“Life is fragile. We're not guaranteed a tomorrow so give it everything you've got.” – Said CEO of Apple Tim Cook
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
(THE AI GENIE IS OUT OF THE BOTTLE – ARE HUMAN RIGHTS AT STAKE?)
June 7, 2024
Hello everyone,
A recent report from the UN is shining a spotlight on the risks of generative AI. The report explores 10 human rights that generative AI may adversely impact.
The paper says that “the most significant harms to people related to generative AI are in fact impacts on internationally agreed human rights” and lays out several examples for each of the 10 human rights it explores: Freedom from Physical and Psychological Harm; Right to Equality Before the Law and Protection against Discrimination; Right to Privacy; Right to Own Property; Freedom of Thought, Religion, Conscience, and Opinion; Freedom of Expression and Access to Information; Right to Take Part in Public Affairs; Right to Work and to Gain a Living; Rights of the Child; and Rights to Culture, Art, and Science.
There is already talk about generative AI’s impact on creative professions. This report discusses this issue and how it can be used to create harmful content from political disinformation to nonconsensual pornography and CSAM (child sexual abuse material). Over 50 examples in the report illustrate the potential human rights violations, which creates an alarming picture of what’s at stake as companies rush to develop, deploy, and commercialize AI.
The report also asserts that generative AI is both altering the current scope of existing human rights risks associated with digital technologies and has unique characteristics that are giving rise to new types of human rights risks. For instance, the use of generative AI for armed conflict and the potential for multiple generative AI models to be fused together into larger single-layer systems that could autonomously disseminate huge quantities of disinformation.
Of some concern is the idea that “other potential risks are still emerging and, in the future, may represent some of the most serious threats to human rights linked to generative AI.
One particular risk the report brings to light surrounds the Rights of the Child. “Generative AI models may affect or limit children’s cognitive or behavioral development where there is over-reliance on these models’ outputs, for example when children use these tools as a substitute for learning in educational settings. These use cases may also cause children to unknowingly adopt incorrect or biased understandings of historical events, societal trends, etc.”
The report also notes that children are especially susceptible to human rights harms linked to generative AI because they are less capable of discerning between synthetic content and genuine content, identifying inaccurate information, and understanding they’re interacting with a machine.
Let’s think of children and social media for a moment. They were given daily access to social media without virtually any transparency or research into how it might impact their development or mental well-being. It’s well known that children have been harmed by social media companies’ apparent lack of guardrails surrounding the technology. This issue came to light earlier this year when the CEOs of Meta, Snapchat, TikTok, X, and Discord testified before Congress in a heated hearing that looked at social media’s role in child exploitation as well as its contribution to addiction, suicide, eating disorders, unrealistic beauty standards, bullying, and sexual abuse. It’s been shown that children were treated as guinea pigs on Big Tech’s social media platforms; repeating those mistakes with generative AI would be shameful.
The Right to Work and to Gain a Living was also covered in the report and showed interesting findings. Of note was the fact that economics, labor markets, and daily work practices could be drastically altered by Generative AI. The future may include employers using generative AI to monitor workers, and the idea that workers engaged in labor disputes with employers may be at heightened risk of being replaced with generative AI tools.
How we implement the technology will be important as well as the guardrails – or lack thereof – we put around it. Perhaps the most significant takeaway is the understanding that Generative AI as a technology won’t commit these human rights violations independently, but rather powerful humans acting recklessly to prioritize profit and dominance will.
The May Monthly Zoom Meeting recording will be sent out next week.
QI CORNER
Cheers,
Jacquie
Global Market Comments
June 7, 2024
Fiat Lux
Featured Trade:
(WHY LITHIUM IS ABOUT TO REPLACE OIL)
(SQM), (FMC), (ALB)
The current nuclear winter in the EV industry is the worst in the history of the industry and there has been no worse affected supplier than the lithium industry.
Flattening sales and increased competition have smashed the share prices of companies like Tesla (TSLA) and many smaller entrants are unlikely to make it out alive.
But conditions can’t remain this horrible forever and there are some fantastic long-term bargains to be had among the big lithium miners for the patent and the discipline.
Would you be interested in buying a commodity that will become the basis for the global economy for the second half of the 21st century?
How about a commodity that is about to see a 100 times increase in demand. It will also become the world’s most widely traded commodity.
The market for Lithium (Li) is about to explode. What we are witnessing now is nothing less than the transition from a carbon to a lithium-based economy. This is a big deal.
I mention this now because we have just been blessed with a great entry point for the entire sector. The government of Chile has raised its lithium mining quota by 400%, causing all shares in the sector to crater.
But this is just a temporary setback. Global demand should handily grow into the new supply.
This is not a new trade for us. I first started writing about lithium in 2009, piling readers into Chile’s Sociedad Quimica Y Minera (SQM), bringing in a handy 440% pop-off the lows (click here for “The Skinny on Lithium” ).
After that, the stock was demolished by the peaking in 2013, and the subsequent collapse of oil prices which took down the entire lithium, rare earth, solar, and alternative energy space. At the end of the day, it’s all one trade about energy.
We saw an almost perfect double bottom in 2015, and since then, the stock has tacked on another perfect 440% gain. We are now plumbing new lows.
Except that this time, it’s different.
Back in 2009, when (SQM) began its first springboard move, the global electric car industry was but a twinkle in Elon Musk’s eye. Lithium demand was limited to use in cell phones with tiny batteries.
Fast forward 15 years, and it’s a different world.
Tesla total car production since inception has topped an eye-opening 6 million. It is ramping up to produce 20 million units a year. And dozens of other major car manufacturers also have all-electric models in showrooms.
And here’s the real kicker. A cell phone uses a miniscule average of seven grams of lithium. A Tesla Model-1 uses 10,000 times that quantity!
In the coming years, we will transition from a global lithium glut to a structural shortage. That is great for share prices….everyone’s.
Tesla brought online its lithium-ion battery-producing Gigafactory in nearby Sparks, Nevada, a joint venture with Japan’s Panasonic. A second Gigafactory has already been completed.
It gets better.
Ten states and countries will eventually ban the sale of new internal combustion engines, and the list is growing.
The Netherlands starts in 2025, followed by Germany in 2030, and Britain and France in 2040.
Norway, which ironically is a major oil exporter, wants to go all-electric as soon as possible.
California, which accounts for 20% of all US car sales, is demanding 100% of new car sales be zero emission by 2035. China has a similar phase in.
Adding together the lifetime cost of operating a vehicle, and averaging out the cost per year, Tesla’s are cheaper than running a conventional car TODAY! It will be the market that dictates that all new sales of vehicles go electric, not some government edict.
You just pay for all of the lifetime need for fuel up front, and make it back over time through a zero cost of maintenance.
Add all this up, and total lithium demand should soar to 470,000 by 2025. That’s a lot of lithium.
Until now, the bulk of the world’s lithium is produced by three companies, (SQM) mentioned above, North Carolina-based special chemical maker Albermarle (ALB), and Pennsylvania-based (FMC) Corp.. The rest of the listed lithium-producing companies are all penny stocks.
All three of these companies obtain their lithium supplies in the same corner of Chile, Bolivia, and Argentina which has the unique geology to cheaper surface mine this white, highly reactive metal.
These are referred to as “lithium brines” where the target metal can be easily obtained through a simple crystallization process.
And here’s the dirty little secret of lithium mining. What do these three countries have in common? Cheap labor and the virtual absence of environmental controls. This is why you will never see competitors emerge from the US or Australia.
What could upset the apple cart for lithium? A totally new battery technology based on other elements could emerge to replace lithium.
There are many on the drawing board. This list includes graphene supercapacitors, redox flow, aluminum graphite, solid state, and biochemical batteries, powered roads, and high-output thin film solar panels.
Several of these also use lithium, but not to the extent that existing lithium-ion batteries do.
But some have come close to challenging lithium’s advantages in cost and scale production.
But then in the tech business, you never say never.
I worked on my first electric car at UCLA 50 years ago as part of a graduate engineering project, and I’m surprised that it has taken this long to get this far.
But then massive government subsidies for the oil industry are a hard thing to run against for anyone.
There is a Future in Lithium
The Gigafactory in Sparks Nevada
Mad Hedge Biotech and Healthcare Letter
June 6, 2024
Fiat Lux
Featured Trade:
(IS THIS THE COMEBACK TRAIL AFTER A CLIFFHANGER?)
(BMY)
I once scaled a mountain everyone swore was cursed after a landslide. They missed out on stunning vistas and the thrill of conquering a challenge. Turns out, the best views often come after a little rock bottoming.
That brings to mind Bristol-Myers Squibb (BMY), the pharma giant fresh off a stock price landslide of its own.
Bristol-Myers Squibb shares have been in a freefall lately, plunging to nearly half their 2022 peak of $80. The culprit? You guessed it: those dreaded patent expirations and a whole lot of hand-wringing about future growth.
However, as a contrarian investor, I see this doom-and-gloom scenario as an opportunity rather than a setback.
Remember those times when the market turned its back on the likes of Meta Platforms (META) and NVIDIA (NVDA)? They were trading for peanuts not so long ago and look at them now.
Now, you might be thinking, "So, BMY's taken a hit. Is it really that undervalued?"
Well, I've been digging through the stock's history, all the way back to 2012, and something interesting popped up: since 2013, BMY has rarely dipped below its 200-week simple moving average (that fancy brown line on your charts). It just recently broke through that floor, which could mean we're looking at a once-in-a-decade buying opportunity.
Every time this stock has even gotten close to that 200-week line, it's been a signal to buy, and the stock has always bounced back.
Let's not forget that just a couple of years ago, this stock was cruising at over $80 a share. Now it's practically a penny stock compared to that. Has the company really lost half its value?
Bristol-Myers Squibb's been facing some headwinds, no doubt about it. Revlimid, their blockbuster cancer treatment, lost patent protection in 2022, and Eliquis, their anti-stroke champ, is set to follow suit in 2026.
But don't count them out just yet. The company still has plenty of promising drugs in its arsenal that aren't facing patent cliffs anytime soon.
Plus, they've been on a shopping spree, snatching up high-potential companies like Karuna, RayzeBio, and Mirati in 2023. These acquisitions could be just the ticket to reignite growth and fill the void left by those expiring patents.
In a strategic move to streamline operations and boost future earnings, Bristol-Myers Squibb also announced a $1.5 billion plan to cut expenses, including eliminating around 2,200 jobs.
Sure, 2024 might be a bit of a transition year with some one-time charges, but this bold move could pave the way for a leaner, meaner, and ultimately more profitable company in the years to come.
Turning to the financials, analysts are forecasting a bit of a slow year for Bristol-Myers Squibb in 2024, with earnings per share of $0.56 on about $46 billion in revenue.
But they're expecting a major rebound in 2025, with earnings soaring to $6.94 per share on similar revenue.
And even though 2026 projections show a slight dip to $6.30 EPS on $43.85 billion revenue, this isn't a company you're buying for explosive growth.
The current stock price is roughly seven times the 2025 earnings estimate. That's a steal, my friends. Sure, they've got a bit of debt on the books – $57.46 billion to be exact, with $9.67 billion in cash. But hey, they still earned a respectable "A2" credit rating, so they're not exactly teetering on the brink.
Now, let's talk about another star of BMY’s show: that sweet, sweet dividend.
Bristol-Myers Squibb is dishing out $0.60 per share each quarter, which adds up to a juicy 5.5% yield. Think about that for a second.
That's more than most money market funds are offering right now, and with the Fed likely to slash interest rates in the near future, those yields are only going to shrink.
Remember that "Fed dot plot" they released earlier this year? It's hinting at a 2.25-point drop in the Fed Funds rate by the end of 2026. That could take us from the current 5.25% to 5.5% range all the way down to 3% to 3.25%.
Imagine how much more tempting that 5.5% dividend yield from Bristol-Myers Squibb will look when money market rates are potentially 40% lower.
That makes Bristol-Myers Squibb's current situation practically irresistible to a contrarian investor like me. We're talking about a stock trading at a price we haven't seen in over a decade, relative to the 200-week simple moving average. That's the kind of bargain that makes my palms sweat.
And that's not all. With a valuation hovering around seven times the 2025 earnings estimate and a dividend yield that makes money market funds look like pocket change, this could be a recipe for serious upside.
Sure, patent expirations are a pain in the you-know-what for every pharma company. But let's not forget those initial years of patent protection are like a golden ticket. Plus, Bristol-Myers Squibb has a proven track record of developing and acquiring blockbuster drugs.
Of course, there's no sugarcoating the challenges and risks, but when a stock's 5.5% yield and a rock-bottom P/E ratio are staring you in the face, it's hard to ignore the potential upside. That's why I'm dipping my toes in with a small initial position, gradually building it up over time.
I'm playing the long game here, folks. I believe that eventually, just like with other beaten-down stocks, investors will wake up and realize the incredible value this historically successful company offers.
In the meantime, that generous dividend will keep those money market-like payouts rolling in while we wait for the share price to rebound.
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
June 6, 2024
Fiat Lux
Featured Trade:
(JULY 2 VANCOUVER CANADA STRATEGY LUNCHEON),
(TAKE A LEAP INTO LEAPS)
(MSFT), (AMZN), (GOOGL), (BIDU), (NVDA), (IBM)
I've been around the block a few times, and I've seen my fair share of tech revolutions - from the rise of the personal computer to the dawn of the internet. But nothing, and I mean nothing, has gotten me as fired up as the AI boom.
It all started back in the early 2010s. I was at a conference in Silicon Valley, rubbing elbows with some of the biggest brains in tech.
That's when I first heard rumblings about this thing called "machine learning." At first, I brushed it off as just another buzzword - something for the eggheads to geek out over.
But then I met this young hotshot named Andrew Ng. He was talking about how machines could learn to recognize patterns, how they could make predictions, and how they could even teach themselves to play complex games like chess and Go.
And it hit me like a ton of bricks - this wasn't just some passing fad. This was the future.
Fast forward to today, and that future is here. AI is no longer a niche academic pursuit - it's a trillion-dollar industry that's reshaping every facet of our lives.
Now, I know what you're thinking. "John, isn't this just another tech bubble waiting to burst?" And sure, I get it. We've all been burned before. But let me tell you something - AI is different.
This isn't just about some fancy new gadget or app. This is about a fundamental shift in the way we live, work, and do business.
Just look at the numbers. Global AI funding hit a staggering $93.5 billion in 2021, up from just $36 billion in 2020. That's a 160% increase in just one year.
And it's not just the Silicon Valley giants getting in on the action. Countries like China and France are pouring billions into AI research and development, racing to gain an edge in this new digital frontier.
Let’s focus on France for now. They've got homegrown heroes like Mistral AI and H turning heads and attracting big-name investors faster than you can say "bonjour."
Mistral AI, backed by Microsoft (MSFT), is already flirting with a $6 billion valuation just a year after setting up shop.
And H? They've raised a staggering $220 million from the likes of luxury kingpin Bernard Arnault (aka the richest man in the world).
Even President Macron is getting in on the action, vowing to make France the undisputed king of the AI hill. He's throwing cash at research centers and promising to open "AI cafes" nationwide.
Can you imagine discussing the finer points of machine learning over a croissant? Sacrebleu!
But it's not just the French République making waves. US giants like Google (GOOGL), Amazon (AMZN), and China's Baidu (BIDU) are all in on the AI game.
And don't even get me started on NVIDIA (NVDA) and IBM (IBM). These companies are building the picks and shovels of the AI gold rush, and they're poised to make a killing.
So, what does this mean for us? It means we've got a once-in-a-generation opportunity on our hands.
The AI market is set to hit $1.8 trillion by 2030, growing at a mind-boggling 38.1% annually.
To put that in perspective, that's like the entire GDP of Canada, but just for AI. And it's not just one industry - AI is seeping into every nook and cranny of the economy, from healthcare to finance to transportation.
A recent survey by McKinsey found that 56% of companies are already using AI in at least one function, and that number is only going to grow.
And get this - by 2025, AI could be driving a whopping $15.7 trillion in global economic growth. That's more than the current output of China and India combined.
On top of all these, though, here's something else to consider: as the AI race heats up, governments are scrambling to figure out how to regulate this brave new world.
Some want to slam on the brakes, while others, like ex-Google boss Eric Schmidt, are urging Europe to step on the gas and invest like crazy.
In fact, the EU has already pledged to invest $21.758 billion per year in AI over the next decade.
So, here's my advice to you. Don't sit on the sidelines and watch this opportunity pass you by. Add those companies I talked about to your watchlist.
As for me? I may be an old dog, but I've still got a few new tricks up my sleeve. And you can bet your bottom dollar that I'll be right there in the thick of things, riding this AI wave all the way to the top.
See you on the other side.