Key Events 

👉 Trafigura Group and Aluminum 

What’s the difference between physical aluminum and abstract aluminum? 

Physical aluminum is the actual aluminum that firms or producers may use to make goods such as cans or bicycles. You get abstract aluminum if you buy a futures contract. After the contract expires, you get a warranty from the London Metal Exchange that entitles you to some amount of aluminum. You can go to a warehouse owned by the London Metal Exchange, show your warranty and convert your abstract aluminum to physical aluminum. 

Here’s the thing—physical aluminum trades at a higher price than abstract aluminum. So, why can’t you buy abstract aluminum, convert it into physical aluminum, and sell it. This is a classic arbitrage opportunity—buy low and sell high. 

The reason is people working at the warehouses are sluggish. So, if you want say 100 tons of aluminum you have to wait a very long time to get that amount and at the same time pay rent to the warehouse for keeping your aluminum. If the difference in prices between physical and abstract aluminum is big, everyone would want to convert their abstract aluminum, translating into longer delays and higher rents. 

This is exactly how Trafigura Group made money on its 650,000 tons of aluminum. It predicted a bearish market outlook on physical aluminum, so it delivered its aluminum to a LME warehouse. Since the commodity traders were bullish on abstract aluminum, this translated into longer delays, allowing Trafigura to benefit from the rent. 

👉 Nvidia Elevates The Tech-Heavy Nasdaq

Nvidia’s shares rose again on Tuesday, bringing its month-to-date gain to 32% and year-to-date gain to 130%. Elon Musk’s $6 billion dollar private financing of xAI offered an extra nudge to Nvidia’s stock, adding to the frenzy of AI investment. 

Several companies have also announced increased dividends and stock buybacks, reflecting the confidence in their financial position and stability. 

👉 The AI economic fork: U.S. vs Europe 

AI will probably reshape the U.S. job market but the benefits will be difficult to replicate across the continent in Europe. Automation technology will replace repetitive, low-skilled jobs such as office support and sales but Europe likely will not capture the productivity growth. 

Europe historically has moved cautiously with technological advancements, worried about job replacements. The fact that most of AI technology has been developed in the US makes it much harder for Europe. 

Productivity growth in the U.S. since 2019 has been 6% while in Europe a mere 0.6%. 

Mergers and Acquisitions

Adam Neumann has ended his efforts to re-acquire WeWork, citing that its growth plan is unrealistic. 

Private Equity 

Eficode, a dev-ops company owned by Investcorp, acquired Jodocus. 

Initial Public Offerings

Actuate Therapeutics, a cancer biotech company, filed for a $50M IPO. 

Venture Capital 

Infra.market, a construction materials procurement platform, raised $50M.