Page 202 - Mad Hedge Fund Trader

A LITTLE LESS CONVERSATION, A LITTLE MORE AI ACTION

(AMZN), (NVDA), (GOOG), (MSFT), (AAPL), (CRM), (ORCL), (IBM), (TSLA)

In 1956, Elvis Presley's "Heartbreak Hotel" topped the charts, teenagers swooned, and parents worried about the decay of civilization.

That same year, a group of scientists at Dartmouth College coined the term "artificial intelligence," boldly predicting human-level machine intelligence within a generation.

Seven decades later, I'm debating with Google’s Gemini about whether a hot dog qualifies as a sandwich. (For the record, Gemini’s argument about structural integrity and bread-to-filling ratios was disturbingly convincing.)

I've analyzed markets for decades, but what's happening now makes those early dot-com days look positively quaint.

Amazon (AMZN) just dropped $4 billion into a startup called Anthropic bringing their total investment to $8 billion.

But Amazon isn't just throwing cash around for fun. They're rolling out custom-designed chips called Trainium and Inferentia to power Anthropic's AI systems through AWS.

Essentially, this move is a direct challenge to Nvidia's (NVDA) GPU dominance in the AI space.

Anthropic, founded in 2021 by OpenAI defectors, has rocketed from startup to major player with stunning speed.

In 2023, Google (GOOG) spotted their potential early and invested $500 million. Now with Amazon's backing, they've got serious muscle.

Considering the massive potential of the AI space, it’s not surprising that the tech giants are picking sides.

Amazon, Anthropic, and Alphabet form one power group, combining Amazon's cloud infrastructure, Anthropic's AI expertise, and Google's massive data resources.

Microsoft (MSFT) and OpenAI make up another, leveraging their Azure cloud platform and GPT technology to dominate enterprise AI solutions.

Apple's (AAPL) pulled off an exclusive deal to bring ChatGPT to iPhones - because apparently, Siri needed some company. This move signals that AI will be the next major battleground in consumer tech.

The November numbers reflect these strategic moves.

Amazon's roughly at $206, buoyed by investors betting on their AI infrastructure play. Microsoft commands $423, their OpenAI partnership driving cloud revenue growth. Alphabet sits at approximately $171, their diverse AI portfolio attracting long-term investors.

Nvidia, despite Amazon's chip rebellion, holds steady at $135 – proof that the AI boom needs more than just one chip supplier.

And the ripple effects are transforming every sector.

IBM's (IBM) Watson has evolved from winning Jeopardy! to analyzing medical data, opening up a $500 billion healthcare AI market.

Oracle (ORCL) finally made databases interesting – words I never thought I'd type. They’re leveraging AI to automate complex data operations, capturing enterprise clients from traditional providers.

Salesforce (CRM) embedded AI so deeply in their platform that their software predicts customer needs before customers even have them. I tested this claim. It knew I wanted to upgrade before I did. Unnerving.

Tesla's (TSLA) AI is teaching cars to distinguish between fire hydrants and pedestrians.

As someone who's had close encounters with both, I appreciate the effort. Though I'm still waiting for AI that can successfully negotiate with traffic cops.

So, how do you get a piece of the action? Consider keeping a close eye on industry leaders like Amazon and Microsoft for their cloud AI dominance, Alphabet for its research prowess, and Nvidia for AI hardware leadership.

And don't overlook IBM, Oracle, and Salesforce for enterprise AI applications. Adding these names to your watchlist could position you well as the AI revolution unfolds.

Needless to say, the stakes here are unprecedented. My first tech investment was in a company making faster floppy disk drives.

Now, I'm watching firms develop artificial minds that outthink teams of PhDs. The money flowing into AI makes those early internet investments look like spare change in a couch. And the pace is only accelerating.

The AI movement isn't approaching – it's here, changing our world faster than rock and roll transformed music.

We've got front-row seats to the biggest show since the internet. As Elvis would say, "It's now or never" for AI investing. Just make sure you don't end up at Heartbreak Hotel.

December 2, 2024

Tech Letter

Mad Hedge Technology Letter
December 2, 2024
Fiat Lux

Featured Trade:

(STICK WITH ENTERPRISE TECH IN 2025)
(HPE), (DELL), (TSLA), (NVDA)

Stick With Enterprise Tech in 2025

Tech Letter

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.

December 2, 2024 - Quote of the Day

Tech Letter

“AI will be the best or worst thing ever for humanity.” – Said Elon Musk

December 2, 2024

Jacque's Post

(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

November 29, 2024

Jacque's Post

(THE BASICS ON BONDS)

November 29, 2024

Hello everyone

What are Bonds?

Bonds are instruments used by companies and governments when they need to raise money in the form of a loan.

If, for instance, a company issues a Bond and the investor buys the bond, the company gives a promise to repay the money at an agreed-upon interest rate.

Bonds are issued at the par value of $1000, which is the standard.

The Interest rate depends on several factors.

One of the most important is the Credit Rating.

The lower the credit rating, the higher the risk and the higher the interest paid.

The U.S. government has never defaulted on a bond, so they are considered a very low credit risk, and therefore, they have a low interest rate.

A Bond states three things:

Par value, also called face value, its coupon rate, which is stated as a percentage of par and its maturity date.

What is the coupon rate for bonds?

The coupon rate is just another term for the bond’s interest rate.

In other words, it’s the cash that the borrower will pay periodically to the bondholder.

The face value is the lump sum that the borrower is promising to pay at the maturity date.

At the end of the term, you get the principal back.

You can also sell your bond to another person on the bond market.

How do you buy a bond?

Depending on the type, you can purchase bonds through brokers or exchange-traded funds or from the U.S. government at Treasury Direct. You may need to have at least $1,000, the typical starting face value for most bonds.

Comparing bonds and stocks

Let’s draw a comparison between stocks and bonds. When you buy a stock, you own some of the company. When you buy a bond, you are making a loan to a company (or the government), but you do not own any of the company.

Types of Bonds

U.S. Treasury Bonds

The most important bonds are the U.S. Treasury bills, notes, and bonds issued by the Treasury Department. They are used to set the rates for all other long-term fixed-rate bonds. The Treasury sells them at auction to fund the operations of the federal government.

These bonds are also resold on the secondary market. They are the safest since they are guaranteed by the United States government. That means they also offer the lowest return. They are owned by almost every institutional investor, corporation, and sovereign wealth fund.

Savings Bonds

Savings bonds are also issued by the Treasury Department. These bonds are meant to be purchased by individual investors. They are issued in low enough amounts to make them affordable for individuals.

Agency Bonds

Quasi-governmental agencies, like Fannie Mae and Freddie Mac, sell bonds that are guaranteed by the federal government.

Municipal Bonds

Municipal bonds are issued by various cities. They are tax-free but have slightly lower interest rates than corporate bonds. They are slightly riskier than bonds issued by the federal government. Cities occasionally do default.

Corporate Bonds

Corporate bonds are issued by all different types of companies. They are riskier than government-backed bonds, so they offer higher rates of return. They are sold by the representative bank.

There are three types of corporate bonds:

Junk bonds or high-yield bonds are corporate bonds from companies that have a chance of defaulting. They offer higher interest rates to compensate for the risk.

Preferred stocks are technically stocks, but they act like bonds. They pay you a fixed dividend at regular intervals. They are slightly safer than stocks in case of bankruptcy.

Holders get paid after bondholders but before common stockholders.

Certificates of deposit are like bonds issued by your bank. You essentially loan the bank your money for a certain period for a guaranteed fixed rate of return.

QI CORNER

SOMETHING TO THINK ABOUT

Cheers

Jacquie

November 29, 2024

Diary, Newsletter, Summary

Global Market Comments
November 29, 2024
Fiat Lux

Featured Trade:

(The Mad DeCEMBER traders & Investors Summit is ON!)
(CHINA’S VIEW OF CHINA),
(FXI), (BIDU), (BABA), (JD)

China's View of China

Diary, Free Research, Newsletter

There was so much enthusiasm for China only a month ago.

A stimulus package was announced, a massive short-covering rally ensured, and finally, after a three-year hiatus, China was back in play. Several hedge funds announced major commitments to the Middle Kingdom.

Here we are only three weeks after the US presidential election, and China now looks so much rubble. Asst prices returned to their starting points. The hedge funds have so much mud on their faces. It’s back to a long wait.

Which gives us all plenty of time to think about what China is really all about.

I ran into Minxin Pei, a scholar at the Carnegie Endowment for International Peace, who imparted to me some iconoclastic, out-of-consensus views on China’s position in the world today.

He thinks that power is not shifting from West to East; Asia is just lifting itself off the mat, with per capita GDP at $12,969, compared to $81,695 in the US.

We are simply moving from a unipolar to a multipolar world. China is not going to dominate the world, or even Asia, where there is a long history of regional rivalries and wars.

China can’t even control China, where recessions lead to revolutions, and 30% of the country, Tibet and the Uighurs want to secede.

China’s military is almost entirely devoted to controlling its own people, which makes US concerns about their recent military build-up laughable.

All of Asia’s progress, to date, has been built on selling to the US market. Take us out, and they’re nowhere.

With enormous resource, environmental, and demographic challenges constraining growth, Asia is not replacing the US anytime soon.

There is no miracle form of Asian capitalism; impoverished, younger populations are simply forced to save more because there is no social safety net.

Try filing a Chinese individual tax return, where a maximum rate of 40% kicks in at an income of $35,000 a year, with no deductions, and there is no social security or Medicare in return.

Ever heard of a Chinese unemployment office or jobs program?

Nor are benevolent dictatorships the answer, with the despots in Burma, Cambodia, North Korea, and Laos thoroughly trashing their countries.

The press often touts the 600,000 engineers that China graduates, joined by 350,000 in India. In fact, 90% of these are only educated to a trade school standard. Asia has just one world-class school, the University of Tokyo.

As much as we Americans despise ourselves and wallow in our failures, Asians see us as a bright, shining example for the world.

After all, it was our open trade policies and innovation that lifted them out of poverty and destitution. Walk the streets of China, as I have done for four decades, and you feel this vibrating from everything around you.

I’ll consider what Minxin Pei said next time I contemplate going back into the (FXI) and (EEM).

China: Not All Its Cracked Up to Be

November 29, 2024 - Quote of the Day

Quote of the Day

“If you are going to be bearish and against this market, you are betting against the three richest men on the earth, Jay Powell, Christine Lagarde, and Kuroda,” said market strategist, Ed Yardeni.

5 AI Stocks to Watch This Holiday Season

Mad Hedge AI

Artificial intelligence (AI) is no longer a futuristic concept confined to science fiction. It's rapidly transforming industries, from healthcare and finance to transportation and entertainment. As we step deeper into the digital age, AI is poised to revolutionize the way we live and work. For investors, this presents a unique opportunity to capitalize on the growth of this groundbreaking technology.

While the AI landscape is vast and constantly evolving, here are five AI stocks worth keeping a close eye on in November 2024 and beyond:

NVIDIA (NVDA): The AI Hardware Powerhouse

NVIDIA is a dominant force in the AI chip market, providing the high-performance GPUs that power AI applications like machine learning, deep learning, and natural language processing. Their GPUs are essential for training and running complex AI models, making them a critical component of the AI ecosystem.

Why NVDA is a top AI stock:

Market dominance: NVIDIA holds a commanding lead in the GPU market, particularly for AI applications.
Strong financial performance: The company consistently delivers impressive revenue and earnings growth, driven by the increasing demand for AI solutions.
Expanding applications: NVIDIA's GPUs are used in a wide range of AI applications, from autonomous vehicles and robotics to healthcare and data centers.