Global Market Comments
September 15, 2023
Fiat Lux
Featured Trade:
(FRIDAY, OCTOBER 6 FRANKFURT, GERMANY STRATEGY DINNER)
(THERE ARE NO GURUS),
(THE PRICE TAG FOR CLEAN COAL),
(KOL), (UNG), (PGE), (BTU)
I wanted to get the low down on clean coal (KOL) to see how clean it really is, so I visited some friends at Lawrence Livermore National Laboratory in California.
The modern-day descendent of the Atomic Energy Commission, where I had a student job in the early seventies, the leading researcher on laser-induced nuclear fission, and the administrator of our atomic weapons stockpile, I figured they’d know.
Dirty coal currently supplies us with 35% of our electricity, and total electricity demand is expected to go up 30% by 2030. The industry is spewing out 32 billion tons of carbon dioxide (CO2) a year and the great majority of independent scientists out there believe that the global warming it is causing will lead us to an environmental disaster within decades.
Carbon Capture and Storage technology (CCS) locks up these emissions deep underground forever. The problem is that there is only one of these plants in operation in North Dakota, a legacy of the Carter administration, and new ones would cost $4 billion each.
The low estimate to replace the 250 existing coal plants in the US is $1 trillion, and this will produce electricity that costs 50% more than we now pay. In a gridlocked constrained congress, this is a big ticket that is highly unlikely to get picked up.
While we can build a wall to keep out illegal immigrants from Latin America, it won’t keep out CO2. This is a big problem as China is currently completing one new coal-fired plant a week.
In fact, the Middle Kingdom is rushing to perfect cheaper CCS technologies, not only for their own use but also to sell to us. The bottom line is coal can be cleaned but at a frightful price.
Coal once had a huge price advantage over other energy sources that disappeared when the price of natural gas (UNG) collapsed for $17 BTU to $2/MM BTU. Yesterday, gas closed at a feeble $2.70.
Cost savings aside, virtually every utility in the country would love to get out of the coal business because of the litigation it invites. Read the prospectus for new securities issued by any of them, and you will find a litany of lawsuits over diseases caused by Sulfur Dioxide (SO2), Nitrous Oxides (NO2), and a host of other asthma and cancer-causing pollutants.
Burning natural gas only emits carbon dioxide (CO2) (only half the amount that crude oil derived bunker fuel does) and water (H2O). Sorry, but my inner chemist is speaking.
California closed its last coal-fueled power plant a 20 years ago, switching to natural gas, accidentally creating a windfall for consumers. Much of the money saved was used to modernize the grid buy installing statewide smart meters which allow customers to both buy and sell electricity back to utilities generated from home solar installations and charged up 1,000-pound 100 kWh lithium-ion Tesla batteries.
These moved are expected to save our local Pacific Gas and Electric (PGE) the capital cost of building two new major generating plants. This is not your father’s utility.
Although it is unlikely that another coal fired power plant will ever be built in the US again, don’t expect coal giants like Peabody Energy (BTU) to disappear anytime soon. There is still a massive export business to China, as the Burlington Northern freight trains that rumble near my home testify (love that midnight whistle).
But don’t ever confuse a stock price that has gone down a lot with “cheap.” The shares of these companies could remain in the dumps for a long time, and possibly forever, creating a classic value trap. That is, until the Chinese buy them out for pennies on the dollar.
These are jobs I don’t mind exporting to China. They can have them.
When I checked the price of the old coal ETF (KOL) I discovered that it had ceased trading in 2020 after its asset under management fell from $908 million to just $35 million. At that level Van Eck was losing money running the fund. Most pension funds had banned investing in coal companies.
That alone tells you a lot right there.
Coal's Popularity is Fading Fast
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Biotech and Healthcare Letter
September 14, 2023
Fiat Lux
Featured Trade:
(A PIGGYBACK RIDE TO THE FUTURE)
(BMY), (NVS), (PFE), (MDT), (ABT), (TMO), (HCA), (UHS), (DGX), (LH)
As I walked the sterile, fluorescent-lit hallways of a leading biotechnological institute last summer, I overheard snippets of a conversation that immediately piqued my interest: “human-pig kidney,” “game-changer,” and “investor's goldmine.”
We often think of medical advancements in terms of their immediate patient benefits. Yet, in this chance encounter, the talk of the town was how these breakthroughs could cascade into lucrative opportunities in the stock market.
But how close are we to realizing this future?
Imagine a world where organ shortages, a grim reality for over 106,000 hopeful recipients in the U.S., could become a thing of the past. This isn’t a whimsical daydream but a tangible reality we're inching towards.
The mastermind behind this evolution? Kidneys grown inside pig embryos with a human cell composition ranging between 50% to 70%. This meticulous procedure, entailing 1,820 genetically modified pig embryos transplanted into 13 surrogate mothers, brought forth five specimens that met research criteria.
Switching our perspective, from a purely financial lens, the world of biotechnology is ripe with promise. But with the emergence of this organ transplant technology, investors should sit up and pay attention.
Consider giants like Bristol Myers Squibb (BMY), Novartis AG (NVS), and Pfizer Inc. (PFE). Their R&D teams are burning the midnight oil to roll out immunosuppressive drugs, pivotal for post-transplant procedures. Influenced by such groundbreaking endeavors, their stock trajectory could be a sight to behold in 2023.
Transitioning to medical equipment, Medtronic plc (MDT), Abbott Laboratories (ABT), and Thermo Fisher Scientific Inc. (TMO) aren't just names in the medical devices sphere. They represent the zenith of innovation, manufacturing state-of-the-art equipment integral to organ transplant procedures. If this biotechnological marvel scales, they stand at the precipice of unprecedented growth.
Moving onto healthcare, HCA Healthcare, Inc. (HCA) and Universal Health Services, Inc. (UHS) are the custodians of transplant centers. Their potential upswing is directly proportional to the success of human-pig kidney transplantations. And not to be overlooked, Quest Diagnostics Incorporated (DGX) and LabCorp (LH) are at the heart of organ compatibility diagnostics. As this transplant technology forges ahead, they are poised for a meteoric rise as well.
However, a word of caution is due.
While the financial forecasts appear rosy, any discerning investor is well aware of the need to balance enthusiasm with caution. The stock market's volatile nature, coupled with regulatory shifts and unpredictable research outcomes, can be game-changers. It is extremely crucial to keep your finger on the pulse of the sector and maybe even conduct more in-depth research on the potential of each company before making investment decisions.
Also, beyond finance, it would be remiss not to address the elephant in the room. The melding of human cells into pig embryos has raised eyebrows and ethical concerns. With human cells found in the embryos' brains and spinal cords, it prompts uneasy questions about the potential integration into the pigs' cognitive or reproductive systems. How the scientific community and regulators address these concerns will undoubtedly influence both the pace and direction of research, as well as investor sentiment.
Looking back, my chance encounter in that research institute was an omen of the times to come. On the brink of a scientific revolution, we are witnesses to a watershed moment in healthcare. But for the astute observer, it’s not just about saving lives. It's about understanding how such advancements can recalibrate the entire financial landscape.
To encapsulate the mood, let me leave you with this quote from the infamous Marie Curie: "Nothing in life is to be feared; it is only to be understood. Now is the time to understand more so that we may fear less.”
Global Market Comments
September 14, 2023
Fiat Lux
Featured Trade:
(SEPTEMBER 29 ZERMATT SWITZERLAND STRATEGY SEMINAR)
(THE BLOCKBUSTER READ IN THE HEDGE FUND COMMUNITY)
Come join me for the Mad Hedge Fund Trader’s Global Strategy Luncheon, which I will be conducting high in the Alps in Zermatt, Switzerland. The event begins at 12:00 noon on Friday, September 29, 2023.
A three-course meal will be provided and there will be an open discussion on the crucial issues facing investors today will take place. You are welcome to attend in your mountain climbing gear, if necessary. One year, a guest descended from the Matterhorn summit to attend.
I’ll be giving you my up-to-date view on stocks, bonds, foreign currencies, commodities, precious metals, energy, and real estate. And to keep you in suspense, I’ll be throwing a few surprises out there too. Tickets are available for $277.
I’ll be arriving early and leaving late in case anyone wants to have a one-on-one discussion, or just sit around and chew the fat about the financial markets.
The event will be held at a central Zermatt hotel, the details of which will be emailed directly to you with your confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please the BUY NOW! button above or click here.
About a year ago, I received a call from a friend of Tony Robbins, the renown, six foot seven inch motivational speaker. He said he was looking for billionaires to participate in a future project.
I answered that I wasn’t a billionaire yet, but that he should call me in a couple of years when I might be there.
Last week, the end result of the project landed on my desk, his book, Money, Master the Game, The 7 Simple Steps to Financial Freedom, by Tony Robbins.
Since it was a near miss of a project of my own, I thought I would give it a quick read. I wasn’t expecting much. After all, the guy walks on burning coals for a living.
I couldn’t have been more wrong. Tony has put together a very coherent, readable, and extremely well researched tome. He has even put to use a formidable research team of his own to produce some fascinating findings about the very long-term returns of different investment strategies.
I was so impressed that I called a hedge fund friend to see if he had heard of the book. Not only had he heard of it, but his CEO had read it and ordered everyone in the company to read it, down to the kid in the mail room. A call to another hedge fund garnered the same response.
Five minutes later, I was on the Amazon website ordering copies for all of my adult kids.
Read the book and you can’t help but notice that Tony Robbins seems to know everyone on the planet. Warren Buffet and Bill Gates? Sure thing. The Dalai Lama? No problem. That is not faint praise, as I am not a slouch at name-dropping myself.
What is useful to both you and me is that Tony has interviewed at length the leading investment lights of our age and extracted their innermost investment secrets.
Name the top dozen investment gurus of the last 40 years and they are all there; hedge fund legends Ray Dalio and Paul Tudor Jones.
Index fund creator John C. Bogle. Legendary long-only managers David Swensen, Mary Callahan Erdos, and Sir John Templeton. The iconoclasts T. Boone Pickens and Carl Icahn are also there.
I know most of these people myself, and you have read their interviews in the hallowed pages of this newsletter. He certainly skimmed the cream.
The introduction is a bit retail. I suppose that Tony is trying to ease the amateur investors in there slowly and prepare them for the rude shocks that follow.
Then he shatters reader preconceptions outlining his nine investment myths. I have been hammering away at my own followers for years on many of these.
The sad truth is that much of Wall Street is trying to skin you alive, leaving your investment well-being at the bottom of their list of priorities. Almost no one reliably beats the market year after year, except myself and a handful of others, and it took me 50 years trying to get there.
Fees are always larger than you think. Published mutual funds results overstate profits, as they have a strong survivor bias. Target-date mutual funds can be disastrous. Fund managers close their losers as fast as they can to skew their results.
Annuities don’t fit into the modern world. Trading means losing for most people. Almost no one can time the market (except me, again). Chasing manias can be the perfect buy high, sell low strategy.
At the end of the day, a balanced portfolio of index mutual funds and Treasury bonds rebalanced annually is probably the best solution for most.
Let me make it clear. This is not a “how to trade” book. Nor is it a “get rich quick scheme.” It is a sober and thoughtful analysis of how the average working person should invest their savings over the course of their lifetime.
At 565 pages, the book is a bit of a wristbreaker. But it is one of the best investment books that I have ever read. And I have read most of them published over the last 100 years.
In fact, I didn’t even read the book, I listened to it on an audio book from Audible.com while backpacking in the High Sierras, which is also owned by Amazon.
As I spend so much time researching and writing these letters, I have little other choice.
To buy Money, Master the Game, The 7 Simple Steps to Financial Freedom
at discount amazon pricing, please click here at http://www.amazon.com/MONEY-Master-Game-Financial-Freedom/dp/1476757801/ref=sr_1_1?s=books&ie=UTF8&qid=1427240026&sr=1-1&keywords=Money%2C+Master+the+Game%2C+The+7+Simple+Steps+to+Financial+Freedom%2C
Enjoy.
Nvidia, the American multinational technology company renowned for its innovations in graphics processing units (GPUs), is currently in negotiations to assume a pivotal role as the 'anchor' investor in the forthcoming initial public offering (IPO) of Arm Ltd. This potential move has sent ripples of excitement, speculation, and even some concern throughout the tech industry, as it could have profound implications for the global semiconductor landscape. Nvidia's involvement as the primary investor in Arm's IPO is a development laden with complexity, implications for competition, and potential for reshaping the semiconductor industry as we know it.
A Storied History of Innovation
Before delving into the current negotiations, it's crucial to acknowledge the historic significance of both Nvidia and Arm in the technology world. Nvidia, founded in 1993, has earned its reputation as a powerhouse in the GPU market. The company's graphics cards have powered everything from high-end gaming systems to scientific research and artificial intelligence applications. Notably, Nvidia's GPUs played a pivotal role in the development of AI, driving the deep learning revolution through their remarkable processing capabilities.
Arm Ltd., on the other hand, has a distinguished legacy of producing energy-efficient microprocessor designs. Founded in the UK in 1990, Arm's intellectual property (IP) is found in countless devices worldwide, from smartphones and tablets to embedded systems and servers. Arm's designs have become the cornerstone of mobile computing, offering a blend of power efficiency and performance that has made it a preferred choice for a wide array of applications.
The Proposed Deal: Nvidia as an 'Anchor' Investor
Now, the news that Nvidia is in discussions to become an 'anchor' investor in Arm's IPO is causing considerable buzz and speculation. An 'anchor' investor typically plays a substantial role by providing a significant investment, thereby lending credibility and stability to an IPO. In this case, Nvidia's involvement would not only inject a substantial amount of capital into Arm's IPO but also solidify a strategic partnership between the two tech giants.
The proposed deal would see Nvidia invest a substantial sum, potentially amounting to billions of dollars, to acquire a considerable stake in Arm. Such a move would have a series of far-reaching implications, not only for the companies involved but for the broader tech industry.
Implications for Competition
One of the central concerns surrounding this potential deal is its impact on competition within the semiconductor industry. Arm has long been recognized for its commitment to licensing its processor designs to a broad range of companies, enabling innovation and competition in the market. If Nvidia, known for its vertical integration strategy, becomes a significant stakeholder in Arm, it raises questions about the future availability of Arm's technology to competitors. Will Nvidia's ownership of Arm limit access to these designs, potentially stifling competition and innovation in the semiconductor space?
This concern is particularly relevant given Nvidia's ongoing efforts to acquire Arm entirely, a deal that has faced regulatory scrutiny and opposition from several quarters, including some of Nvidia's competitors. The combination of Nvidia's GPU technology and Arm's CPU designs could potentially create a formidable technology juggernaut, further consolidating the industry.
Global Regulatory Scrutiny
The proposed deal between Nvidia and Arm has already attracted the attention of regulatory bodies worldwide. Multiple jurisdictions are closely scrutinizing the transaction due to its potential to reshape the semiconductor landscape and influence the competitive dynamics of the industry. Regulatory approval is a significant hurdle that must be overcome for this deal to proceed, and any perceived threat to competition may slow down or even halt its progress.
China, in particular, has been cautious about this potential partnership. The Chinese semiconductor industry heavily relies on Arm's IP, and any restrictions on access to Arm's designs could significantly impact Chinese tech companies' ability to compete globally. Consequently, the Chinese government's stance on the deal is likely to play a pivotal role in its outcome.
Reshaping the Semiconductor Landscape
If the deal goes through, Nvidia's role as the 'anchor' investor in Arm's IPO could reshape the semiconductor landscape in various ways. Nvidia could leverage Arm's extensive customer base, which includes companies from various industries, to further expand its reach in markets such as automotive, data centers, and the Internet of Things (IoT). This strategic alliance could potentially result in more tightly integrated hardware and software solutions.
Additionally, the collaboration between Nvidia and Arm could accelerate innovation in AI and deep learning, as both companies have made significant strides in these fields. Combining Arm's CPU designs with Nvidia's GPU prowess could yield even more powerful and energy-efficient AI solutions, potentially revolutionizing industries that rely on AI technologies.
Potential Benefits and Concerns
The potential benefits of Nvidia becoming the 'anchor' investor in Arm's IPO are undeniable. It could inject a significant amount of capital into Arm, enabling further research and development, as well as supporting Arm's growth in various markets. This, in turn, could result in more advanced and energy-efficient processor designs, benefiting a wide range of industries.
However, there are also concerns, including the potential for market consolidation and reduced competition, as mentioned earlier. It's essential that the deal, if approved, includes safeguards to ensure that Arm's IP remains accessible to a broad range of companies, promoting innovation and competition in the semiconductor space.
Global Impact
The ramifications of this deal extend far beyond the companies involved. The semiconductor industry is a vital component of the global tech ecosystem, with implications for national security, economic competitiveness, and technological progress. As a result, governments and regulatory bodies worldwide are closely monitoring developments related to Nvidia's potential role in Arm's IPO.
Furthermore, the semiconductor shortage that has plagued industries ranging from automotive to consumer electronics has highlighted the critical role that chip manufacturers play in the modern world. Any consolidation or changes in the semiconductor landscape can have far-reaching consequences for industries and economies worldwide.
Conclusion
The news of Nvidia's discussions to become the 'anchor' investor in Arm's IPO is a significant development in the tech world. It has generated considerable interest, not only because of the potential financial implications but also because of the potential impact on competition, innovation, and the broader semiconductor industry.
The proposed deal is a complex and multifaceted undertaking, with regulatory hurdles and global implications. Whether it proceeds and how it is structured will determine its ultimate impact on the tech industry and the world at large. Regardless of the outcome, the tech world will be watching closely, as this partnership between two tech giants has the potential to shape the future of the semiconductor industry for years to come.
Midjourney prompt: “Nvidia in Talks To Be ‘Anchor’ Investor in Arm's IPO”
Mad Hedge Technology Letter
September 13, 2023
Fiat Lux
(A GREAT CHIP STOCK TO BUY AND HOLD)
(QCOM), (APPL), (SOC), (SAMSUNG), (TSM)
