March 4, 2024
Markets and Chevron-Hess
Equity markets remained firm, with the S&P 500 at 5,137.08, the Dow at 39,087.38, the Nasdaq at 16,274.94, and the Russell 2000 at 2,076.39. WTI crude was near $79.81, and the 10-year Treasury yield was around 4.2%.
Chevron's proposed $53 billion all-stock acquisition of Hess ran into a rights dispute. Hess owns a 30% stake in an Exxon-led offshore Guyana project, which is a central reason Chevron wants the company. Exxon Mobil and Cnooc claim they have a right to pre-empt Chevron's bid for the Guyana stake, while Chevron and Hess dispute that claim.
This is a useful recruiting example because it shows why asset-level contracts can matter as much as headline valuation. If arbitration or negotiations affect control of the Guyana asset, the logic of the deal changes even though the announced purchase price does not.
Crypto access
BlackRock and Fidelity filed to launch the first U.S.-listed ETFs holding Ether. Ether moved above $3,000 as investors anticipated possible approval, and the SEC faced a May deadline on the first spot Ether ETF application. More than 10 firms were waiting for a decision.
Bitcoin also surged above $63,000, briefly touched $64,000, and remained near its prior all-time high of $68,982.20. It had gained nearly 20% during the week and more than 40% for the year. In one 24-hour period, there were $176 million of short liquidations and $86.1 million of long liquidations. Spot ETFs expanded the buyer base, while the April halving was expected to reduce new supply. My read is that the crypto story here is less about price prediction and more about distribution, liquidity, and product design.
Credit and macro
Credit card APRs reached record levels. The average APR rose from about 12.9% in late 2013 to 22.8% in 2023, the highest level since the Fed began collecting the data. The average APR margin over the prime rate rose from 9.6% to 14.3%, costing borrowers an estimated $25 billion in 2023.
January consumer spending rose 0.2% after a 0.7% increase in December, while rate futures still implied a greater than 50% probability of cuts by June. The Fed debate was not settled, because inflation, labor-market balance, and credibility still mattered.
Country and sector notes
Nigeria remained under pressure after ending fuel subsidies and removing the naira's dollar peg. The naira lost more than two-thirds of its value, gasoline prices doubled, and inflation approached 30%. Protests followed as workers pushed back against rising hardship.
Reliance's Viacom18 and Disney's Star India were set to merge assets in an $8.5 billion joint venture targeting more than 750 million viewers. Country Garden also faced a liquidation petition over a HK$1.6 billion loan, with shares down about 75% over 12 months.