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
Global Market Comments
May 9, 2024
Fiat Lux
Featured Trade:
(DECODING THE GREENBACK),
(BRING BACK THE OLD ASSET ALLOCATION RULES)
(TLT), (JNK), (HYG), (REIT), (BKLN)
If you want to impress your friends with your vast knowledge of financial matters, then here are the Latin translations of the script on the backside of a US dollar bill.
“ANNUIT COEPTIS” means “God has favored our undertaking.” “NOVUS ORDO SECLORUM” translates into “A new order has begun.”
The Roman numerals at the base of the pyramid are “1776.” The better-known “E PLURIBUS UNUM” is “One nation from many people.”
The basic design for the cotton and linen currency with red and blue silk fibers which has been in circulation since 1957 carries enough symbolism to drive conspiracy theorists to distraction.
An all-seeing eye? The darkened Western face of the pyramid? And of course, the number “13” abounds.
Thank Freemason Benjamin Franklin for these cryptic symbols and watch Nicholas Cage’s historical adventure movie “National Treasure.”
The balanced scales in the seal are certainly wishful thinking and a bit quaint if they refer to the Federal budget.
Study the buck closely because there are soon going to be a lot more of them around, thanks to a deficit that is rising to record levels daily.
“What to do about asset allocation” is the one question I get every day which I absolutely cannot answer.
The reason is simple: no two investors are alike.
The answer varies whether you are young or old, have $1,000 in the bank or $1 billion, are a sophisticated investor or a basic beginner, are in the top or the bottom tax bracket, and so on.
This is something you should ask your financial advisor if you haven’t fired him already, which you probably should.
Only advisors who read the Diary of a Mad Hedge Fund Trader should merit your attention. At least they’re going the extra mile trying to figure things out.
Having said all that, there is one old hard and fast rule, which you should probably dump.
It used to be prudent to own your age in bonds. So, if you were 70, you should have had 70% of your assets in fixed-income instruments and 30% in equities.
When bond interest rates were plumbing the depths at a 0.32% yield during the pandemic low, bonds were shunned by all advisers. In fact, the (TLT) was one of the best short plays I have ever executed.
But you know what? Time heals all wounds. Maybe it is time to go back to the old rules. With a 4.47% for ten-year US Treasury bonds, 7.5% for junk, 8.8% for senior loan ETFs, and 15% for some REITS, maybe fixed income doesn’t look so bad after all. And they are all about ready to take off with the Fed ready to start cutting interest rates in the coming months.
Just thought you’d like to know.
Allocation: Are You Him?
Or Him?
In a move that could revitalize its growth strategy, Apple is reportedly developing its own line of dedicated artificial intelligence (AI) chips. This strategic shift comes amidst a broader slowdown in the tech sector and aims to enhance Apple products and services in a future dominated by AI-powered innovation.
The AI Imperative
Apple's interest in developing in-house AI chips reflects the growing recognition that AI is becoming essential for competitive technology products and services. AI fuels features like photo and image classification, voice assistants, personalized recommendations, and advanced computational photography. Currently, Apple relies on chips from suppliers like Qualcomm and Nvidia to power the AI capabilities of its devices. However, by developing its custom AI silicon, Apple could gain significant advantages:
A History of Chip Innovation
Apple has a proven record of developing its own custom chips, particularly its A-series and M-series chips that power iPhones, iPads, and Macs. These chips have consistently demonstrated superiority in performance and energy efficiency compared to off-the-shelf solutions. Building on this success, Apple appears poised to apply its chip-design expertise to the burgeoning realm of AI acceleration.
The Market Context
News of Apple's AI chip development emerges during a challenging time for the tech industry. The global economic slowdown, rising inflation, and supply chain disruptions have contributed to a market slump, with major tech companies experiencing slowing growth and declining stock prices. In response, many companies, including Apple, are scrutinizing their costs and investments focusing on high-potential areas.
Investing in AI represents a strategic bet for Apple. The global AI chip market is expected to witness explosive growth in the coming years, fueled by applications across various industries, including autonomous vehicles, healthcare, and smart manufacturing. By establishing a significant presence in AI hardware, Apple would position itself to capture a substantial portion of this burgeoning market.
The Competitive Landscape
Apple's foray into AI chips intensifies competition in an increasingly crowded field. Tech giants like Google and Amazon have already developed custom AI chips for their cloud computing services and devices. Meta (formerly Facebook) is also heavily invested in the development of AI chips aimed at powering its Metaverse ambitions. Traditional chipmakers like Nvidia and Intel are equally committed to maintaining their dominance in AI hardware development.
Potential Impact on Apple's Ecosystem
Should Apple successfully develop its AI chips, the implications for its products and services would be notable:
Challenges and Considerations
Apple's path to becoming a leader in AI hardware won't be without challenges:
Getting in on the AI market might be more important than ever for Apple, given the recent lackluster stock performance issues the company has seen.
Mad Hedge Technology Letter
May 8, 2024
Fiat Lux
Featured Trade:
(THE TECH STOCK HAS MORE ROOM TO RUN)
(ANDREESSEN HOROWITZ)
There is more room for stocks to extend themselves to the upside, which is great news for many who think we might be reaching the last gasp up in tech.
We aren’t there yet and the longest late-cycle bull market continues.
It certainly isn’t over - we received some timely commentary from one of the most prominent venture capital firms in technology, Andreessen Horowitz.
The company isn’t afraid to tell the truth.
Sometimes that means sticking in where it really hurts like a jab to the gut in an industry where most people get their feelings hurt quite easily.
I understand the bravado partly results from the mountains of success that have preceded them, but nonetheless, it is refreshing to hear from successful people who have their pulse on the tech sector.
Google might be among corporate America's favorite success stories, but some people aren't convinced Big Tech is operating as efficiently as it could be.
There is still a lot of frittering away in Mountain View, California or that is what Andreessen Horowitz has to say.
The venture capitalist firm said that most Google workers don’t really do anything.
What do I mean by that?
To do nothing “except complete a 10-minute task every now and again” is what they said.
Some workers used their weekdays to learn how to scuba dive or go for a Thai massage because there wasn’t much for them to do in the office.
Companies retaining a bloated headcount with people who don't actually help drive the company forward shows how profitable these companies are.
When push comes to shove and a recession slams us blindly, Google will know what to do with these workers.
The company later said a “bunch of people” in large corporations are working “BS jobs.”
“Anyone who works in a 10,000+ person or larger white-collar job company knows that a bunch of the people can probably be let go tomorrow and the company wouldn’t really feel the difference, maybe it’d even improve with fewer people inserting themselves into things.”
Much of the vendetta against tech workers isn’t all justified, but I do believe it is more about the top 10% carrying the load for the other 90%.
The top end of the talent pool is so brilliant, they are leading $2 trillion companies and that doesn’t happen with a bunch of morons, does it?
However, another trend I have noticed is that America could be running out of talent after exhausting India and China while work visas have never been harder to procure.
After getting rid of the bad workers, will there be those superstars that move the window and that is a big doubt moving forward.
Talking with people in the know, there is great uncertainty with the direction of big tech as nobody understands what will really succeed the smartphone.
The smartphone was that one vehicle of profit that all companies knew they had to make money from and now what is next?
Is it a virtual reality with all those goofy headsets giving people headaches?
Companies are pouring billions into figuring out what the next iPhone is and it’s more like throwing paint on the wall and seeing what sticks.
Luckily, the tech bull market should continue but many companies are facing existential threats due to lack of innovation and lack of top-end employee talent.
If innovation somehow takes a wild turn away from the AI path, many companies could blow up.
Until then, buy the dip in GOOGL until a black swan hits the industry or sub-sector. They have many ways to keep the stock from going down like their newly minted dividend which is a first in the company.
“If you try to do too much, you will not achieve anything.” – Said Confucius
(EUROPEAN COMPANIES ARE CASH-RICH)
May 8, 2024
Hello everyone,
Companies in the Stoxx 600 index have nearly 1.5 trillion euros ($1.6 trillion) in cash on their balance sheets - that’s 25% higher than pre-pandemic levels, according to Goldman Sachs.
The bank further stated that free cash flow yield in Europe is around 6% - more than 1% point above that of the United States. Sectors with the highest yield include autos, commodity producers, and financials. Goldman favors the latter two, given their clearly stated focus on shareholder returns.
Balance sheets are strong. And the bank notes that net debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) is close to an all-time low. Furthermore, Goldman says, “Europe has rarely looked cheaper on an absolute and relative basis.”
Regarding dividends, the bank believes they can continue to grow in Europe given that payout ratios are below the historical average. They expect dividends to grow around 3% in 2024 and 4% in 2025.
Goldman particularly favors stocks in the banking and energy sectors. The MSCI Europe Value index offers a dividend yield of 4.8% - 2.8 times that of the MSCI Europe Growth.
Goldman lists here companies in the Stoxx Europe 600 with the highest, sustainable, 12-month forward dividend yields in each sector.
This is not a recommendation to buy any of these stocks. It is purely for your information to show you what dividend yields are available. Many people are interested in yield, so this is why I’m illustrating these examples.
Bonza removed from Australian skies.
Negotiations have failed between budget airline Bonza and its aircraft lenders. So, the decision has been made to remove the airline’s fleet from Australia.
The airline's financial issues have forced lease agreements on a fleet of Boeing 737-8 planes to be terminated.
Almost 60,000 passengers say they are owed money after many of their bookings were canceled.
The low-cost carrier was less than 12 months old when it canceled all flights across Australia and entered voluntary administration last week.
Wearing Clothing made from Bamboo supports the environment.
Bamboo is the fastest-growing plant in the world. It stores five times more carbon than other hardwood trees. It stores this carbon in its plant and roots, in turn helping to regenerate soil health.
It requires minimal water and little to no pesticides, which protects surrounding habitats and ecological systems from harsh chemicals used to grow crops.
Bamboo viscose, a fibre crafted from bamboo, is very soft. The fabric has natural moisture-wicking properties, meaning it can absorb moisture away from the skin.
Bamboo is biodegradable, making it a more environmentally friendly choice compared to cotton, which often requires more water and chemicals to grow and process.
Brands that use bamboo in their clothing include: Baserange, BAM, Peachaus, Patra, & Lotties Eco.
QI Corner
Goldman expresses strong confidence in the robustness of the U.S. economy, projecting a more positive outlook for the growth of U.S. GDP in 2024 and 2025 compared to consensus forecasts.
A sign on the gate of a Glen Innes property in New South Wales. It seems Australians take their privacy quite seriously.
Cheers,
Jacquie
Global Market Comments
May 8, 2024
Fiat Lux
Featured Trade:
(TAKING A LOOK AT HOME DEPOT)
(HD)