(TECH OF THE FUTURE: THE WORLD IN 2050)

April 26, 2024

Hello everyone,

The economic landscape at present is a little uncomfortable, to say the least.  Investors’ perceptions about interest rates, inflation, and employment stability are being influenced by data the Fed is watching closely.  In turn, the interpretation of this data is causing volatility in the market.  We are in a long-overdue correction, which should take the froth out of the huge market rally we have recently experienced. 

Tech stocks, overall, have been brought back to earth.  It certainly does not mean the tech sector is dead.  It’s just resting.   Five, ten, twenty, thirty years in the future, we will look back on this correction as a blip.   Technology will keep advancing and take tech stocks along for the ride. 

So, what exactly do those tech advancements look like?   An insight into some of the tech of the future shows just what is ahead of us.

Future of Education

We will probably see a shift to more interactive method of learning.  Online learning platforms to more personalized learning experiences alongside the incorporation of virtual and augmented reality.  The traditional lecture-based, note-taking methods may be replaced by an emphasis on collaboration and problem-solving to better prepare for the workplace.

In schools, we could see biometric scanning upon check-in, which will streamline registration. 3-D printers will be a standard appliance both in the home and at school.  They will be an essential learning aid for teachers, facilitating the task of teaching complex concepts.

Learning systems driven by artificial intelligence (AI) will have been integrated into the school environment by 2050.  Personalized learning experiences will consider learning styles and create adaptive assessments that adjust in real-time based on performance.  AI may predict a student’s future performance, allowing teachers to step in before a student falls behind in a particular area.  Furthermore, AI will ensure students receive immediate feedback with suggested areas for improvement, thereby tailoring to a student’s strengths and weaknesses.

Self-driving cars

We have all heard about the crashes because of self-driving cars, which have often made headline news.  In decades to come, self-driving cars could well make our roads safer, and reduce deaths and injuries from car accidents.  The insurance industry will surely be impacted by this change.  This AI could also change our lifestyles as well.  The grind of the daily commute will be more comfortable and less taxing on the body, and consequently, it may even change where we choose to live.  Overall, AI will make our transportation systems both safer and more efficient, as AI-powered systems will coordinate traffic flows.

Plants will charge your iPhone.

Forests are set to become the energy stations of the future.  Bioo is a clean-tech company capable of generating electricity from plant photosynthesis.

Delivery Drones

By 2050 the urban skyline will probably be buzzing with drones delivering all manner of things from books to medical supplies to food.  I wonder how noisy that will be? 

Ocean Thermal Energy

Ocean thermal energy is one of the world’s largest renewable energy sources, and it has been relatively untapped to date.  However, a company called Bluerise is working on creating an energy breakthrough by generating utility-scale electricity through Ocean thermal energy conversion.  It is believed it will be able to outcompete fossil fuel-based generation and other renewables that require storage and grid balancing.  It will play a crucial role in the future energy mix being one of the very few constant energy sources, available day, and night, year-round.

Health Wearables

Wristbands tracking our movement came about in 2009 when the Fitbit Tracker debuted.  Since then, many watches can now monitor our movement, our sleep, our heart rate, and other health data.  By 2050, wearables may eliminate the annual physical because they will be loaded with sensors that transmit vital health data, hence giving us warning signs of health issues.   Nanobots and wearable devices will monitor and enhance our mental and physical health continuously.  Necklaces and wristbands that reduce inflammation and pain may also be common items.   This will revolutionize healthcare, making it more personalized and proactive.

Augmented Reality and Virtual Reality

By 2050 technology will be seamlessly integrated into our everyday lives.  AR and VR will be commonplace transforming how we work, learn, and interact.

The Job Landscape will be ‘smart’.

Half of the world’s current jobs are unlikely to exist in 2050.  The jobs that will be on offer haven’t been invented yet. AI and smart assistants will be commonplace.  Robots will play a significant role in the workplace as they can perform many human jobs.   Everything will be ‘smart’ – connect and data-driven.  This will lead to a big shift in the job market, with a greater emphasis on roles that require human creativity and emotional intelligence.  Employers will need to become responsible for creating a life-long learning culture at work, so their staff can take ownership of their professional development, thereby staying up to date with skills and knowledge as their workplace transforms.

Update:  On Wednesday I wrote about the metals sector and mentioned a copper stock that was worth looking at - Solaris Resources Inc (SLSR). Yesterday It rose 0.29 cents, a total of 8.49%. 

Cheers,

Jacquie

(LOOKING BEYOND THE TECH SECTOR FOR INVESTMENT IDEAS IN AI)

April 22, 2024

Hello everyone.

The week ahead calendar

Monday, April 22

8:30 a.m. Chicago Fed National Activity Index (March)

Euro Area Consumer Confidence

Previous: -14.9

Time: 10:00 am ET

Earnings: Verizon Communications, Ameriprise Financial, Truist Financial

Tuesday, April 23

8 a.m. Building Permits final (March)

9:45 a.m. PMI Composite preliminary (April)

9:45 a.m. Markit PMI Manufacturing preliminary (April)

9:45 a.m. Markit PMI Services preliminary (April)

10 a.m. New Home Sales (March)

Australian Inflation Rate

Previous: 4.1%

Time: 9:30 pm ET

Earnings: Baker Hughes, Visa, Enphase Energy, Tesla, NextEra Energy, Freeport-McMoRan, Philip Morris International, Halliburton, United Parcel Service, PepsiCo, Lockheed Martin, Raytheon Technologies, GE Aerospace.

Wednesday, April 24

8:30 a.m. Durable Orders preliminary (March)

Previous: 1.4%

Time: 8:30 am ET

Earnings:  Chipotle Mexican Grill, International Business Machines, Lam Research, Ford Motor, Align Technology, Waste Management, Universal Health Services, Raymond James Financial, Meta Platforms, Boeing, Hilton Worldwide Holdings, AT&T.

Thursday, April 25

8:30 a.m. Continuing Jobless Claims (04/13

8:30 a.m. GDP (Q1)

Previous: 3.4%

Time: 8:30 am ET

8:30 a.m. Initial Claims (04/20)

8:30 a.m. Wholesale Inventories preliminary (March)

10 a.m. Pending Home Sales (March)

11 a.m. Kansas City Fed Manufacturing Index (April)

Earnings:  T-Mobile US, Capital One Financial Corp, Intel, Western Digital, Microsoft, Alphabet, Comcast, American Airlines Group, Southwest Airlines, Valero Energy, Caterpillar, Tractor Supply, Royal Caribbean Group, PG&E, GE Vernova.

Friday, April 26

8:30 a.m. PCE Deflator

8:30 a.m. Personal Consumption Expenditure

8:30 a.m. Personal Income

10 a.m. Michigan Sentiment NSA final

Japan Interest Rate Decision

Previous: 0%

Time: 12:00 am ET

Earnings: T. Rowe Price Group, Colgate-Palmolive, Exxon Mobil, Chevron, AbbVie, Phillips 66.

Big Tech is on stage this week – among other sectors - to deliver earnings results.   Will they be mighty results and revive the flagging market?  Let’s wait and see.   Tech has had an incredible run since last October, so it should not be a surprise to see this sector taking a rest.  This week will also give us a sense of where investors’ perceptions are in relation to AI. 

In addition, Consumer spending will be under the spotlight this week, so we will get some understanding of the U.S. consumer’s behavior in the face of higher prices.  Are they still consuming and borrowing?

The Bank of Japan is set to meet Friday at 12 am EST.  With the USD/JPY reaching above 154.00, forex traders will be listening closely to hear any commentary from the BoJ regarding the depreciation of their currency.

Brief Market Update

US Dollar:  The dollar will continue to rally for the medium term at least.  Euro, Pound, Yen, Aussie, and KIWI will continue to weaken against the USD.

S&P 500:  Correction in progress.  Having advanced almost in a straight line since last October, the market is drawing breath.  From an Elliott Wave perspective, the market is interpreted as undergoing a 4^th wave correction.  Market should find support around 4,820 or at worst in the low 4,700’s.  Still potential for this market to extend to new highs after it takes a rest.

GOLD & SILVER:  Bull market in progress.   Gold’s uptrend to extend on to the next target around $2,500 over the coming weeks.  Silver will rally toward $32.00.

Bitcoin:  The coin has been undergoing a complex correction.  Next upside target is around $83,000.

10-Year Yields:  Yields could rally a little further before taking a rest.

Revisiting some Trades and Recommendations made last year.

October 25, 2023, Newsletter Title: Finding Defensive and Stable Stocks Amongst Changing Global Forces. 

Stocks recommended: 

Johnson & Johnson (JNJ) @ $ 150       April 19, 2024 @ $147.91

Visa (V) @ $ 235.00   April 19, 2024 @ $269.78

Google (GOOGL) @ $132.50 April 19, 2024 @ $ $154.09

November 11, 2023, Title:  It’s a Green Light for the Market according to this Indicator. 

Recommended:  Digital Ocean (DOCN) $26.30   April 19, 2024 @ $32.43

November 13, 2023, Title:  Which Noise is the Market Listening to:  Wars in Europe and the Middle East or the Recession Drums? 

Recommended:  Trade ideas for Palo Alto Networks (PANW)

1/ Buy 1 Dec. 15, 2023, 250 call.

Sell 1 Dec. 15, 2023, 260 call.

2/ (More aggressive at the time)   

Buy 1 June 21, 2024, out of the money 260 call.

Sell 1 June 21, 2024, out of the money 270 calls.  Profit $540.  Loss $460.

Current price of PANW as of Friday, April 19, 2024, is $277.71.  If you took this trade, take profits. 

What Stocks will Power the AI revolution?

Investors are starting to look beyond tech stocks when it comes to investing in artificial intelligence.  They are now looking at real estate, energy, and utilities.

WHY?

Data centers will support a new world of AI technologies, and this is also fuelling demand for the providers of data center parts.  In other words, we need to start thinking about power producers, grid equipment makers, providers of grid technology, as well as commodity companies tied to uranium and copper, used for cabling and electricity networks serving the data center.

Power usage for data centers will more than double and then some.  Power usage is expected to grow at a compound annual rate of between 25% and 33% between 2023 and 2028. AI processing tends to happen on graphics processing units, or GPUs, which are more power-intensive. 

According to Bank of America analysts, several companies stand to benefit from the rapidly growing power needs of data centers, including Caterpillar (CAT) and Equinix (EQIX).

Caterpillar is underrated here.   The company is the leading manufacturer of diesel generator sets with more than 450,000 kilowatts installed in data centres and hospitals in a single year.  Management is raising its own capital expenditures for the first time in a decade to meet the power demand for data centers.  Caterpillar dropped last week but is a quality stock to own for the long term.

Equinix (EQIX) is starting to capture the very early signs of AI demand.  Most of the total opportunity is yet to come. (EQIX) is anticipating strong top-line revenue growth this year.  Bank of America expects Equinix to jump roughly 33% this year.  Equinix has dropped around 7% so far this year.

Bank of America is also bullish on electrical components maker Eaton (ETN) in relation to its ability to provide data center infrastructure and power supply.  BofA believes Eaton shares could climb another 12% after gaining more than 25% this year.

Generally speaking, analysts expect data center demand to likely exceed supply.  It is understood that AI demand will emerge in two phases – training and inference – where training new AI models will require power and cooling while new data centers will need to be built to accommodate those needs.

Quite Interesting (QI) Corner

Cheers,

Jacquie

(INVESTORS INTERPRETATION OF DATA MOVES THE MARKET – OPPORTUNITIES ARE SETTING UP)

April 17, 2024

Hello everyone,

The stock market correction.  What’s it all about?

Lingering inflation concerns.  We know it will be higher for longer.  Fed will react to economic data eventually. 

Rising Treasury yields. 

Turmoil in the Middle East.

Healthy correction in a bull market.

Corrections are common in bull markets and the speed of recovery is relatively fast. There have been 24 corrections since World War II with an average decline of 13.9% and lasting about four months, and it took the S&P 500 four months to recover all that was lost in the decline, according to Sam Stovall, chief investment strategist at CFRA Research.

A 10% decline is defined as a correction in one of the major stock indexes.  A 20% or greater decline indicates we have moved into bear market territory. 

CFRA Research shows us that if we go back to 1990, the market fell an average of 14.7% in a correction and was able to recoup the losses in the correction in only three months.

So, for long-term investors – it’s better to hang on than to jump.

With the S&P 500 now sitting below its 50-day moving average, we may have further downside to go.  We will probably see relief rallies, but while the S&P 500 is below 5114, the risk is to the downside.

The way to look at this correction is as a healthy consolidation after a very strong return in the first quarter.  It doesn’t change the fundamentals.  We should continue to rally into year-end, but it won’t be a straight line.

So, where should we be looking for opportunities?

There will be continued demand for AI and AI-related technologies.  Therefore, we should have our focus on AI software and semiconductor companies.  Additionally, let’s not forget global commodity producers and miners, particularly those related to copper.

Miners (Copper) (FCX)

AI – Nvidia (NVDA), Microsoft (MSFT), Advanced Micro Devices (AMD), Amazon (AMZN),

Taiwan Semiconductor Manufacturing Co (TSM), Applied Materials (AMAT), Dell Technologies (DELL), Meta Platforms (META)

Miners (BHP), (RIO), (CVX)

Of course, this is not a complete list of every company in the categories I’ve mentioned.  But it’s a good place to start.

This is a very sad sign of the times.  In just about every shop and place of business I go into today, these signs are present.

Cheers,

Jacquie

(DATA WILL BE KEY IN THE MONTHS AHEAD AS THE FED LOOKS TO START CUTTING RATES)

April 12, 2024

Hello everyone,

Investors are learning to balance on a moving train. 

Earnings are strong.

The economy is strong.

But inflation remains stubbornly high.

We know that cyclical stocks perform best when the economy turns up, such as energy, materials, and hospitality. 

Energy has been the second-best performer among S&P sectors year to date, up 17%.  Communication services, led by a big move in Meta, has been the leader, up 18%.

Other potential beneficiaries of higher rates with a strong economy are defensive stocks, which tend to be less interest rate-sensitive, such as Kroger or Walmart.

But if the bottom starts to fall out of the jobs market, the narrative changes quickly.  A weaker job market with high inflation may well lead to stagflation – which markets would find distasteful.   The S&P 500, which closed Wednesday at 5,160 could well slide down the elevator shaft rather quickly and we could see the market in the mid-4,000’s.

The key here is a strong economy, which will help prop up earnings.  The next three to six months will be very important in terms of earnings results, and employment numbers.

The growing value of assets that can’t be confiscated.

Gold and Bitcoin’s value derives from their non-confiscatability by inflation, by bank failure, and - in the case of Bitcoin – by state expropriation.

Bitcoin can’t be confiscated by inflation because of its controlled supply, while the failure of banks and other financial institutions wouldn’t lead to the custody of an investor’s crypto assets.

Even a government banning Bitcoin wouldn’t lead to its confiscation, because a global network of bitcoin holders remains.

The Bitcoin price may well rise beyond $100k as the market value for non-confiscatability grows substantially and Bitcoin’s share of this market grows substantially.

Bitcoin hit a new high above $73,000 on March 14, rising more than 70% this year.   The introduction of the U.S. spot bitcoin ETFs this year and the tightening bitcoin supply ahead of the late April “halving” have driven the price of the cryptocurrency up.

Meanwhile, gold has also hit record highs.  It is presently sitting at around $2384.68.  Bullion is considered by some investors as a hedge against inflation and geopolitical uncertainties.

Both Bullion and Bitcoin are becoming increasingly valuable in both Western and emerging nations.

Cheers,

Jacquie

(MARKETS HAVE A LOT OF DATA TO DIGEST THIS WEEK)

April 8, 2024

Hello everyone,

Week ahead calendar

Monday, April 8

Switzerland Unemployment Rate

Previous: 2.4%

Time: 1:45 am

Tuesday, April 9

6 a.m. NFIB Small Business Index (March)

Japan Consumer Confidence

Previous: 39.1

Time: 1:00 am

Wednesday, April 10

8:30 a.m. Consumer Price Index (CPI) (March)

8:30 a.m. Hourly Earnings final (March)

8:30 a.m. Average Workweek final (March)

10 a.m. Wholesale Inventories final (February)

2:00 p.m. Treasury Budget NSA (March)

2:00 p.m. FOMC Minutes

Earnings: Delta Air Lines

Thursday, April 11

8:30 a.m. Continuing Jobless Claims (3/30)

8:30 a.m. Initial Claims (04/06)

8:30 a.m. Producer Price Index PPI

Euro Area Interest Rate Decision

Previous: 4.5%

Time: 8:15 am

Earnings: CarMax

Friday, April 12

8:30 a.m. Export Price Index (March)

8:30 a.m. Import Price Index (March)

10 a.m. Michigan Sentiment preliminary (April)

UK GDP Growth Rate

Previous: -0.3%

Time: 2:00 am

Earnings: State Street, Wells Fargo, JPMorgan Chase, Progressive, Citigroup

Top of mind for investors this week will be inflation numbers that are out on Wednesday. Markets are already digesting rising Treasury yields, so the data could provide an added dose of medicine that the market may love or just really hate.

The numbers will confirm whether we are headed towards the Fed’s 2% target or whether a reassessment or shift is needed on interest rate policy and outlook.  Even if March numbers are good, investors should still remain cautious about where inflation will sit in the months ahead.

The number of jobs added to the U.S. economy in March was beyond expectations, really highlighting the labour market’s strength.  Of significance, however, was the fact that average hourly earnings were in line with forecasts, suggesting that the labour market and the economy as a whole are not overheating.  Currently, the CME Fed Watch Tool shows markets are pricing in three rate cuts this year, starting in June.  Wait for the data; it will tell a story.

The markets are feeling brittle about yields, and any further negative data could tip us into a little more volatility, and more of a correction here.

Rising Treasury yields and higher oil prices saw the DJIA close lower by 2.3% last week.  West Texas Intermediate crude oil futures topped $87 a barrel last week, reaching a five-month high.  The 10-year Treasury yield hit 4.4% last Friday.

Despite these readings, many investors remain optimistic that stocks can continue to rally, citing a broadening out in the rally – meaning that it is not just the tech sector leading the rally, but a participation of all sectors – and a strong economy, which are constructive signals for markets.

The market’s “Bigger Picture” outlook remains Bullish.  We would need to see a strong break below 5,140 to signal a deeper retracement back towards the 4990 area.

The uptrend in Gold and Silver remains in progress, and we are awaiting a breakout from a symmetrical triangle in Bitcoin, with a target of around $82,000.

Cheers,

Jacquie