“Instead of buying low and selling high, you’re buying high and crossing your fingers,” said Bill Gross, former head of the bond giant PIMCO.
(SYM), (GM), (AMZN), (ACI), (TGT), (WMT)
The realm of artificial intelligence (AI) is not just burgeoning; it's revolutionizing industries. Amid this technological renaissance, AI's integration with robotics is weaving a tale that was once mere science fiction into our daily reality.
ChatGPT, a brainchild of OpenAI, exemplifies this surge, marking its territory as perhaps the fastest-growing application in history. OpenAI's ballooning valuation mirrors the transition of AI from potential to palpable reality.
While predicting the exact trajectory of AI's evolution is complex, its synergy with robotics is undeniable.
This fusion is pivotal as it represents a significant shift in the way we approach technology and its applications in the real world.
The image of AI-powered robots, reminiscent of iconic figures like Star Wars' R2-D2 or C-3PO, is no longer a distant dream. These robots, now equipped with AI, are evolving into sophisticated entities capable of learning and adapting in real-time.
This is more than a technological leap; it's a revolution in problem-solving and task execution. This evolution marks a shift from automated to intelligent, adaptive technology, a trend that is reshaping industries globally.
At the heart of this AI and robotics movement is Symbotic (SYM), a company whose AI-driven warehouse automation systems exemplify the next wave of computing.
Symbotic represents a blend of AI's potential and the practical application of robotics, a combination that is increasingly becoming the backbone of various sectors.
The robotics sector, with its rich history dating back to 1962 with Unimation, the first company to commercialize robots, has continuously evolved.
Unimation's first robots were installed at a General Motors (GM) factory in New Jersey, and since then, the sector has seen exponential growth. Today, this evolution is evident as companies like iRobot and Amazon’s (AMZN) acquisition interest in it highlights the sector's growth and potential.
Symbotic stands out in this landscape with its end-to-end AI and robotics integration for warehouse management, already attracting giants like Albertsons (ACI), Target (TGT), and Walmart (WMT). Its partnership with SoftBank for the GreenBox initiative further cements its position as a leader in this evolving market.
What's remarkable about Symbotic is its approach: a blend of AI with robotics that not only processes tasks but learns, adapts, and evolves.
This is not just about automation; it's about creating intelligent systems that can independently solve problems and improve efficiency. With clients like Walmart holding stakes in Symbotic, the company's growth trajectory seems promising.
Notably, the fiscal figures for Symbotic paint a vivid picture of its growth.
With revenue reaching $311.8 million in the fiscal third quarter, marking a 78% increase year-over-year, the company is on a steep upward curve. This financial growth proves the increasing relevance and demand for AI-integrated solutions in various industries.
The anticipated revenue for the fiscal fourth quarter further underscores this growth. However, a caveat remains – Symbotic is yet to tip the scale towards profitability, recording a net loss of $162.5 million in three quarters of the fiscal year.
This points to a common challenge in high-growth tech sectors – balancing rapid expansion with the journey toward profitability.
The reliance on a handful of major clients for a substantial part of its revenue poses a risk. However, the high switching costs for clients and Symbotic's continued expansion indicate a potential for long-term client retention and growth. This aspect of Symbotic's business model is crucial for investors to consider.
The AI and robotics industry is on a trajectory of explosive growth, further highlighting Symbotic's potential in this booming market.
The global AI market, currently valued at $142 billion, is expected to soar to $1.8 trillion by 2030.
In robotics, Symbotic finds itself in a sector where the global market size is anticipated to reach almost $150 billion by 2030, growing at a CAGR of 27.7% from 2021.
Clearly, the intersection of AI and robotics heralds a new era of technological advancement.
For the risk-averse, keeping Symbotic under observation can provide insights into how AI and robotics will shape future market trends.
For those with higher risk tolerance, investing in Symbotic offers a front-row seat to the unfolding story of AI and robotics – a sector rich with potential but not without its challenges.
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Technology Letter
November 22, 2023
Fiat Lux
Featured Trade:
(YEN COULD DRAG DOWN TECH STOCKS)
(FXY), ($COMPQ), (WEWKQ), (SOFTBANK)
The Japanese yen has helped boost tech stocks ($COMPQ).
Institutional money is borrowing Japanese yen (FXY) by the bucketful because Japanese interest rates have been anchored at 0% and betting big on tech stocks.
The strategy has worked like clockwork and Japanese stocks have also felt the wind at its sails.
What now?
Lurking in the shadows is a potentially catastrophic problem called Japanese tech company Softbank.
Softbank reported a "shocking" Q2-2 loss, revealing, in particular, how dangerously exposed they are to a Japanese yen devaluation.
Selling in Softbank stock would trigger panic selling in Japanese Banks. The contagion risk here is crystal clear.
JGB yields will spike following the US Treasury yields overnight trend. This will put even further pressure on banks' liquidity with a risk of exacerbating the sell-off.
What's important to understand here is the risk of Softbank triggering a $226 billion (the total amount of Softbank balance sheet liabilities) credit event right now.
To begin with, with a BB rating from S&P, Softbank has a pitiful credit rating tying its hands.
Now Softbank has liabilities mostly in US dollars while on the hook to repay $48 billion in the next 12 months.
Days before WeWork (WEWKQ) filed for bankruptcy, Softbank paid $1.5 billion to WeWork bank lenders.
In total, Softbank had to write off more than $14 billion in US dollars on that terrible WeWork investment while the Japanese yen crashed.
Now here the big problem is that Softbank doesn't disclose the amount of "off-balance-sheet" guarantees they issued either directly or through the Vision Fund.
Lastly, things might turn quite bad for Masayoshi Son personally, because 35% of his personal shares in Softbank are already pledged to financial institutions.
It doesn't take much to figure out what financial institutions will do if Softbank stock starts crashing, right?
The Japanese government will need to bail out not only Softbank but also the Japanese banks.
This tinderbox could explode anytime and the Yen would then become the focus.
If the Japanese government finally does embark on an interest hiking cycle then under this scenario, the Bank of Japan would be forced to raise the cost of capital on investors and households.
The global and Japanese financial system isn’t ready to take away the low-interest carry trade and it’s hard to quantify the unintended consequences.
Large parts of the Japanese system could go under water and the Japanese yen would greatly strengthen.
I specifically am worried about all the adjustable loans taken out by the Japanese consumer.
Loan defaults would surge.
If the Japanese government is forced to save Softbank and the Japanese financial system then expect another tidal wave of inflation as the purchasing power of the Japanese yen is even more devalued.
The string of abysmal tech investments by Softbank is threatening to accelerate the financial death spiral in Japan.
In my view, this would ice the tech rally momentarily, but not derail it long-term.
In all honesty, Softbank did deliver ample liquidity to many poorly run Silicon Valley tech companies and this fortified tech stocks during the bull run.
Now Softbank cannot throw around the cash they used to and tech stocks have concentrated into a group of 7 outperformers.
In the short term, the tech bull run continues in just a few narrow names but 2024 could trigger a broader run in secondary tech names as well.
“When you innovate, you've got to be prepared for everyone telling you you're nuts.” – Said CEO of Oracle Larry Ellison
(A TRAILER TO MATCH YOUR ELECTRIC VEHICLE)
November 22, 2023
Hello everyone.
The $50 billion travel trailer industry is playing catch-up.
As more Americans move to electric cars, the trailer industry must evolve because the towing runs down the battery quickly. The drag on battery power can make towing an RV long distances with an RV prohibitive.
Pebble Mobility, a California-based start-up, has invented a self-propelled, self-powered, remote-controlled trailer. The 25-foot vehicle sleeps four and has its own electric motor. It propels itself, saving on the power needed by the car dragging it.
The trailer has an EV battery on board and an integrated solar array over the rooftop of the travel trailer – making the most of renewable energy from the sun and powering the entire vehicle.
Yang, who helped build the iPhone, uses that knowledge to enhance the RV experience.
The user can use Pebble’s app to maneuver the trailer on its own, which helps in tight spaces. There is a generational shift in RV use from the baby boomers to millennials, and this group of consumers is more tech-forward. They are tech-savvy, and they want a better experience.
The trailer price starts at $109,000 without the self-propelling motor. Potential tax credits could bring that price down. The version with the motor starts at $125,000, which is comparable to other RVs. Different products are on the horizon to cater to the different needs of consumers.
With the solar and battery power, the Pebble makers say it can live off the grid for seven days, without propane or a generator required. The kitchen appliances, lights, AC, and everything else are fully electric.
Pebble aims to deliver the first models in 2024.
Why being bored can be a good thing.
I talked about this just recently in a Post, how just daydreaming and looking into thin air and giving your brain a rest can be very useful. It seems counterintuitive, I know, but when we are constantly expected to be on task, we are decreasing our level of productive output.
When we let the brain go into “default mode” – i.e. when we are folding the laundry or walking to or catching the train, this is when the brain gets busy; we are allowing the brain to connect disparate ideas – we can solve some of our most pressing problems.
We unconsciously dive into a path of autobiographic planning – we look back at our lives, take note of big moments and not so big, create a personal narrative, and then set goals and work out what steps we need to take to reach them.
Today we are often doing four or five tasks at once and switching our attention every few minutes, which is not productive. In fact, it creates higher levels of cortisol and reduces productivity. It essentially depletes our brain, exhausts it, and makes it less efficient. So, multitasking – talking to friends, checking social media, and working on a project all at the same time can lead to a lack of focus, loss of energy, confusion about priorities, and even a decline in cognitive function.
Try daydreaming to give your brain a rest.
You are actually being your most productive and creative self by doing nothing for short periods.
Thank you for supporting my Posts.
Wishing you all a wonderful Thanksgiving.
Cheers
Jacquie
Global Market Comments
November 22, 2023
Fiat Lux
Featured Trade:
(TRADING THE KENNEDY ASSASSINATION)
Mad Hedge Biotech and Healthcare Letter
November 21, 2023
Fiat Lux
Featured Trade:
(A PRESCRIPTION FOR CAUTION)
(VTRS), (PFE), (JNJ), (LLY), (BMY), (TEVA), (ABBV), (CVS)
In the rollercoaster world of pharmaceutical stocks, 2023 has been like riding the Cyclone at Coney Island – thrilling for some, nauseating for others.
Take Pfizer (PFE), for instance. It’s seen its stock take a nosedive by 43.4%. That’s the kind of drop that makes you check if your wallet’s still there. Then there’s Johnson & Johnson (JNJ), trailing behind with a 16.4% decline. Not as dramatic, but still enough to make your stomach lurch.
Meanwhile, there’s Eli Lilly (LLY), playing the hero as it rockets up by an extraordinary 66.8%, thanks to its new weight-loss drugs. At this point, investors are practically throwing ticker-tape parades.
However, even with Eli Lilly’s star performance, the S&P 500 Pharmaceuticals index still shows a downturn of 2.3%.
Now, as we've seen earnings reports trickle in, a trend has started to stick out: positive results aren’t shielding drugmakers from a sell-off. Look at Pfizer and Bristol Myers Squibb (BMY), both hovering near their 52-week lows.
Still, investors are giving the biotechnology and healthcare stocks the side-eye for several reasons.
The new Medicare drug-price negotiation program is like a strict parent setting a curfew – it’s potentially restricting pricing power for certain medications. Plus, as interest rates climb, the allure of high dividend yields is diminishing faster than my motivation to hit the gym.
In this skeptical market, however, there are some optimistic investors who are digging through the bargain bin, hoping to strike gold.
Enter Viatris (VTRS), trading at just 3.3 times earnings and boasting a 5.1% dividend yield. It sounds promising, but only a few brave souls are recommending a buy.
Basically, this situation with Viatris is pretty much like finding a designer shirt at a discount store – sure, it’s cheap, but will it fall apart after two washes? Let’s take a closer look.
Viatris’s backstory is a bit of a soap opera. Born from the merger of Mylan and Pfizer's Upjohn unit, it carries the baggage of Mylan's EpiPen pricing scandal.
Since rebranding, Viatris has been trying to find its footing. Despite a shiny new business plan, which involves selling off assets for a potential $9 billion, investor confidence remains shaky at best.
Notably, its decision to exit the biosimilars market, where heavy hitters like Teva Pharmaceutical Industries (TEVA) and AbbVie (ABBV) play ball, has been seen as a bold move. Considering the potential of that market, it felt like leaving a high-stakes poker game just when the chips were starting to stack up. And with CVS Health (CVS) eyeing this lucrative space, Viatris might find itself wishing it had stayed at the table.
These past months, investors have been capturing this drama through a meme – comparing 'adjusted Ebitda' to 'free cash flow' with images of Jennifer Aniston and Iggy Pop. It’s a cheeky way of saying that Viatris’s financial projections might be wearing rose-colored glasses.
Looking ahead, Viatris is aiming for $2.3 billion in free cash flow next year, buoyed by recent sales. But the big question is: can it turn these assets into growth, or will it continue its high-wire act?
Reviewing its recent moves and their effects on the market, the Viatris saga has turned into a cautionary tale for investors in the pharma world – it’s a reminder that sometimes the threat of a nosedive is as real as the thrill of a skyrocket.
So, what’s the takeaway for those of us with skin in the game?
It seems wise to keep our eyes peeled and not jump on any bandwagons too hastily. Viatris, amidst its strategic transformations and market challenges, is worth watching with a careful eye. While its cash flow looks steady through 2027, thanks to planned asset sales, the long-term picture is as clear as mud.
As we navigate the unpredictable waves of the pharmaceutical market this year, let’s remember – it’s not just about holding on for the ride. It’s about knowing when to get on, when to get off, and maybe, just maybe, when to enjoy the view from the sidelines with some popcorn in hand. I say hold off from buying Viatris shares at the moment.
