Mad Hedge Technology Letter
December 2, 2024
Fiat Lux
Featured Trade:
(STICK WITH ENTERPRISE TECH IN 2025)
(HPE), (DELL), (TSLA), (NVDA)
Although, on the surface, tech stocks might be performing quite well, we need to talk about an imminent issue that could affect them.
I would even say that I am quite surprised by how the year is panning out.
There was so much uncertainty going into this year, and the election was a brutal contest that was bitterly fought.
However, the election gave us a clear winner, triggering a short-term tsunami of capital into tech stocks with the likes of Tesla (TSLA) leading the charge.
Even institutional money from heavyweights like Blackrock and others poured into tech stocks like there was no tomorrow.
TSLA is up today again on more stock upgrades.
If one ever needed a skinny variety of reliable tech stocks, then investing capital in Nvidia, Tesla, and perhaps Netflix or a Meta would be a solid foundation.
It is not only the Midas touch in the tech world, with management at HP and Dell saying the computer and laptop business isn’t all too hot.
Revenue generated by Dell’s (DELL) PC business declined 1% to $12.1 billion in the fiscal third quarter, falling short of estimates. While sales in HP’s (HPE) PC unit rose 2% to $9.59 billion, missing forecasts.
The PC refresh cycle is pushing into next year (2025), said Dell management.
HP Chief Executive Officer Enrique Lores said in an interview that the release of Microsoft’s new edition of Windows software hasn’t fueled PC sales from corporate clients as quickly as in previous releases.
The market had seen a historic decline in recent years after a burst of demand for new laptops in the early months of the pandemic when students and corporate employees were stuck at home. While signs of a rebound began to materialize this year, shipments again dipped in the third quarter.
This type of narrative has been put in motion by the crowd who think a new administration and their immigration stance will cause rampant inflation in wages.
No doubt, a lot of changes will take place in the next 50 days and after, and that type of uncertainty could deliver us a sharp selloff if short-term pain is sensed by the market.
Comments from Best Buy already set a very low bar even lower, as the recession that was supposed to take place in 2018 could be sneaking up on us.
The unemployment rate is forecasted to peak at 4.4% and has been steadily trending higher, highlighting the weakening of the US consumer.
There is a good chance that in 2025, retail tech will be in a recession before enterprise tech and enterprise tech stocks will be the last bastion of a narrowing market growth.
The key signal to focus on is a big Bitcoin sell-off that could trigger a flight to safety.
As long as market action stays orderly, I expect the pain trade to go higher in tech stocks in an uneven way, and I would avoid any tech stocks directly connected to American retail shoppers.
“AI will be the best or worst thing ever for humanity.” – Said Elon Musk
(A MELBOURNE START-UP ELIMINATING FOOD WASTE)
December 2, 2024
Hello everyone
WEEK AHEAD CALENDAR
MONDAY DEC. 2
9:45 a.m. S&P PMI Manufacturing final (November)
10:00 a.m. Construction Spending (October)
10:00 a.m. ISM Manufacturing (November)
TUESDAY DEC. 3
10:00 a.m. JOLTS Job Openings (October)
7:30 p.m. Australia GDP Growth
Previous: 0.2%
Forecast: 0.5%
Earnings: Salesforce
WEDNESDAY DEC. 4
8:15 a.m. ADP Employment Survey (November)
9:45 a.m. PMI Composite final (November)
9:45 a.m. S&P PMI Services final (November)
10:00 a.m. Durable Orders (October)
10:00 a.m. Factory Orders (October)
10:00 a.m. ISM Services PMI (November)
2:00 p.m. Fed Beige Book
Earnings: Campbell Soup, Hormel Foods, Dollar Tree
THURSDAY DEC. 5
8:30 a.m. Continuing Jobless Claims (11/23)
8:30 a.m. Initial Claims (11/30)
8:30 a.m. Trade Balance (October)
10:00 a.m. Canada Ivey PMI
Previous: 52
Forecast: 53.1
Earnings: Ulta Beauty, Hewlett Packard, Enterprise, Dollar General, Kroger.
FRIDAY DEC. 5
8:30 a.m. November Jobs report
Previous: 12k
Forecast: 183k
10:00 a.m. Michigan Sentiment preliminary (December)
3:00 p.m. Consumer Credit (October)
ON THE RADAR THIS WEEK
This week’s employment data, culminating in Friday’s Nonfarm Payrolls report, is expected to return to normal after last month’s unusual numbers, which were off-kilter by virtue of hurricane disruptions and labour strikes. Investors will also watch Federal Reserve Chair Powell’s upcoming speech for clues about how the central bank might respond to the trade policies expected from the Trump administration.
FOOD WASTE – WHAT TO DO ABOUT IT
A Melbourne start-up, Freshho, aims to tackle the $940bn food waste crisis. The startup has raised $17m to expand its platform that, which eliminates food waste and saves wholesalers a fortune by taking the guess work out of food ordering. In other words, they are better able to anticipate their restaurant customers’ needs, thanks to artificial intelligence.
Fresho, which James Andronis and Huw Birrell founded in 2015, is now looking to expand to the US, with the raising – led by Geoff Tarrant, co-founder and former executive chairman of Payapps – valuing the company at $120m.
The pair have developed a platform that aims to make ordering produce more efficient at a wholesale level.
Mr Andronis said it had replaced fresh food wholesalers dedicating overnight staff to manually process orders, which typically arrived via email. Text, voicemails, and even faxes, which often resulted in errors and wastage.
Fresho’s AI-powered system automatically converts incoming orders into structured data while giving restaurants direct access to live pricing and availability through its app.
According to Oz Harvest, about 1.3 billion tonnes of food produced is wasted each year, costing the global economy about $940bn. It’s also bad for the environment, with up to 10 percent of global greenhouse gas emissions coming from goods that are produced but not eaten. Oz Harvest commented that “if food waste was a country, it would be the third-biggest emitter of greenhouse gases after the US and China.
Mr Andronis says Fresho – which has processed 30 million orders since its inception and 10 million orders in the past year- says its platform has led to a dramatic reduction in food waste.
Investor Geoff Tarrant will join Fresho as a director. Payapps, the global construction software firm he co-founded, was acquired by Autodesk for $600m in 2024.
The software platform Fresho will provide benefits for all participants in the fresh food market.
Note: This is an item of interest post. I will monitor Fresho’s progress as it expands to the U.S.
Fresho’s app automates sales orders to eliminate errors and guesswork that fuels food wastage.
MARKET UPDATE
S&P500
Uptrend is still intact and showing no signs of exhaustion yet. The Santa rally is in front of us.
Next year, I will be looking for some sort of correction, be it a time correction or price correction.
Support: $5950/$5890
Next resistance targets: $6085/$6120
GOLD
Consolidating taking place in gold after a strong rally. Rally will continue, but we may not hit new highs until next year. Time will tell.
Support: $2615/$2560
Next resistance target: $2,820
BITCOIN
The uptrend continues here. It is expected that we will break through $100k before year-end.
Support: $95,800/$94,900/$90,560
Next resistance target: $100,650/$109,280
PORTFOLIO UPDATE
PALANTIR (PLTR) Recommended on March 20, 2024, at $23.00.
Today’s recommendation: Take some profits off the table.
Daily chart
Weekly chart
Palantir stock has soared nearly 277% this year, climbing 47% just in the past month after the analytics software provider beat the Street’s earnings and sales estimates in its third quarter, raised its forecasts for future profit, and decided to move its stocks listing to the Nasdaq stock market from the NYSE.
I recommended Palantir on March 20 this year when the stock was sitting at $23.00. At the end of September, we were up 61.73%. At the end of November, however, we were up 191.65%. Now, that’s quite a tidy return. Let’s stick to our regime of taking some profits off the table, as after such a strong rally, we may find some sort of correction that could follow in the new year.
QI CORNER
SOMETHING TO THINK ABOUT
Cheers
Jacquie