumer, which was previously robust, now seems to be facing obstacles in the form of stagnant real incomes and dwindling savings rates as pandemic savings are exhausted. This has prompted an increasing reliance on credit cards and other financing options for spending, leading to a decline in consumer expenditure in April, predominantly on non-essential items like cars and dining out. Additionally, a cooling job market is constraining income growth, forcing families to be more cautious with their expenditures due to reduced savings and heightened debt burdens. These trends signal a departure from the strong economic performance seen in 2023, as evidenced by recent dips in consumer spending and downward revisions of GDP forecasts. Moreover, discussions within the Federal Reserve about the impact of their high interest rates on the slowing economy are arising, reflecting concerns about inflation and its subsequent effects on borrowing costs.
PRODUCTION CUTS EXTENDED
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, have reached an agreement to extend their official crude output cuts until 2025. This decision, which aligns with analyst forecasts, sets a combined production target of 39.725 million barrels per day for the coalition next year. The departure of long-standing OPEC member Angola earlier in the year has been factored into this figure. Additionally, the United Arab Emirates (UAE) will gradually increase its output by 300,000 barrels per day, starting in 2025. In a statement released by key OPEC+ members including Saudi Arabia and Russia, it was announced that nearly 1.7 million barrels per day of voluntary cuts would continue throughout 2025, as well as an additional 2.2 million barrels per day of reductions until the end of the third quarter of the year. This measured approach aims to stabilize global oil markets.
KEY EVENTS HAPPENING THIS WEEK
Monday: Construction spending report for April, S&P flash U.S. manufacturing PMI, ISM manufacturing and auto sales reports for May.
Tuesday: Factory orders and job openings reports for April.
Wednesday: Final revision of U.S. productivity for first quarter, U.S. trade deficit report for April, and ADP employment, ISM services and S&P flash U.S. services PMI reports for May.
Thursday: Initial jobs report for week ending on June 1.
Friday: Wholesale inventories report for April, and U.S. employment, unemployment, and hourly wages reports for May.
