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
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
(“WOODSTOCK FOR CAPITALISTS” SHOWED BUFFETT IS STILL IN GOOD FORM)
May 6, 2024
Hello everyone.
Week ahead calendar
Monday, May 6
No economic data of note.
Earnings: Loews, Spirit Airlines, Tyson Foods, BioNTech, Hims & Hers, Vertex Pharmaceuticals, Lucid Group, Palantir Technologies, Simon Property Group, Aecom, Microchip Technology, Rocket lab, Goodyear Tire, Flavours & Fragrances, Marriott Vacations, Noble Corp., Vornado Realty, Coty, Bell Ring Brands, Cabot
Tuesday, May 7
3:00 pm Consumer Credit (March)
Earnings: UBS, BP, Nintendo, Squarespace, Kenvue, Aramark, Gogo, Energizer, Tempur Sealy, Bloomin’ Brands, Crocs, Datadog, Duke Energy, Rockwell Automation, Spirit AeroSystems, TransDigm, Expeditors, Nikola, Walt Disney, Ferrari, Global Foundries, NRG Energy, Perrigo, Electronic Arts, Cirrus Logic, iRobot, Redfin, Lyft, TripAdvisor, Adaptive Biotech, Arista Networks, Dutch Bros., Kyndryl, Marqeta, Oddity Tech, Olo, Sonos, Toast, Upstart Holdings, Virgin Galactic, Twilio, IAC/InterActive, Match Group, McKesson, Rivian Automative, Brighthouse, Occidental Petroleum, Assurant, Angi, Kinross Gold, Astera Labs, Diamond Offshore, Reddit.
Wednesday, May 8
10:00 a.m. Wholesale inventories (March)
Earnings: Anheuser-Busch InBev, Edgewell Personal Care, Embraer, Elanco Animal Health, United Parks & Resorts, ODP, Emerson Electric, Brookfield, New York Times, Performance Food Group, Reynolds Consumer Products, Shopify, Teva Pharma, Uber Technologies, Brink’s Tegna, Hain Celestial, Choice Hotels, Dine Brands, Liberty Broadband, Affirm Holdings, Fox Corp., Cushman & Wakefield, Liberty Media, Valvoline, Arm Holdings, Airbnb, Robinhood, Beyond Meat, Bumble, Kodiak Gas Services, NuSkin, SolarEdge Technologies, TKO Group, Vizio, AMC Entertainment, Cheesecake Factory, News Corp., Toyota Motors, Celanese, Instacart, Klaviyo.
Thursday, May 9
8:30 a.m.
Continuing jobless claims
8:30 a.m. Initial claims
Earnings: Nissan, Cedar Fair, Six Flags, Yeti, Hanesbrands, Planet Fitness, Sally Beauty, Tapestry, US Foods, Warby Parker, Krispy Kreme, Hyatt Hotels, Warner Bros, Discovery, Roblox, Viatris, Papa John’s, Hilton Grand Vacations, Warner Music Group, Solventum, DropBox, Akamai, Figs, Sweetgreen, Unity Software, Yelp, Synaptics, H&R Block, Iamgold, Fidelis Insurance, GenDigital, Savers Value Village.
Friday, May 10
10:00 a.m. Michigan sentiment (May)
2:00 p.m. Treasury budget (April)
Earnings: Honda Motor, AMC Networks.
Maybe time to start looking at Emerging Markets.
The weaker than expected employment numbers last Friday marked the first sign this year that we may just see some interest rate movement in the form of cuts toward the latter part of this year.
And if we do see a lower rate environment on the horizon, one area that will be boosted is emerging markets.
Emerging market equities are at attractive valuations presently; earnings growth too has started to accelerate.
Start looking at this ETF:
(EEM)iShares MSCI Emerging Markets ETF
Continue scooping up some Berkshire Hathaway stock.
Berkshire Hathaway’s annual general meeting on Saturday, May 4, has been dubbed “Woodstock for Capitalists.”
Analysts have a $472 price target on class B shares, and this suggest nearly 18% upside from last Thursday’s close.
I listened to several hours of the meeting and the topics covered included climate change, succession planning, artificial intelligence, the sale of a chunk of Apple shares (around 13%) - 115 million shares.
The company has approximately $200billion in cash. Greg Abel will make investing decisions for Berkshire Hathaway when Buffett passes.
Buffett spoke of “scamming” as a growth industry, which will be enabled by AI. While he didn’t see AI as all bad, he did note that the potential for AI to manipulate videos and images - to extract money from people - poses enormous harm to those who are unsophisticated in critically evaluating these types of media.
One of the best lessons from Charlie Munger.
Patience.
Munger was well known for waiting – not only when it came to building wealth, but for finding attractive investing opportunities.
In his words: “We wait for no-brainers. We’re not trying to do the difficult things. And we have the patience to wait.”
When it came to investing in what he viewed as great companies, Munger shared Buffett’s view that your best move as an investor is holding for the long term.
In Buffett’s words: “When we own portions of outstanding businesses with outstanding managements, our favourite holding period is forever.”
Warren Buffett’s insights about life.
“If you are lucky in life, make sure others in life are lucky too.”
“Be kind and the world will be better off.”
Market Update:
S&P500
It’s possible that this correction is completed to enable the resumption of uptrend in a Wave 5 advance towards the next upside target at around 5,450. If the 5th wave has begun, then support at 5,060/5,011 should now hold.
We must be aware, though that there is still risk of a final sell-off toward the low/mid 4,800’s, before the uptrend is ready to resume.
The Bigger Picture outlook remains bullish. The 5,735 mark is the potential target over the coming months.
Gold
Gold has been undergoing a 4th wave correction. A sustained break above $2,350 resistance will represent the resumption of uptrend for rally back toward the area of $2,430.
The Bigger Picture outlook remains bullish, with the next upside target at around $2,530.
Bitcoin
Bitcoin has been undergoing a 4th wave correction, and this might be completed now.
Support lies around the $59,500 level. If this area holds, we should now see rallies on to the next resistance areas at $67,240 and $73,794 levels.
Bitcoin’s bullish structure remains in place.
QI Corner
Cheers
Jacquie
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
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 6, 2024
Fiat Lux
Featured Trade:
(NONE)
While swimming with the hammerhead sharks off a rocky outcrop near the Galapagos Islands in the South Pacific, John Thomas swallowed too much seawater and suffered from too much sun. He collected aloe vera leaves around his house, crushed them, and rubbed the juice over his face. It is now working its magic. Western sun blocks are no match for the equatorial sun.
Our regular service resumes tomorrow.
AI Revolutionizes Card Issuance: Survey Highlights Transformation for Financial Institutions
A groundbreaking survey conducted by the World Economic Forum (WEF) and the Cambridge Centre for Alternative Finance (CCAF) has revealed the rapidly evolving landscape of card issuance within the financial services industry. Artificial intelligence (AI) is poised to play a pivotal role in this transformation, driving changes in customer experience, operational efficiency, and even the fundamentals of how financial institutions underwrite risk.
The Rise of AI in Financial Services
The WEF-CCAF survey, entitled Transforming Paradigms: A Global AI in Financial Services Survey, offers crucial insights into the adoption of AI within the sector. The study surveyed 151 respondents from 33 countries, encompassing both incumbent financial institutions and disruptive FinTech companies. The results paint a compelling picture of the expanding use of AI for various financial services, with card issuance being a prime area of impact.
One key takeaway from the survey is that financial institutions are increasingly turning to AI to revamp their card offerings. AI-powered algorithms are being used to personalize credit lines, rewards programs, and even the physical design of cards. This enhanced personalization offers tremendous potential for improving customer acquisition, retention, and overall satisfaction.
Smarter Underwriting and Risk Assessment
Traditionally, card issuance decisions have relied heavily on historical credit data and standardized risk models. But AI is reshaping these processes, enabling financial institutions to make more informed and nuanced decisions. By analyzing massive datasets, including alternative data sources like social media activity and spending patterns, AI algorithms can build more comprehensive customer profiles. This, in turn, allows for more refined risk assessments, expanding card access to individuals who might have been excluded by conventional underwriting models.
The WEF-CCAF survey indicates that financial institutions are also leveraging AI for enhanced fraud detection. AI-powered systems can analyze transaction patterns in real-time, identifying anomalies and potential fraudulent activity with far greater accuracy than legacy systems. This heightened security not only protects institutions from financial losses but crucially builds consumer trust in digital financial services.
Streamlining Operations and Enhancing Customer Service
The impact of AI on card issuance extends far beyond customer-facing enhancements. Financial institutions are utilizing AI to streamline their back-end operations, leading to increased efficiency and cost savings. For instance, AI-powered chatbots can handle routine customer inquiries, freeing up human agents to focus on more complex issues. In addition, intelligent process automation (IPA) can be used to automate tasks like application processing, account management, and dispute resolution.
Challenges and Considerations
While the survey highlights the potential benefits of AI in card issuance, it also acknowledges the challenges that financial institutions face in its implementation. The report cites several hurdles including:
Charting the Future of Card Issuance
Looking ahead, the WEF-CCAF survey suggests that AI's transformative impact on card issuance will only accelerate. Here are some key trends to watch:
Mad Hedge Technology Letter
May 3, 2024
Fiat Lux
Featured Trade:
(ARE 8% RATES GOOD FOR TECH?)
(GOOGL), (AAPL), (JPM)
Although much of the mass media ignores some of these dire reports issued by some prominent finance guys, I have taken notice.
I’m not here to scare you.
Everything will work out fine.
It was only just lately that one of the most public-facing US bankers, Jamie Dimon, delivered us a future warning that could mean bad results for many tech companies.
I won’t say that every tech company will be ripped to shreds, there are still a few that are head and shoulders above the rest and could withstand heavy shelling.
But 8% rates is a world that could spook tech investors.
It just goes to show that some numbers floating around are starting to come into the realm of possibility even if the probabilities are quite low.
Dimon’s thesis centered on “persistent inflationary pressures” and unless you’re an ostrich with your head in the ground, prices haven’t come down for most stuff that we buy including software and tech gadgets.
Rates close to 10% would kill many golden gooses in various industries and I do believe a world of rates that high would really put the sword to the throat of many tech companies.
If that happened, kiss the tech IPO market goodbye and just be happy that we squeezed into Reddit this year.
More often than not, American tech companies are gut-punched when there is a global growth slowdown because many of these companies extract revenue from everywhere.
They are so big that they have to unearth every stone in far-flung places to keep the growth narrative chugging along.
The unemployment rate remains below 4% and businesses, but a world of 8% interest rates would mean another 50% downsizing of tech staff and a rockier path to profits.
Amidst heightened global uncertainty, what has the technology sector delivered to us lately?
Shareholder returns.
Google rolled out the carpet for its first-ever dividend.
Apple increased its dividend by announcing a new $110 billion share repurchase plan.
What is my takeaway here?
Has Apple run out of bullets here so much so that a share buyback is better to do than give its clients a new product?
They do this also because they can afford to and many tech companies would view this as a luxury.
However, there will come a time where the market will demand a new killer product and that day is inching forward.
How do I know that?
iPhone sales are down 10% in the first 3 months of 2024 and that is absolutely awful.
Even if the market looks through these terrible numbers, the day of reckoning inches up, and when it comes, not even a shareholder buyback will massage the stock higher.
Like a magician, this earnings season was a great escape for tech, and I question how many more earnings seasons will they get a pass for.
In a scenario of 8% interest rates, 95% of tech stocks would drop and a few heavyweights would be forced to carry the load. Psychologically, it would scare off the incremental tech investor and that is the bigger problem.
There is only so far the can is able to get kicked down the road.
In the short term, I would be inclined to buy on the dip after we can digest this mediocre earnings season, but at some point, this “bad news is good news” will disappear with the wind.
