Category: 3. Business

Chinese investors hunting for the next artificial intelligence winners are looking beyond high-flying chipmakers to the utilities and metal producers that form the industry’s physical backbone.

The shift toward the sector’s supply chain — from power generators to materials used in data centers — reflects growing concern over lofty valuations in pure-play AI stocks. Analysts say firms supporting the tech ecosystem offer a more affordable entry point into this year’s hottest theme.

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New York Federal Reserve president John Williams convened a meeting with Wall Street banks this week over a key short-term lending facility, underscoring officials’ concerns about strains in US money markets. 

The hastily arranged meeting, which has not been previously reported, took place on the sidelines of the Fed’s annual Treasury market conference on Wednesday, according to three people familiar with the matter.

It comes at a time when banks, investors and officials are concerned about signs of stress in an arcane, but vital corner of the US financial system.

Williams solicited feedback from primary dealers, banks that underwrite the government’s debt, on the use of the Fed’s standing repo facility, which central bank officials describe as a crucial pressure relief valve to help them keep short-term borrowing costs within their target range.

A representative from many of the 24 primary dealers was in attendance, the people said. They noted that the attendants were broadly members of banks’ teams specialising in fixed-income markets.

A spokesperson for the New York Fed confirmed the meeting took place.

“President Williams convened the New York Fed’s primary trading counterparties [primary dealers] to continue engagement on the purpose of the standing repo facility as a tool of monetary policy implementation and to solicit feedback that ensures it remains effective for rate control,” the spokesperson said.

A closely tracked measure of short-term borrowing costs, known as tri-party repo, jumped well above a rate set by the Fed late last month, but then eased back the following week as investors took solace in the central bank’s pledge to stop shrinking its balance sheet on December 1.

Tri-party repo rates have again picked up this week, rising to almost 0.1 percentage points above the Fed’s rate on reserve balances — though they remain lower than at the end of October.

Roberto Perli, the head of the New York Fed’s market operations, acknowledged this week that some borrowers have struggled to secure repo rates close to the level of interest paid on reserves parked at the US central bank.

“The share of repo transactions taking place at rates above the [interest rate on reserve balances] has reached levels last seen in late 2018 and 2019,” Perli said earlier this week at a New York Fed event. 

Repo transactions, in which high-quality collateral is exchanged for cash on a short-term basis, provide essential lubrication for the financial system, and rates on these transactions are closely watched by policymakers.

Analysts have warned that they expect further bouts of pressure in the coming weeks. After three years of quantitative tightening, banks have little excess cash, a condition that will only worsen as year-end approaches and they reduce the size of their balance sheets for reporting purposes.

Williams and other senior Fed officials have insisted that the SRF will be a crucial tool in relieving that pressure and capping short-term rates within the Fed’s target range.

The New York Fed president said earlier this week he viewed the recent use of the facility as “effective”, adding that he “fully” expected it would “continue to be actively used . . . and contain upward pressures on money market rates”.

But use of the facility has been limited in recent weeks. Some groups have borrowed from the Fed, but not in high enough numbers to fully stabilise repo rates.

Lenders are often loath to use the facility, fearing that it could signal to the market that their institutions are under pressure even though names of borrowers are only made public two years after they tap the facility.

“Repo is all about trust,” said Thomas Simons, chief US economist at Jefferies.

“If any borrower gets the reputation of being riskier, it creates this perverse incentive for all the lenders to pull back at once, even if it is not deserved . . . once you get the stink on you, it’s hard to recover,” he said. 

Multi-Color Corp.’s earnings were hit hard by lower customer demand in the third quarter as the label making firm’s debt obligations grow more daunting, according to people familiar with the situation.

The Illinois-based private company, which offers a wide array of labels for packaging, faces a rapid succession of maturities on its more than $5 billion in debt over the next few years.

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LONDON (AP) — A London judge ruled Friday that global mining company BHP Group is liable in Brazil’s worst environmental disaster when a dam collapse a decade ago unleashed tons of toxic waste into a major river, killing 19 people and devastating villages downstream.

High Court Justice Finola O’Farrell said that Australia-based BHP was responsible, despite not owning the dam at the time, finding its negligence, carelessness or lack of skill led to the collapse.

Anglo-Australian BHP owns 50% of Samarco, the Brazilian company that operates the iron ore mine where the tailings dam ruptured on Nov. 5, 2015.

READ MORE: Mining is necessary for the green transition. Here’s why experts say we need to do it better

Sludge from the burst dam destroyed the once-bustling village of Bento Rodrigues in Minas Gerais state and badly damaged other towns. Enough mine waste to fill 13,000 Olympic-size swimming pools poured into the Doce River in southeastern Brazil, damaging 600 kilometers (370 miles) of the waterway and killing 14 tons of freshwater fish, according to a study by the University of Ulster in the U.K. The river, which the Krenak Indigenous people revere as a deity, has yet to recover.

A decade later, legal disputes have prolonged reconstruction and reparations and the river is still contaminated with heavy metals. Even as Brazil tries to define itself as a global environmental leader while hosting the U.N. COP30 climate summit, advocacy groups say the dam collapse is a reminder of industry-friendly policies that have ecological protection.

Victims of the disaster called the ruling a historic victory in seeking justice.

“We had to cross the Atlantic Ocean and go to England to finally see a mining company held to account,” said Mônica dos Santos of the Commission for Those Affected by the Fundão Dam.

Gelvana Rodrigues, whose 7-year-old son, Thiago, was killed in a mudslide, celebrated the step forward and said she wouldn’t rest until those responsible are punished.

“The judge’s decision shows what we have been saying for the last 10 years: it was not an accident, and BHP must take responsibility for its actions,” Rodrigues said.

The judge agreed with lawyers representing 600,000 Brazilians and 31 communities in the class-action case who argued that BHP was heavily involved in the Samarco operation and could have prevented the disaster, but instead encouraged raising the dam to allow more production.

“The risk of collapse of the dam was foreseeable,” O’Farrell wrote in the 222-page decision. “It is inconceivable that a decision would have been taken to continue raising the height of the dam in those circumstances and the collapse could have been averted.”

BHP said that it plans to appeal.

The claimants are seeking 36 billion pounds ($47 billion) in compensation, though the ruling only addressed liability. A second phase of the trial will determine damages.

The case was filed in Britain because one of BHP’s two main legal entities was based in London at the time.

The trial began in October 2024, just days before the federal government in the South American country reached a multibillion-dollar settlement with the mining companies.

Under the agreement, Samarco — which is also half owned by Brazilian mining giant Vale — agreed to pay 132 billion reais ($23 billion) over 20 years. The payments were meant to compensate for human, environmental and infrastructure damage.

BHP had said the U.K. legal action was unnecessary, because it duplicated matters covered by legal proceedings in Brazil.

The judge ruled that those who were compensated in the settlement in Brazil could still bring claims, though they might be limited by any waivers they signed.

Brandon Craig, BHP’s president of Minerals Americas, said that nearly half of the claimants could be eliminated from the group because of settlement agreements they signed in Brazil.

BHP shares fell more than 2% on the London market after the ruling and the company said that it would update its financial provisions.

Shopify (SHOP) shares have seen some volatility recently, catching the attention of investors looking for signs of broader shifts in e-commerce demand. After trending lower over the past month, the stock is drawing more questions about valuation.

See our latest analysis for Shopify.

Shopify’s 1-year total shareholder return clocks in at 34.6%, while the share price has climbed more than 35% year-to-date. Still, after a hot run earlier this year, recent weeks have seen momentum fade a bit with a 7-day share price drop of 4.2% and a 30-day decline of 6.5%. Investors seem to be reassessing growth prospects as the company navigates a dynamic e-commerce landscape.

If you’re curious about what other tech names are gaining interest lately, the Simply Wall St Tech & AI Stock Screener could spark your next discovery: See the full list for free.

The question now is whether Shopify’s recent pullback signals an attractive entry point for long-term investors, or if expectations for future growth are already reflected in the share price. Is there real upside left to capture, or is the market one step ahead?

Shopify’s most-followed narrative sets its fair value at $165.87, about 12% above the recent close of $146.04. This suggests that, even after a recent dip, there could be meaningful upside left if the narrative’s expectations play out as forecasted.

Rapid international expansion, upmarket focus, and financial ecosystem growth are diversifying revenue streams and increasing resilience amid evolving digital commerce trends. Aggressive integration of AI and emerging retail channels is boosting merchant acquisition, efficiency, and margins. This is positioning Shopify as a central digital commerce enabler.

Read the complete narrative.

What’s driving this bullish outlook? The numbers behind this valuation hinge on ambitious growth for both revenue and earnings, plus a profit multiple that puts Shopify in rare company among tech stocks. Want to find out which hidden levers and key assumptions push consensus fair value higher than the market price? Dig deeper to see what underpins this upbeat forecast.

Result: Fair Value of $165.87 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, intensifying competition from e-commerce giants and global regulatory hurdles could put pressure on Shopify’s growth, margins, and long-term outlook.

Find out about the key risks to this Shopify narrative.

While the consensus fair value hints at upside, our comparative multiples approach signals caution. Shopify currently trades at a price-to-earnings ratio of 106.8x, which is well above the US IT industry average of 31.3x, the peer average of 40.7x, and the fair ratio of 51.4x. Such a high premium suggests the stock is priced for exceptional growth, leaving less room for error if expectations fall short. Is this premium justified, or will market sentiment eventually recalibrate?

See what the numbers say about this price — find out in our valuation breakdown.

If you see things differently or want to follow your own instincts, it’s easy to dig into the details yourself and assemble a narrative in minutes. Do it your way

A great starting point for your Shopify research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Smart investors never stop searching for the next breakout play or steady growth opportunity. Don’t miss your chance to rethink your watchlist with these proven ideas:

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include SHOP.

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