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Futures Trim Losses As Focus Turns To Earnings

Futures Trim Losses As Focus Turns To Earnings

US stock futures slipped for a second day as investors braced for a busy week of parsing earnings…



Futures Trim Losses As Focus Turns To Earnings

US stock futures slipped for a second day as investors braced for a busy week of parsing earnings reports for signs of an earnings recession, falling profitability and an economic slowdown. Contracts on the S&P 500 fell 0.2% at 7:10 a.m. ET, recovering from a -0.5% drop earlier, while Nasdaq 100 futures dropped 0.3% after trading in the cash market was closed on Monday for a holiday. The dollar was flat after rebounding from an 8 month low on Monday while the US 10-year Treasury yield rises to top about 3.55%.

In premarket trading, shares of Chinese electric-vehicle makers like XPeng Inc. retreated amid worries over demand and competition after the company slashed prices on its models in China. Bank stocks were also lower as Goldman Sachs and Morgan Stanley were set to report their fourth-quarter results before the bell. In corporate news, Bank of America shares got their only sell-equivalent rating after the company flagged a slowdown in lending last week. Whirlpool fell 6% in early New York trading after reporting fourth-quarter net sales of $4.90 billion, compared with forecasts for $5.15 billion. Freeport McMoRan slid 2.6%. Bloomberg Intelligence analysts predict copper could fall to $8,000 a ton from more than $9,000 now as physical demand indicators are weakening. Here are some other notable premarket movers:

  • Pfizer (PFE US) stock slides 1.5% after it was cut to equal-weight from overweight at Wells Fargo, which sees an earnings downgrade cycle on the horizon for the pharma giant.
  • Cryptocurrency-related stocks rally, as Bitcoin extends its winning streak into a 14th day and trades above the $21,000 level. Coinbase +6%, Riot Platforms +8.3%, Bakkt +10%, Marathon Digital +9.4%
  • MGO Global rises 43% to $6.65 in premarket trading, reversing losses from a volatile initial trading session in which the stock more than tripled before closing lower, the latest in a series of wild debuts for US small-cap listings.
  • Keep an eye on Tesla after Jefferies cut its target for the stock to $180 from $350, as the brokerage slashed sales and earnings estimates for the electric-car maker. The company last week cut prices across its lineup in an effort to stoke demand after several quarters of disappointing deliveries.
  • Watch Wells Fargo stock as it was cut to hold from buy at Jefferies with the risk-reward on the US lender now looking more balanced.
  • Keep an eye on utilities as KeyBanc Capital Markets turned more negative on the outlook for the sector into 2023, downgrading CenterPoint Energy and Southern Co to sector weight.
  • Watch Global Payments stock as it was upgraded to overweight at Morgan Stanley, which says that fintech and payments sector offers “increasingly compelling” valuations from a more favorable backdrop.
  • Piper Sandler downgrades Bandwidth (BAND US), DigitalOcean (DOCN US) and RingCentral (RNG US) to neutral as it tweaks its cloud automation software ratings, with Nice (NICE US) upgraded to overweight and Nutanix (NTNX US) its top pick.
  • Morgan Stanley is guarded on hardline, broadline and food retail coverage to start 2023 as it sees more headwinds than tailwinds, with the magnitude of the headwinds outweighing the tailwinds. Wayfair (W US) and Kroger (KR US) upgraded to equal-weight from underweight; National Vision (EYE US) downgraded to equal-weight from overweight.

Bank stocks reversed losses to trade higher on Friday, even after JPM CEO Jamie Dimon and BofA's Brian Moynihan warned of an uncertain economic environment as four of the six biggest US lenders reported their fourth-quarter results. Lenders Goldman Sachs Group Inc. and Morgan Stanley report earnings on Tuesday. Investors will dissect results for the impact of the Federal Reserve’s interest rate hikes and signs of consumer spending slowdown.

“The spread between our earnings model and consensus forecasts is nearly as wide as it’s ever been and suggests a drawdown in stocks for which most are not prepared,” Morgan Stanley’s Michael Wilson wrote in his latest gloomy note. “The main culprit is the elevated and volatile inflationary environment which is likely to play havoc with profitability.”

Meanwhile, according to Bank of America’s latest global fund manager survey, investors are the most underweight on US equities since 2005 as improving market sentiment sends them flocking toward cheaper regions. Allocation to US equities “collapsed” during the first month of 2023, with investors a net 39% underweight the asset class, they said, exceeding even the UK’s 15%. At the same time, participants in the January poll were “a lot less bearish” than in the fourth quarter, sparking a rotation to emerging markets, Europe and cyclical stocks, and away from pharmaceuticals, technology and the US, strategists led by Michael Hartnett wrote in a note.

Investors had their expectations for a pause in central-bank tightening damped by ECB Chief Economist Philip Lane, who said interest rates will have to move into restrictive territory to bring inflation back to target. BlackRock Inc. Vice Chairman Philipp Hildebrand said he saw no chance of policy easing this year. Data including a record increase in UK wages signaled further rate hikes are necessary.

“We’ve just hit pause and I am sure there’s some profit taking,” said James Athey, investment director at Edinburgh-based abrdn. “We‘re into the earnings season which likely brings with it risks and volatility. If you run a risk-parity or 60/40 book, you’ve done brilliantly already this year. It seems prudent to trim some risk.”

US corporate earnings may set the tone for traders this week as the reporting season moves up a gear. Of the 30 companies on the S&P 500 that have posted earnings so far, 24 have beaten analysts’ expectations. However, UBS Wealth Management expects “quite a bit of downside here on the earnings” in the US, according to Hartmut Issel, head of Asia Pacific equities.

European stocks and bonds are both in the red as investors contemplated the prospect of ongoing monetary tightening after ECB Chief Economist Lane said rates will have to move into restrictive territory. The BOE are also facing pressure to continue hiking after UK wages rose at their fastest rate on record, excluding the pandemic. The Stoxx 600 was down 0.2% and on course to snap a four-day winning streak with technology, real estate and autos leading declines. Here are some of the most notable European movers:

  • ABB shares rise as much as 1.9% after Redburn upgrades stock to buy from sell, saying recent business exits could mean the Swiss industrial group can grow faster than earlier expected
  • Wacker Chemie, one of Europe’s largest producers of polysilicon, rose as much as 3.7% after prices of the material used in solar panels surged in China
  • Infineon shares rise as much as 2.4% after Barclays starts coverage of European semiconductor stocks with a preference for Infineon and STMicro, rating both overweight
  • Alten shares rise as much as 4.5% after Kepler Cheuvreux raised its recommendation for the French engineering company to buy from hold, citing its ability to deliver strong growth
  • Lindt shares rise as much as 1.1% after the Swiss chocolate maker delivered estimate-beating organic sales growth, Vontobel says, with FY23 guidance in line with mid-term targets
  • Wise shares fall as much as 7.1% after the UK money-transfer firm’s volume growth slowed, coming in below analyst expectations in the fiscal third quarter
  • Ocado Group shares decline as much as 11% after the online grocer reported 4Q retail sales that missed analyst estimates. Morgan Stanley said period performance was “disappointing”
  • Philips falls as much as 5.6% after UBS cut the Dutch medical technology group to sell, describing a recent month-long rally as “unjustified,” and flagging downside risks to earnings
  • Hugo Boss drops as much as 2.7% as Deustche Bank said a “mild” beat of 4Q consensus estimates failed to impress investors

Asian stocks were mixed as investors assessed data on China’s economic growth and braced for the Bank of Japan’s key policy decision due Wednesday. The MSCI Asia Pacific Index was little changed as of 4:30p.m. Hong Kong time, as losses in financial shares offset an advance in consumer discretionary stocks. Hong Kong’s Hang Seng Index fell 0.8%, ending a four-day rally. Alibaba gained 1% after news that billionaire-investor Ryan Cohen has acquired a stake worth hundreds of millions of dollars in the second half of last year. China’s CSI 300 Index ended flat after a report showed the nation’s gross domestic product grew 3% in 2022, higher than economists expected. The market took a breather after three days of gains fueled by optimism over reopening and eased tech regulations. 

“I believe that the market will welcome such numbers,” said Hao Hong, chief economist at Grow Investment Group, in a Bloomberg TV interview. Still, “if the property sector takes more time to recover, it will affect consumption as well. So this year is actually going to be more challenging than last year.”  Investors in Asia will also monitor speeches by several Federal Reserve officials this week, as well as comments by central bankers during the World Economic Forum’s annual meeting in Davos, Switzerland.

Japanese stocks rose, ending a two-day loss, as investors adjusted positions before the Bank of Japan’s policy decision tomorrow. Although almost all economists polled by Bloomberg expect no change at the BOJ on Wednesday, some investors are bracing for more action as the central bank struggles to keep bond yields below its target.  The Topix Index rose 0.9% to 1,902.89 as of the market close in Tokyo, while the Nikkei 225 advanced 1.2% to 26,138.68. Toyota Motor contributed the most to the Topix’s gain, increasing 2.5%. Out of 2,161 stocks in the index, 1,570 rose and 474 fell, while 117 were unchanged

Australian stocks dipped: the S&P/ASX 200 index closed slightly lower at 7,386.30, snapping four days of gains, as losses in mining and technology stocks weighed on the gauge.  Most markets across Asia fell as traders digested data that showed China’s economy growing at the second slowest pace since the 1970s.  In New Zealand, the S&P/NZX 50 index rose 0.6% to 11,881.00

India’s benchmark stock gauge posted its biggest advance in more than a week as Reliance Industries led gains among energy firms amid improving outlook for the sector. The S&P BSE Sensex rose 0.9% to 60,655.72 in Mumbai, its largest single-day jump since Jan. 9. The NSE Nifty 50 Index rallied by a similar measure. All but three of the 20 sector sub-gauges compiled by BSE Ltd. gained, led by capital goods makers. Reliance Industries gained 1.4%, after five-straight declines, to push the oil-and-gas sector gauge to an all-time high after the government lowered windfall tax on locally-produced crude and export of diesel.  Outlook for oil and gas companies has been improving as moderating crude prices allow state-run refiners to lower marketing losses while Reliance Industries benefits from higher margins. 

The Bloomberg Dollar Index inched up 0.1% as the greenback traded higher against most of its Group-of-10 peers. Scandinavian currencies were the worst performers while the Swiss franc led G-10 gains.

  • The pound gained and gilts slumped in the wake of UK labor data that showed wages rose at a near-record pace for the three months through November. Yields rose 5-7bps across the curve and traders also bolstered bets on the BOE’s peak rate
  • The euro inched lower, but held above $1.08. Bunds eased across the curve and Italian bonds underperformed. Germany January ZEW investor expectations rose to 16.9 versus estimate -15.0
  • Japan’s benchmark yield briefly rose above the central bank’s ceiling for a third day as the Bank of Japan starts a two-day policy meeting. The yen fell for a second day. Most economists expect the BOJ to stand pat although market watchers don’t rule out an adjustment including another widening of the yield band to 0.75 or higher, or a scrapping of the yield curve control
  • The Australian and New Zealand dollars reversed an Asia session gain amid broad-based dollar strengthening. Australia’s consumer confidence jumped 5%, the largest monthly gain since April 2021, aided by a temporary respite from interest-rate increase as the Reserve Bank’s board doesn’t meet this month

In rates, the Treasury curve extended bear-steepening move after 30-year yields gap higher from the reopen after Monday’s US holiday. Treasury yields were cheaper by up to 7bp across long-end of the curve with 10-year note futures trading toward bottom of Monday’s range; 10-year yields around 3.56% and cheaper by ~5bp vs Friday’s close. Gilts weaker over London session after UK wages rise faster than forecast while European supply pressures also weigh on core rates.  Long-end-led losses in US curve steepen 2s10s, 5s30s cash spreads by 5bp and 4bp vs Friday’s close. UK and German government bonds fall with 10-year borrowing costs rising 6bps and 2bps respectively.

In commodities, rose to session highs after earlier dropping  WTI rose 0.65% to trade above $80. Spot gold falls roughly $10 to trade near 1,906/oz.

Bitcoin is essentially unchanged on the session and resides in particularly narrow sub-USD 400 parameters after last week's marked upside.

To the day ahead now, and data releases include UK unemployment for November, the German ZEW survey for January, Canadian CPI for December, and the US Empire State manufacturing survey for January. Central bank speakers include the ECB’s Centeno and the Fed’s Williams. Finally, earnings releases include Goldman Sachs, Morgan Stanley and United Airlines.

Market Snapshot

  • S&P 500 futures down 0.3% to 4,007.75
  • MXAP little changed at 165.62
  • MXAPJ down 0.4% to 544.25
  • Nikkei up 1.2% to 26,138.68
  • Topix up 0.9% to 1,902.89
  • Hang Seng Index down 0.8% to 21,577.64
  • Shanghai Composite down 0.1% to 3,224.25
  • Sensex up 0.9% to 60,629.94
  • Australia S&P/ASX 200 little changed at 7,386.29
  • Kospi down 0.9% to 2,379.39
  • STOXX Europe 600 down 0.1% to 454.10
  • German 10Y yield little changed at 2.19%
  • Euro little changed at $1.0822
  • Brent Futures up 0.4% to $84.78/bbl
  • Gold spot down 0.4% to $1,908.36
  • U.S. Dollar Index up 0.17% to 102.38

Top Overnight News from Bloomberg

  • ECB Governing Council member Mario Centeno said the euro-area economy is performing better than many anticipated in the face of record inflation and the energy crisis that erupted after Russia attacked Ukraine
  • ECB Chief Economist Philip Lane said interest rates will have to move into “restrictive territory” to bring inflation back to target
  • Investors are looking to bet against Italy’s peer-beating bond rally, saying the gains have gone too far. They argue the ECB is expected to keep hiking interest rates and is unlikely to stand in the way of a selloff given how narrow the spread over German bunds remains
  • Investors are the most underweight on US equities since 2005 as improving market sentiment sends them flocking toward cheaper regions, according to Bank of America’s global fund manager survey
  • Some 467,000 working days in the UK were lost to strikes in November, a 10-year high, after a wave of walkouts caused by the most severe cost-of-living crisis in a generation. Days lost over a six-month period reached the highest level since 1989-90
  • The BOJ’s policy decision due Wednesday is shaping up to be the biggest risk for the dollar-yen pair since the global financial crisis. The currency pair’s overnight implied volatility jumped as high as 54.4 vol, the highest since November 2008, as traders positioned for another policy tweak following a surprise move in December
  • An arbitrage trade that rattled Japan’s bond market last year looks to be back. The spread between the prices on Japanese 10-year debt and similar-maturity futures has swelled in recent weeks, providing room for so-called basis trades that try to take advantage of the difference
  • This year is pivotal for the Japanese economy to move away from decades of deflationary thinking toward sustained real wage growth, according to the head of the country’s largest labor union
  • While China’s GDP grew 3% last year, the second-slowest pace since the 1970s, fourth- quarter and December data came in better than economists had expected
  • China’s population started shrinking in 2022 for the first time in six decades, the latest milestone in a worsening demographic crisis for the world’s second-largest economy

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed in which most bourses lacked firm direction in the absence of a lead from the US due to MLK Jr. Day and despite the better-than-expected Chinese economic growth and activity data. ASX 200 was subdued with the index contained after it hit resistance at the 7,400 level, while an improvement in Westpac Consumer Confidence and an increase in Rio Tinto’s quarterly output did little to inspire trade. Nikkei 225 outperformed with strength in the auto sector driving the advances and as the BoJ kicked off its 2-day policy meeting with markets second-guessing what the central bank will decide regarding its ultra-easy policy. Hang Seng and Shanghai Comp were lacklustre despite encouraging data in which Chinese GDP, Industrial Production and Retail Sales figures all topped estimates. Nonetheless, the 3.0% growth for 2022 was much lower than the ‘abandoned’ target of around 5.5% and President Xi’s hint of at least 4.4% growth, while China also noted its population shrunk for the first time since 1961 and the death rate was the highest since 1974.

Top Asian News

  • PBoC injected CNY 205bln via 7-day reverse repos with the rate kept at 2.00% and injected CNY 301bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 504bln net injection.
  • China's Customs said GDP grew 3.0% Y/Y in 2022 and that China was able to stabilise the economy, but added that the foundation for economic recovery is not solid yet, according to Reuters.
  • China's stats bureau stated China's population in 2022 shrunk for the first time since 1961 and the death rate was the highest since 1974, although the stats bureau chief later noted they should not worry about China's population decline and overall labour supply still exceeds demand. The stats bureau chief also said that benign inflation in China will create room for macro policies and that the property sector's drag on economic growth this year will not be larger than in 2022, according to Reuters.

European equities trade marginally lower following a mixed APAC lead, Euro Stoxx 50 -0.3%. Sectors in Europe are now mostly lower with no overall bias, but with Chemicals and Industrials outperforming and Autos and Energy towards the bottom. US equity futures are softer but off worse levels with the ES holding above 4,000 throughout the Tuesday session.

Top European News

  • ECB's Centeno says Q4 growth within Europe is likely to be positive.
  • European Economy Commissioner Gentiloni says we have to strengthen competitiveness by streamlining state aid rules, have a good EU-US partnership; need to support competitiveness, not begin a subsidy war with the US.
  • European Commission President von der Leyen says to avoid fragmenting the EU's single market and to support clean tech across the EU, EU has to step up finding; For medium term will prepare a European sovereignty fund but it will take time.
  • Germany's BDI President says mild recessionary tendencies will predominate at the start of the year, sees upward trend; Economy expected to shrink by 0.3% in 2023; sees real 1% increase in export of goods and services this year (vs 1.5% global trade).


  • A choppy Tuesday session thus far for the Dollar as the index matched yesterday’s 102.56 peak in APAC hours before waning towards the unchanged mark ahead of the European cash open.
  • CNH is softer intraday despite supportive Chinese data overnight, which saw Q4 GDP, IP and Retail Sales top expectations across the board.
  • USD/JPY is choppy in a 128.23-129.13 parameter, but within recent ranges, whilst the technical “death cross” is more evident as the 50 DMA (135.60) falls further below the 200 DMA (136.67).
  • Mixed trade seen across both the EUR and GBP with the latter leading the way following the UK jobs data following strong wages metrics which subsequently lifted BoE market pricing for a 50bps hike (at the time) to around 72% from 63% pre-release.
  • PBoC set USD/CNY mid-point at 6.7222 vs exp. 6.7234 (prev. 6.7135)

Fixed Income

  • Core benchmarks are downbeat after UK and German data, with USTs in tandem directionally but with magnitudes more contained ahead of Fed's Williams.
  • Bunds and, post-open, Gilts printed session lows of 137.66 and 103.37 respectively post-UK jobs data, with the benchmarks nearing but not retesting these points after a particularly strong ZEW release.
  • Following the UK jobs data, we have seen an uptick in BoE pricing for 50bp in February to a 75% probability from circa. 63% pre-release.


  • WTI and Brent front-month futures diverge intraday on account of the US MLK holiday on Monday which resulted in no WTI settlement.
  • WTI Feb holds onto a USD 79/bbl status whilst Brent trades on either side of USD 85/bbl in what has been a choppy session.
  • Spot gold has been drifting lower as the Dollar remains firm, with the yellow metal trundling lower from highs of USD 1,919/oz down to around USD 1,905/oz.
  • Base metals are softer across the board (but to varying degrees) despite the supportive Chinese data overnight as a firmer Dollar exerts pressure on the complex.
  • China's state planner, NDRC is to lower retail prices of gasoline an diesel by CNY 205/tonne and CNY 195/tonne respectively as of January 18th.
  • Radio Free Europe's Jozwiak writes "Review underway on the Russian oil price cap. Currently at USD 60 but I understand there is a good chance that it might be lowered a bit in upcoming weeks".
  • OPEC Secretary General is very bullish on China, and cautiously optimistic on the global economy; Chinese demand will grow by 500k barrels this year; waiting to see what happens after China's New Year holiday (Jan 21st-29th).


  • Russian Defence Ministry discussed increasing the number of military personnel to 1.5mln (vs ~1.3mln in 2022), according to Tass; says major changes in Russian army will take place from 2023-26.
  • Ukrainian President Zelensky said the attack in Dnipro underscores the need for new and faster decisions on weapons supplies, while he added they expect key decisions from partners on arms supplies at the Ramstein meeting.
  • Russian-installed Donetsk authorities confirm that Russia has control of Soledar, via Tass.
  • Russia deployed an SU-27 fighter plane to escort a German naval aircraft over the Baltic, according to Interfax.
  • Russian Kremlin when asked about a potential meeting between the CIA's Burns and Russia spy chief says "this kind of dialogue is beneficial".
  • UK is reviewing whether to designate Iran’s Revolutionary Guards as a terrorist organisation, according to FT.
  • China's Foreign Ministry spokesperson says they are discussing the details of a visit from US Secretary of State Blinken.
  • Iran's IRGC have conducted "major drills" in the Persian Gulf, according to Tasnim; details light.

US Event Calendar

  • 08:30: Jan. Empire Manufacturing, est. -8.6, prior -11.2

Central Bank Speakers

  • 15:00: Fed’s Williams Gives Welcoming Remarks

DB's Jim Reid concludes the overnight wrap

I hope you are all looking forward to the rest of the year now after Blue Monday was navigated yesterday, which flew hot on the heels of Friday 13th at the end of last week. To be fair markets of late haven't been either depressing or scary. However we took pause for breath yesterday, given the US holiday, with nothing much happening. The main news has instead been overnight, where we’ve just had the release of the Chinese GDP figures for Q4 that covers the December surge in Covid cases. The data was better than expected but still showed the scars from Covid.

Q4 GDP (+2.9%) beat expectations (+1.6%) with the FY at +3% (+2.7% expected and +8.1% in 2021) - the second lowest year since China re-emerged from the economic wilderness in the 1970s. Momentum was much stronger than expected in December though. Retail sales dropped -1.8% y/y in December, much better than -9.0% fall expected by analysts and compared to a -5.9% decline in the prior month. Meanwhile, industrial production grew +1.3% y/y, well above the +0.1% predicted by Bloomberg. At the same time, fixed asset investment for 2022 rose by +5.1%, slightly above the +5% expected by Bloomberg.

Asian markets are lower though led by the Hang Seng (-1.25%) followed by the KOSPI (-0.77%), the Shanghai Composite (-0.27%) and the CSI (-0.16%). Elsewhere, the Nikkei (+1.28%) is bucking the trend this morning, recouping some of the losses from the previous two sessions. In overnight trading, stock futures in the US are indicating a negative opening with contracts on the S&P 500 (-0.32%) and NASDAQ 100 (-0.54%) trading in the red. Meanwhile, yields on 10yr USTs (+2.95 bps) have edged higher to 3.53% after the holiday.

Looking back at yesterday now, it was an incredibly uneventful session for the most part, even adjusting for the impact of the US holiday. For instance, if you look at US futures markets (since spot markets were closed), S&P 500 futures had barely budged by the time Europe went home, with a modest decline of -0.10%. It was a similar story for bonds, where futures also saw little change, perhaps in part since expectations of the Fed’s terminal rate for June moved up by just +0.002bps on the day. That said, despite the lack of excitement, the VIX index of volatility ticked up from its one-year low on Friday, moving up +1.14pts to 19.49pts.

Back in Europe there wasn’t much happening either, but one trend to note was the continued decline in natural gas futures yesterday, which fell back to a 16-month low of €55.45 per megawatt-hour. Although these prices are still well above their historic norms, they’ve now come down by more than half in the last month, so this is a big and positive shock if it ends up being sustained. In turn, that led to a fresh decline in inflation expectations, and the 10yr German breakeven came down a further -2.9bps to a 3-month low of 2.05%.

That greater optimism on the inflation side wasn’t enough to prevent a modest decline in sovereign bonds yesterday, with yields on 10yr bunds (+0.6bps), OATs (+0.6bps) and BTPs (+0.6bps) all seeing a small increase. Gilts were an underperformer, with 10yr yields up +1.8bps rise on the day as UK assets more broadly saw a slight underperformance. That came as BoE Governor Bailey testified before the Treasury Committee of MPs, where he warned that there was a risk that inflation wouldn’t drop as fast as expected. Overall however, there was nothing revelatory on how they’re thinking about the next decision on February 2.

With the positive gas news boosting sentiment more broadly, European equities advanced for the most part. The STOXX 600 rose +0.46%, taking the index up to its highest level since April, with other advances for the FTSE 100 (+0.20%), the DAX (+0.31%) and the CAC 40 (+0.28%). That continues the very positive start to the year for European equities, and means that the YTD returns now stand at +7.00% for the STOXX 600 and +8.69% for the DAX.

Finally, the World Economic Forum’s annual meeting at Davos opened last night, which will continue for the rest of the week. Numerous political and business leaders are gathering there, and today’s speakers include European Commission President Ursula Von der Leyen, Chinese Vice Premier Liu He, Spanish PM Pedro Sánchez and German finance minister Christian Lindner. Separately, it’s not actually a Davos meeting, but we heard yesterday that US Treasury Secretary Yellen and Chinese Vice Premier Liu He would be meeting in Zurich.

To the day ahead now, and data releases include UK unemployment for November, the German ZEW survey for January, Canadian CPI for December, and the US Empire State manufacturing survey for January. Central bank speakers include the ECB’s Centeno and the Fed’s Williams. Finally, earnings releases include Goldman Sachs, Morgan Stanley and United Airlines.

Tyler Durden Tue, 01/17/2023 - 07:36

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Das: Is A Full-Blown Global Banking Crisis In The Offing?

Das: Is A Full-Blown Global Banking Crisis In The Offing?

Authored by Styajit Das via,

If everything is fine, then why…



Das: Is A Full-Blown Global Banking Crisis In The Offing?

Authored by Styajit Das via,

If everything is fine, then why are US banks borrowing billions at punitive rates at the discount window... a larger amount than in 2008/9?

Financial crashes like revolutions are impossible until they are inevitable. They typically proceed in stages. Since central banks began to increase interest rates in response to rising inflation, financial markets have been under pressure.

In 2022, there was the crypto meltdown (approximately $2 trillion of losses).

The S&P500 index fell about 20 percent. The largest US technology companies, which include Apple, Microsoft, Alphabet and Amazon, lost around $4.6 trillion in market value  The September 2022 UK gilt crisis may have cost $500 billion. 30 percent of emerging market countries and 60 percent of low-income nations face a debt crisis. The problems have now reached the financial system, with US, European and Japanese banks losing around $460 billion in market value in March 2023.

While it is too early to say whether a full-fledged financial crisis is imminent, the trajectory is unpromising.


The affected US regional banks had specific failings. The collapse of Silicon Valley Bank ("SVB") highlighted the interest rate risk of financing holdings of long-term fixed-rate securities with short-term deposits. SVB and First Republic Bank ("FRB") also illustrate the problem of the $250,000 limit on Federal Deposit Insurance Corporation ("FDIC") coverage. Over 90 percent of failed SVB and Signature Bank as well as two-thirds of FRB deposits were uninsured, creating a predisposition to a liquidity run in periods of financial uncertainty.

The crisis is not exclusively American. Credit Suisse has been, to date, the highest-profile European institution affected. The venerable Swiss bank -- which critics dubbed  'Debit Suisse' -- has a troubled history of banking dictators, money laundering, sanctions breaches, tax evasion and fraud, shredding documents sought by regulators and poor risk management evidenced most recently by high-profile losses associated with hedge fund Archegos and fintech firm Greensill. It has been plagued by corporate espionage, CEO turnover and repeated unsuccessful restructurings.

In February 2023, Credit Suisse announced an annual loss of nearly Swiss Franc 7.3 billion ($7.9 billion), its biggest since the financial crisis in 2008. Since the start of 2023, the bank's share price had fallen by about 25 percent. It was down more than 70 percent over the last year and nearly 90 percent over 5 years. Credit Suisse wealth management clients withdrew Swiss Franc 123 billion ($133 billion) of deposits in 2022, mostly in the fourth quarter.

The categoric refusal -- "absolutely not" -- of its key shareholder Saudi National Bank to inject new capital into Credit Suisse precipitated its end. It followed the announcement earlier in March that fund manager Harris Associates, a longest-standing shareholder, had sold its entire stake after losing patience with the Swiss Bank’s strategy and questioning the future of its franchise.

While the circumstances of individual firms exhibit differences, there are uncomfortable commonalities - interest rate risk, uninsured deposits and exposure to loss of funding.


Banks globally increased investment in high-quality securities -- primarily government and agency backed mortgage-backed securities ("MBS"). It was driven by an excess of customer deposits relative to loan demand in an environment of abundant liquidity. Another motivation was the need to boost earnings under low-interest conditions which were squeezing net interest margin because deposit rates were largely constrained at the zero bound. The latter was, in part, driven by central bank regulations which favour customer deposit funding and the risk of loss of these if negative rates are applied.

Higher rates resulted in unrealised losses on these investments exceeding $600 billion as at end 2022 at
Federal Deposit Insurance Corporation-insured US banks. If other interest-sensitive assets are included, then the loss for American banks alone may be around $2,000 billion. Globally, the total unrealised loss might be two to three times that.

Pundits, most with passing practical banking experience, have criticised the lack of hedging. The reality is that eliminating interest rate risk is costly and would reduce earnings. While SVB's portfolio's duration was an outlier, banks routinely invest in 1- to 5-year securities and run some level of the resulting interest rate exposure.

Additional complexities inform some investment portfolios. Japanese investors have large holdings of domestic and foreign long-maturity bonds. The market value of these fixed-rate investments have fallen. While Japanese short-term rates have not risen significantly, rising inflationary pressures may force increases that would reduce the margin between investment returns and interest expense reducing earnings.

It is unclear how much of the currency risk on these holdings of Japanese investors is hedged. A fall in the dollar, the principal denomination of these investments, would result in additional losses. The announcement by the US Federal Reserve ("the Fed") of coordinated action with other major central banks (Canada, England, Japan, Euro-zone and Switzerland) to provide US dollar liquidity suggests ongoing issues in hedging these currency exposures.

Banking is essentially a confidence trick because of the inherent mismatch between short-term deposits and longer-term assets. As the rapid demise of Credit Suisse highlights, strong capital and liquidity ratios count for little when depositors take flight.

Banks now face falling customer deposits as monetary stimulus is withdrawn, the build-up of savings during the pandemic is drawn down and the economy slows. In the US, deposits are projected to decline by up to 6 percent. Financial instability and apprehension about the solvency of individual institutions can, as recent experience corroborates, result in bank runs.


The fact is that events have significantly weakened the global banking system. A 10 percent loss on bank bond holdings would, if realised, decrease bank shareholder capital by around a quarter. This is before potential loan losses, as higher rates affect interest-sensitive sectors of the economy, are incorporated.

One vulnerable sector is property, due to high levels of leverage generally employed.

House prices are falling albeit from artificially high pandemic levels. Many households face financial stress due to high mortgage debt, rising repayments, cost of living increases and lagging real income. Risks in commercial real estate are increasing. The construction sector globally shows sign of slowing down. Capital expenditure is decreasing because of uncertainty about future prospects. Higher material and energy costs are pushing up prices further lowering demand.

Heavily indebted companies, especially in cyclical sectors like non-essential goods and services and many who borrowed heavily to get through the pandemic will find it difficult to repay debt. The last decade saw an increase in leveraged purchases of businesses. The value of outstanding US leveraged loans used in these transactions nearly tripled from $500 billion in 2010 to around $1.4 trillion as of August 2022, comparable to the $1.5 trillion high-yield bond market. There were similar rises in Europe and elsewhere.

Business bankruptcies are increasing in Europe and the UK although they fell in the US in 2022. The effects of higher rates are likely to take time to emerge due to staggered debt maturities and the timing of re-pricing. Default rates are projected to rise globally resulting in bank bad debts, reduced earnings and erosion of capital buffers.


There is a concerted effort by financial officials and their acolytes to reassure the population and mainly themselves of the safety of the financial system. Protestations of a sound banking system and the absence of contagion is an oxymoron. If the authorities are correct then why evoke the ‘systemic risk exemption’ to guarantee all depositors of failed banks? If there is liquidity to meet withdrawals then why the logorrhoea about the sufficiency of funds? If everything is fine, then why have US banks borrowed $153 billion at a punitive 4.75% against collateral at the discount window, a larger amount than in 2008/9? Why the compelling need for authorities to provide over $1 trillion in money or force bank mergers?

John Kenneth Galbraith once remarked that "anyone who says he won't resign four times, will". In a similar vein, the incessant repetition about the absence of any financial crisis suggests exactly the opposite.


The essential structure of the banking is unstable, primarily because of its high leverage where around $10 of equity supports $100 of assets. The desire to encourage competition and diversity, local needs, parochialism and fear of excessive numbers of systemically important and 'too-big-to-fail' institutions also mean that there are too many banks.

There are over 4,000 commercial banks in the US insured by the FDIC with nearly $24 trillion in assets, most of them small or mid-sized. Germany has around 1,900 banks including 1,000 cooperative banks, 400 Sparkassen, and smaller numbers of private banks and Landesbanken. Switzerland has over 240 banks with only four (now three) major institutions and a large number of cantonal, regional and savings banks.

Even if they were adequately staffed and equipped, managers and regulators would find it difficult to monitor and enforce rules. This creates a tendency for 'accidents' and periodic runs to larger banks.

Deposit insurance is one favoured means of ensuring customer safety and assured funding. But that entails a delicate balance between consumer protection and moral hazard - concerns that it might encourage risky behaviour. There is the issue of the extent of protection.

In reality, no deposit insurance system can safeguard a banking system completely, especially under conditions of stress. It would overwhelm the sovereign's balance sheet and credit. Banks and consumers would ultimately have to bear the cost.

Deposit insurance can have cross-border implications. Thought bubbles like extending FDIC deposit coverage to all deposits for even a limited period can transmit problems globally and disrupt currency markets. If the US guarantees all deposits, then depositors might withdraw money from banks in their home countries to take advantage of the scheme setting off an international flight of capital. The movement of funds would aggravate any dollar shortages and complicate hedging of foreign exchange exposures. It may push up the value of the currency inflicting losses on emerging market borrowers and reducing American export competitiveness.

In effect, there are few if any neat, simple answers.


This means the resolution of any banking crisis relies, in practice, on private sector initiatives or public bailouts.

The deposit of $30 billion at FRB by a group of major banks is similar to actions during the 1907 US banking crisis and the 1998 $3.6 billion bailout of hedge fund Long-Term Capital Management. Such transactions, if they are unsuccessful, risk dragging the saviours into a morass of expanding financial commitments as may be the case with FRB.

A related option is the forced sale or shotgun marriage. It is unclear how given systemic issues in banking, the blind lending assistance to the deaf and dumb strengthens the financial system. Given the ignominious record of many bank mergers, it is puzzling why foisting a failing institution onto a healthy rival constitutes sound policy.

HSBC, which is purchasing SVB's UK operations, has a poor record of acquisitions that included Edmond Safra's Republic Bank which caused it much embarrassment and US sub-prime lender Household International just prior to the 2008 crisis. The bank's decision to purchase SVB UK for a nominal £1 ($1.20) was despite a rushed due diligence and admissions that it was unable to fully analyse 30 percent of the target's loan book. It was justified as 'strategic' and the opportunity to win new start-up clients.

On 19 March 2023, Swiss regulators arranged for a reluctant UBS, the country's largest bank, to buy Credit Suisse after it become clear that an emergency Swiss Franc 50 billion ($54 billion) credit line provided by the Swiss National Bank was unlikely to arrest the decline. UBS will pay about Swiss Franc 0.76 a share in its own stock, a total value of around Swiss Franc 3 billion ($3.2 billion). While triple the earlier proposed price, it is nearly 60 percent lower than CS’s last closing price of Swiss Franc1.86.

Investors cheered the purchase as a generational bargain for UBS. This ignores Credit Suisse's unresolved issues including toxic assets and legacy litigation exposures. It was oblivious to well-known difficulties in integrating institutions, particularly different business models, systems, practices, jurisdictions and cultures. The purchase does not solve Credit Suisse's fundamental business and financial problems which are now UBS’s.

It also leaves Switzerland with the problem of concentrated exposure to a single large bank, a shift from its hitherto preferred two-bank model. Analysts seemed to have forgotten that UBS itself had to be supported by the state in 2008 with taxpayer funds after suffering large losses to avoid the bank being acquired by foreign buyers.


The only other option is some degree of state support.

The UBS acquisition of Credit Suisse requires the Swiss National Bank to assume certain risks. It will provide a Swiss Franc 100 billion ($108 billion) liquidity line backed by an enigmatically titled government default guarantee, presumably in addition to the earlier credit support. The Swiss government is also providing a loss guarantee on certain assets of up to Swiss Franc 9 billion ($9.7 billion), which operates after UBS bears the first Swiss Franc 5 billion ($5.4 billion) of losses.

The state can underwrite bank liabilities including all deposits as some countries did after 2008. As US Treasury Secretary Yellen reluctantly admitted to Congress, the extension of FDIC coverage was contingent on US officials and regulators determining systemic risk as happened with SVB and Signature. Another alternative is to recapitalise banks with public money as was done after 2008 or finance the removal of distressed or toxic assets from bank books.

Socialisation of losses is politically and financially expensive.

Despite protestations to the contrary, the dismal truth is that in a major financial crisis, lenders to and owners of systemic large banks will be bailed out to some extent.

European supervisors have been critical of the US decision to break with its own standard of guaranteeing only the first $250,000 of deposits by invoking a systemic risk exception while excluding SVB as too small to be required to comply with the higher standards applicable to larger banks. There now exist voluminous manuals on handling bank collapses such as imposing losses on owners, bondholders and other unsecured creditors, including depositors with funds exceeding guarantee limit, as well as resolution plans designed to minimise the fallout from failures. Prepared by expensive consultants, they serve the essential function of satisfying regulatory checklists. Theoretically sound reforms are not consistently followed in practice. Under fire in trenches, regulators concentrate on more practical priorities.

The debate about bank regulation misses a central point. Since the 1980s, the economic system has become addicted to borrowing-funded consumption and investment. Bank credit is central to this process. Some recommendations propose a drastic reduction in bank leverage from the current 10-to-1 to a mere 3-to1. The resulting contraction would have serious implications for economic activity and asset values.

In Annie Hall, Woody Allen cannot have his brother, who thinks he is a chicken, treated by a psychiatrist because the family needs the eggs. Banking regulation flounders on the same logic.

As in all crises, commentators have reached for the 150-year-old dictum of Walter Bagehot in Lombard Street that a central bank's job is "to lend in a panic on every kind of current security, or every sort on which money is ordinarily and usually lent."

Central bankers are certainly lending, although advancing funds based on the face value of securities with much lower market values would not seem to be what the former editor of The Economist had in mind. It also ignores the final part of the statement that such actions "may not save the bank; but if it do not, nothing will save it."

Banks everywhere remain exposed. US regional banks, especially those with a high proportion of uninsured deposits, remain under pressure.

European banks, in Germany, Italy and smaller Euro-zone economies, may be susceptible because of poor profitability, lack of essential scale, questionable loan quality and the residual scar tissue from the 2011 debt crisis.

Emerging market banks' loan books face the test of an economic slowdown. There are specific sectoral concerns such as the exposure of Chinese banks to the property sector which has necessitated significant ($460 billion) state support.

Contagion may spread across a hyper-connected financial system from country to country and from smaller to larger more systematically important banks. Declining share prices and credit ratings downgrades combined with a slowdown in inter-bank transactions, as credit risk managers become increasingly cautious, will transmit stress across global markets.

For the moment, whether the third banking crisis in two decades remains contained is a matter of faith and belief. Financial markets will test policymakers' resolve in the coming days and weeks.

Tyler Durden Sat, 03/25/2023 - 10:30

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Southwest Airlines Tries to End a Passenger Boarding Pain Point

The company has a novel way to end a practice that passengers hate.



The company has a novel way to end a practice that passengers hate.

Southwest Airlines boards its planes in a way very different from that of any of its major rivals.

As fans and detractors of the brand know, the airline does not offer seat assignments. Instead, passengers board by group and number. When you check into your flight, Southwest assigns you to the A, B, or C boarding groups and gives you a number 1-60. The A group boards first in numerical order.

DON'T MISS: Delta Move Is Bad News For Southwest, United Airlines Passengers

In theory, people board in the assigned order and can claim any seat that's available. In practice, the airline's boarding process leaves a lot of gray area that some people exploit. Others simply don't know exactly what the rules are.

If, for example, you are traveling with a friend who has a much later boarding number, is it okay to save a middle seat for that person?

Generally, that's okay because middle seats are less desirable, but technically it's not allowed. In general practice, if you move into the second half of the plane, no passenger will fight for a specific middle seat, but toward the front some may claim a middle seat.

There's less grey area, however, when it comes to trying to keep people from sitting in unoccupied seats. That's a huge problem for the airline, one that Southwest has tried to address in a humorous way.

A Southwest Airlines plane is in the air. 

Image source: Shutterstock

Southwest Airlines Has a Boarding Problem

When Southwest boards its flights it generally communicates to passengers about how full it expects the plane to be. In very rare cases, the airline will tell passengers when the crowd is small and they can expect that nobody will have to sit in a middle seat.

In most cases, however, at least since air travel has recovered after the covid pandemic, the airline usually announces that the flight is full or nearly full as passengers board. That's a de facto (and sometimes explicit) call not to attempt to discourage people from taking open seats in your row.

Unfortunately, many passengers know that sometimes when the airline says a flight is full, that's not entirely true. There might be a few no shows or a few seats that end up being open for one reason or another.

That leads to passengers -- at least a few of them on nearly every flight -- going to great lengths to try to end up next to an empty seat. Southwest has tried lots of different ways to discourage this behavior and has now resorted to humor in an effort to stop the seat hogs.

Southwest Uses Humor to Address a Pain Point

The airline recently released a video that addressed what it called "discouraged but crafty strategies to get a row to yourself" on Southwest. The video shows a man demonstrating all the different ways people try to dissuade other passengers from taking the open seats in their row.

These include, but are not limited to:

  • Laying out across the whole row.   
  • Holding your arm up to sort of block the seats.
  • Being too encouraging about someone taking the seat.
  • Actually saying no when someone asks if they can have an open seat. 

The airline also detailed a scenario it called "the fake breakup," where the person in the seat holds a loud phone conversation where he pretends he's being broken up with.

That one seems a bit of a reach, especially when Southwest left the most common seat-saving tactic out of its video -- simply putting some of your stuff in the open seat to make it appear unavailable.

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Why We Opened The Belgrade Bitcoin Hub

With a rich history and recent evolution, Belgrade is now home to the latest Bitcoin working and presentation space.




With a rich history and recent evolution, Belgrade is now home to the latest Bitcoin working and presentation space.

This is an opinion editorial by Plumski, a native of Serbia and founder of the Belgrade Bitcoin Hub.

“What we now want is closer contact and better understanding between individuals and communities all over the earth, and the elimination of egoism and pride which is always prone to plunge the world into primeval barbarism and strife…”

–Serbian-American inventor Nikola Tesla.

As Bitcoin adoption grows at an unprecedented rate for a new technology, Bitcoiners are setting up physical locations around the world where enthusiasts can work and play in group atmospheres.

For those of us taking part in this Bitcoin "Renaissance" period, it has been a great joy to watch the Bitcoin Beach success story in El Salvador that likely resulted in the country-wide adoption of bitcoin as legal tender. Since such projects are numerous in Africa, Central and South America, Bitcoiners living in Eastern Europe have watched these developments with intrigue. And added to that is the fact that Eastern Europe is economically underdeveloped compared to its Western European counterpart.

Inspired by what we saw in other parts of the world, a small group of Bitcoiners centered in the Serbian capital city of Belgrade recently opened a Bitcoin hub where we want to welcome visitors from around the world.

A New Chapter For A Historic City


View the 2 images of this gallery on the original article

Belgrade is a city that lies at the confluence of two great European rivers, the Danube and Sava, the apex of which is marked by the great Kalemegdan Fortress. This defensive fortress has withstood the test of time for over 15 centuries, bearing witness to battles too numerous to count. The history of Belgrade and the Serbian people as a whole has been a turbulent one.

Having the (mis)fortune of being located at the center of the geopolitically-important Balkan Peninsula, often on the border of two rivaling Eurasian empires, its people have been fighting for their independence from foreign influence throughout their history. Although it’s hard to estimate, history suggests that Belgrade has been destroyed and rebuilt over 40 times throughout its 17-century existence. Despite this, or perhaps because of it, Belgrade has always been the economic and artistic center of the region, as well as a home to people of all races, faiths and denominations.

Today, Belgrade is once again undergoing an important historical transition period. During the 1990s, civil wars took place in Croatia and Bosnia, republics of former Yugoslavia, culminating in the NATO bombing of Serbia and its capital city in 1999 and about 15 years of economic isolation from the western world.

Although the transformation is not fully complete, Belgrade is re-emerging as a vibrant cultural epicenter of the region. Much like the mosaic of architectural styles visible in the city's buildings, ranging from Communist-style, soulless heaps of gray concrete intermingled with wonderful old Secessionist buildings adorned with ornamental facades, its streetfronts are a collage of mom-and-pop-owned, modest businesses clashing with modern boutiques and glass-clad office buildings. Gone are the days when food options in the city's restaurants were limited solely to Balkan traditional cuisine. Now, poke, sushi, Chinese and Indian food, burger joints and American-style diners are all on the menu for the city's residents.

Contributing to the metamorphosis of the city's cultural fabric is also a noticeable shift in the residents who make up its population. Perhaps due to the relatively low cost of living compared to other world capitals, or Serbia's generally lax pandemic restrictions, or the political uncertainty that seems to have gripped the western world as of late, I have seen that a once heavily-emigrating city has been welcoming back a large segment of its old population and a sizeable inpouring of digital nomads that now call this place home.

Bitcoin Resilience, Despite Obstacles

In Serbian, the term "inat," a historically-defining characteristic of its people, can be loosely translated as "resilience." This mindset is ingrained in its population which, time and time again, rebuilds its homes on the heels of destructive periods to their former glory, to the dismay of invading armies, occupiers and detractors, because: inat.

As a result of years of unfulfilled promises from regional politicians, people of the Balkans are hard to convince about the long-term benefits that can be realized by adopting Bitcoin in one's life. A low time preference way of life to most people in this region is associated with disappointment and the lowered standards of living that have happened many times before.

Promises of quick riches (especially ones that suggest there is no associated risk whatsoever) is much more preferable for many and, thus, the power of the shitcoin narrative has sadly thrived in this region as "cryptocurrency" and "blockchain" marketing schemes gripped the world at large. To those of us who grew up in this part of the world, it is a dark comedy that, for instance, the Celsius bankruptcy affected our country as well. Like an exaggerated piece of irony from an Emir Kusturica movie, when the dust around this company's disastrous financial collapse finally settled, legal documents revealed that several entities associated with the Serbian government were listed as creditors to this well-known Ponzi scheme.

In general, Bitcoin-only companies and projects are hard to find here, but a growing community of Balkan Bitcoiners are imagining a different world of financial freedom to their compatriots.

And, much like Belgrade many times before, my personal life is undergoing a restructuring period. On my travels through the Bitcoin rabbit hole, I have met many people who are redesigning their lives around this paradigm-shifting technological discovery. With my recent move back from Canada to the city where I grew up, as I look around, it is easy to draw many parallels between the Bitcoin network architecture and the somewhat chaotic organization of Belgrade that just somehow seems to work — tick tock, next block.

A live DvadesetJedan podcast stream from Rab, Croatia.

Introducing DvadesetJedan

A group of us Bitcoiners from the countries of former Yugoslavia began to organize regular meetups about a year ago. Our group, called DvadesetJedan is an offshoot of the German Einundzwanzig initiative that was started to bring plebs together in meatspace so that enthusiasts can socialize, share ideas and formulate business ventures together in an informal atmosphere.

The idea behind Einundzwanzig is that geographically-distributed, independent Bitcoin communities can form across the world and eventually collaborate on their ongoing projects and offer traveling Bitcoiners a home, wherever they happen to be. In the Balkans, DvadesetJedan records a weekly podcast in the Serbian/Croatian language to cover Bitcoin news, philosophy and the technical architecture of the network. We are very proud to be the first Bitcoin-only podcast in the region and it is a great way for people that are too far from the city's urban centers, where our meetups take place, to receive high-signal Bitcoin content on a regular basis. This podcast is also complemented by our active Telegram channel and while our core group is made up of vehement shitcoin minimalists, a fair-sized part of the group is made up of noobs. We take special joy in guiding them through their journey toward understanding Bitcoin.

Since four of the six former Yugoslav republics that are now independent countries speak the same language, our initiative is multinational in nature. We collaborate with members from Slovenia, Macedonia, Croatia, Bosnia and Montenegro and our group has been steadily growing over the past year. We have a mixture of Bitcoin builders, content creators, developers and Bitcoin enthusiasts in the group who all come together on a regular basis for bar hopping, barbecues and road trips to Bitcoin events in the region.

While trendy breweries and coffee shops for our meetups are aplenty in Belgrade, a Bitcoin-dedicated space did not exist here nor in the wider Balkan peninsula. A small group of us decided to undertake the mission of finding and equipping a space where more serious discussions and presentations can take place.

Since Bitcoin professionals here are somewhat isolated compared to more-established regions such as Germany and the U.S., we also wanted the space to serve as a co-working environment for locals to bounce ideas off of other experts in the field. As we plan on partnering with local developers to build Bitcoin-focused businesses, this office space would also serve as the physical location for new startups to work with their teams.

Meetup in Belgrade: R0ckstarDev and Johns Beharry displaying Bitko Yinowski’s famous Bitcoin jam made from Serbian apricots.

View the 2 images of this gallery on the original article

The hunt was on and we scoured Belgrade in search of an ideal location. We focused our search to the center of the city so that future visitors can not only work in a comfortable space but can also easily access the museums, galleries, music venues, bars and restaurants that make up Belgrade's exciting social scene. We eventually found a duplex on the top floor of an old, mixed-use building next to the University of Belgrade’s philosophy faculty and it is perhaps fitting that the fort of Kalemegdan is within a two-minute walk from our new Belgrade Bitcoin Hub.

Welcome To The Belgrade Bitcoin Hub

Elevator control board to the top floor of the building where the hub is located. Source: Author.

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The hub features a large, communal, co-working/presentation room where most of the action will be taking place, with two additional rooms that we will outfit into a recording studio and a more private office space.

At our disposal for visitors we have a variety of hardware wallets, a point-of-sale unit powered by BTCPay Server, a Bitcoin node and an Antminer S9 to experiment with the newest software being developed by the tenants of the space. For educational purposes, or to get extra inspiration, the hub has a small collection of Bitcoin literature for visitors to read.

During the early days of activity in the hub, it has been populated by drop-in visitors that prefer working in group settings. As we grow, we will develop the hub to be a venue for cultural events, art exhibits/auctions, hackathons, as well as a small-scale presentation center for Bitcoiners. While advanced users will be working at the hub, novices will benefit from presentations and hands-on demonstrations that will take place in the evenings and weekends. Inspired by many ventures around the world with similar goals in mind, we are especially proud that we made this hub a reality using our own funds to finance these initial steps.

In one of the first public presentations at the hub, Pavlenex described the history of the BTCPay Server project along with a live demo to an audience. Source: Author.

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We want this space to be a permanent Bitcoin home in Belgrade and we hope that organizing such events will enable the space to finance itself for many years to come. While locals will be able to purchase annual memberships, we also have a structure in place so that Bitcoiners who do not live in Belgrade can come and work from the hub during their visits to Serbia. We are especially excited to welcome foreigners to the Belgrade Bitcoin Hub to build and help us build, however, the space will be limited.

Indeed, matching Bitcoiners from around the world with the immense talent that exists in Serbia is one of our top priorities. After all, everything our small group of believers has done to date has culminated into the Belgrade Hub genesis block.

This is a guest post by Plumski. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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