“Over the long term, all of the fiat currencies of the world are involved in a competitive devaluation. The structural stresses in most of the western economies are such that central banks will attempt to continue to substitute liquidity for solvency,” said Rick Rule, director, president and CEO of Sprott U.S. Holdings, a precious metals specialist.
(AAPL), (GOOGL), (PYPL), (SQ), (SHOP)
Remember when cash was king? Well, the monarchy's been overthrown by a bunch of ones and zeros.
Whether we like it or not, the digital wallet revolution isn't just coming—it's already here, and it's moving faster than a high-frequency trading algorithm. Back when I started in this business, we thought electronic trading was cutting edge.
Now? We're watching cash disappear faster than free drinks at a Wall Street Christmas party.
Let me throw some numbers at you to give more context. In 2022, digital wallets grabbed 53% of global e-commerce transaction value, up from 49% in 2021. And by 2026? They're projected to dominate 60% of global e-commerce transactions.
It's a shift as dramatic as the rise of derivatives in the '80s, only this time, the asset is pure data.
Now, if you think this digital wave is hitting every shore equally, you'd be mistaken. The Asia-Pacific region, always ahead of the curve (remember when I told you about Deng Xiaoping's economic reforms?), is surfing this wave like a pro, with digital wallets handling 69% of e-commerce transactions. North America? Well, they're still fumbling with their leather billfolds at 37%.
Consumer behavior is also shifting faster than anticipated. A recent study found 65% of consumers are storing their payment info with merchants they frequent. It's convenient, sure, but it's also changing the game entirely.
By 2025, we're looking at over 125 million Americans using proximity mobile payments, up from 101.2 million in 2021. That's a trend you can't ignore.
Next, let’s talk about the future. The global digital payments market is set to explode from $96.19 billion in 2023 to a staggering $254.83 billion by 2028. That's a CAGR of 21.5%, and when you throw AI into this mix? It's like adding rocket fuel to an already blazing fire.
The AI in fintech market is projected to surge from $11.7 billion to $61.3 billion between 2023 and 2030, with a CAGR of 26.7%. The last time I saw numbers like these, I was looking at tech stocks in the late '90s.
In fact, AI in finance is becoming as crucial as Bloomberg terminals. A whopping 83% of financial services firms are already leveraging AI.
But what about the average Joe and Jane? Are they ready to trust their hard-earned cash to a bunch of algorithms? You bet your bottom dollar they are.
Actually, 75% of consumers trust AI to handle financial services tasks. Even more surprisingly, 64% believe AI can make better decisions about their finances than they can.
It's like we're outsourcing our financial common sense to machines, and we're doing it gladly.
Now, let’s zoom in on the players who are making this happen. First up is Apple (AAPL). Apple Pay has turned into this unstoppable colossal force, with 640 million users to date. If this trend continues, then over 25% of consumers globally will use Apple Pay by 2030.
Looking at their technology, Apple's Neural Engine in iPhone chips is driving their AI push, with patents like the "Intelligent automated assistant in a messaging environment" setting the stage for a smarter, more personalized Apple Pay.
With AI in the mix, Apple Pay could soon be offering financial advice as personalized as having Warren Buffett on speed dial.
Google (GOOGL) might not match Apple’s numbers, but with around 150 million users across 42 countries, it’s certainly holding its own.
In 2022, Google took a significant step forward by integrating Google Pay with Gmail, making it easier for users to track expenses and split bills directly from their inbox. This move highlights Google’s real strength: its ecosystem.
By seamlessly connecting your wallet to your email, calendar, maps, and search history, Google has turned its vast digital network into a powerful tool. And with $31.6 billion invested in R&D in 2021, Google isn’t just keeping pace with the future—it’s actively shaping it.
PayPal (PYPL) is another heavyweight in the digital wallet arena. With 431 million active accounts worldwide as of Q2 2023, PayPal is leveraging AI to enhance customer service and personalize user experiences.
Venmo, PayPal’s cooler, younger sibling, has over 70 million users and saw a 44% year-over-year growth in payment volume in Q1 2023.
Block (SQ), formerly Square, is the wild card here. Its Cash App has more than 44 million monthly active users. Block’s deep dive into crypto is paying off — Cash App generated $2.4 billion in revenue in Q2 2023, with Bitcoin transactions making up over 40% of that.
The company’s acquisition of AI company Dessa in 2020 signals they’re serious about integrating AI into their services. It’s like they’re building a financial Terminator, minus the whole apocalypse thing.
Meanwhile, Shopify (SHOP) is approaching the digital wallet space from a unique angle, leveraging its e-commerce dominance. Think about it: there are over 2 million websites across 175 countries, all powered by Shopify.
In 2022, these digital storefronts pushed $200 billion in Gross Merchandise Volume through the pipes. That's no chump change.
But here's where it gets even more interesting. In 2023, Shopify threw $100 million at a conversational AI company called Attentive. Why? Because they're not content with just processing payments. No, they're aiming to turn Shop Pay into the Einstein of e-commerce.
We're talking about AI so smart, it'll know what you want to buy before you do.
This isn't just about making shopping easier. It's about creating an experience so personalized, you'll feel like every online store is your own personal boutique.
And let me tell you, when that happens, that $200 billion GMV figure? It's going to look like pocket change.
As you can see, the digital wallet revolution isn't some distant possibility — it's happening right now. From Apple's dominance to Google's ecosystem integration, from PayPal's AI chatbots to Block's crypto innovations, the financial landscape is being reshaped right before our very eyes.
So, the question isn’t if digital wallets will change finance—they already have.
The real question is: how will you position yourself in this new financial order? Are you ready to bend the knee to the new king? Or better yet, are you prepared to claim your stake in this digital gold rush?
Mad Hedge Technology Letter
September 6, 2024
Fiat Lux
Featured Trade:
(BROADCOM A LONG-TERM WINNER)
(AI), (NVDA), (AVGO),
The chip trade isn’t in the dumps, but traders are taking a fine tooth comb to earnings guidance to see if the numbers are stacking up with the hype.
Today we got yet another data point that suggests chip stocks are great, but they aren’t living up to the lofty expectations of growth that tech companies are used to.
In short, they are too expensive and investors want a cheaper multiple for chip stocks right here and now.
So be prepared for a little bit of a selloff in the immediate short term.
One of the best second-tier chip stocks and one of Apple's biggest customers gave us a glimpse into operations behind the scenes at one of Silicon Valley’s robust silicon makers.
Broadcom (AVGO) delivered a disappointing sales forecast, hurt by the parts of its business that aren’t tied to artificial intelligence.
The company projected sales of roughly $14 billion in the fourth quarter while they expect $12 billion of revenue from AI-related products for the full year, beating the average estimate of $11.8 billion.
The forecast showed that Broadcom’s non-AI operations are growing more slowly than anticipated. Though the company has benefited from a surge in artificial intelligence spending, not all of its wide-ranging divisions are significantly profiting.
The AI spending boom has turned Broadcom’s rival Nvidia (NVDA) into the richest, most valuable company in the industry. Nvidia sells so-called AI accelerators that help develop tools such as ChatGPT. Broadcom has benefited as well by supplying related components and software.
Datacenter providers rely on Broadcom’s custom-chip design and networking semiconductors to build their AI systems. The company also sells components for cars, smartphones, and internet access gear. Its push into software, meanwhile, includes products for mainframe computers, cybersecurity, and data center optimization.
Over the long term, the AVGOs CEO believes that the AI chip market will move to custom, in-house designs. That would mean shifting away from Nvidia components — a change that could benefit Broadcom since it helps customers produce their chips.
Apple is a top customer as well: Broadcom provides key components for the iPhone.
Chip stocks were hovering at an all-time high just a few weeks ago.
The scandal that spurred a selloff in chips was the accounting issues at SuperMicro.
The initial event opened up a can of worms and signaled to traders to take profits while conditions were still favorable.
Now chip stocks are telling traders that they cannot keep up with the high expectations and investors will need to taper back the whole idea that AI is about to overtake the world.
Even if AVGOs AI business is doing exceptionally well, they have a legacy business that is bringing up the rear and could be a drag on the overall business for years to come.
AVGO is still a stalwart in the chip business with interests in the right verticals and I do believe it is still a long-term buy especially considering they still haven’t successfully integrated VMware.
(INVESTORS ARE PAYING ATTENTION TO CHINA’S EV INDUSTRY)
September 6, 2024
Hello everyone
Xpeng (XPEV) to launch new models later this year.
Chinese EV maker, Xpeng could see a significant move by the end of the year as two new key EV models are being unveiled in the fourth quarter of this year.
JP Morgan has upgraded the China-based electric vehicle maker from overweight to neutral. It also increased its price target for U.S.-listed shares to $11.50 from $8 per share. From Wednesday’s close that implies a 36% upside.
The demand for EV’s globally has cooled in 2024. Consumers have obviously rebelled against the EV adoption marketing slogans & EV technology and have instead dug in their heels…sticking closely to their traditional gas-guzzling machines.
Demand in China for EV’s has been much higher compared to the U.S. The rollout of its Mona M03 and P7 plus sedans could nearly double the company’s overall vehicle delivery from the third to the fourth quarter.
At a starting price of $US16,812.00, the Mon M03 is directed at the lower to middle-income earner.
Looking into 2025, the current estimate is that sales volume can top 300k units thanks to more new models, which is a big jump from 180k in 2024.
Shares could see growth on the heels of the new vehicles. When Xpeng launched its G6 sports utility vehicle in 2023, the stock advanced roughly 30%.
Weekly (XPEV) chart
The Mona M03
I recommended (XPEV) on March 15 this year when it was $10.05. If you bought some shares at that time and are still holding – well done for showing patience.
For those that don’t own the shares, you can either watch the action in the shares from the sidelines or buy a small parcel of the stock over the next month.
You can see from the chart above that the stock has moved sideways since the beginning of year, which could be a precursor to a breakout rally.
China appears to enjoy a solid position in the EV industry. The country is now the world’s largest exporter of cars, having surpassed Germany and is even now outpacing Japan. By destination, the EU holds the majority share, accounting for 47% of China’s EV exports in value last year; exports to Thailand, the Philippines, and India have also proved strong. In a strong contrast, exports to the U.S. fell 32% year over year in January – October, curbed by high taxes and U.S. restrictions. China’s automakers pay a 27.5% import duty to send vehicles to the U.S. compared with just 10% on cars sent to the EU.
SOMETHING TO THINK ABOUT
Have a wonderful weekend.
Cheers
Jacquie
Global Market Comments
September 6, 2024
Fiat Lux
Featured Trade:
(ANOTHER CRYPTO VICTIM BITES THE DUST)
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
Mad Hedge Biotech and Healthcare Letter
September 5, 2024
Fiat Lux
Featured Trade:
(A VERY STRONG CELL-ING POINT)
(TXG), (NSTG), (BRKR), (ILMN), (BMY), (GILD), (BIO)
I've been tracking the biotech sector for decades now, and let me tell you, we're on the cusp of something big. Single-cell and spatial genomics are shaking up cancer research like nothing I've seen before.
Remember when we used to look at tumors as one big blob of cells? Those days are gone.
Now, it's not just about understanding tumors anymore – it's about dissecting them cell by cell, mapping them out like uncharted territories.
Single-cell genomics is giving us a front-row seat to the cellular soap opera playing out in every cancer.
From where I'm sitting, this is the kind of revolution that separates the wheat from the chaff in my portfolio. We're not just identifying the players anymore. Instead, we're mapping out their positions and interactions with unprecedented precision.
Take what's happening at St. Jude Children's Research Hospital. They're using single-cell genomics to crack the code on why some stages of B-cell acute lymphoblastic leukemia thumb their noses at chemotherapy.
And this isn't just academic navel-gazing. It's actually paving the way for treatments that pack a real punch.
Or look at what Fynn Biotechnologies is doing with 10X Genomics' (TXG) Xenium In Situ platform.
They're peering into breast cancer tumors and finding that the neighborhood where immune cells hang out can make or break immunotherapy.
This is the kind of insight that turns the one-size-fits-all approach to cancer treatment on its head.
Now, let's talk turkey. Where's the money in all this? I've got my eye on a few players.
First up, 10X Genomics. These folks aren't just dipping their toes in the single-cell and spatial genomics pool; they're doing cannonballs.
Their Chromium and Xenium platforms are becoming the go-to tools for researchers and clinics alike.
And the numbers don't lie – they pulled in $156 million in Q2 2024, up 25% from the year before.
NanoString Technologies (NSTG) is a bit of a different story. They've been a big name in spatial biology with their GeoMx Digital Spatial Profiler, but they've hit some rough waters.
Filing for Chapter 11 in early 2024 wasn't on anyone's bingo card. Despite a solid Q4 2022 with $36.2 million in revenue (up 29% year-over-year), their legal tussle with 10x Genomics and other financial headaches have put them in a tight spot.
But don't count them out yet – Bruker Corporation (BRKR) swooping in to buy up their assets might just be the lifeline they need.
Illumina Inc. (ILMN) is another heavyweight worth watching. I’ve said it before, and I’ll say this again – this biotech is the reigning 800-pound gorilla in DNA sequencing. And now, they're muscling into single-cell genomics.
Their acquisition of GRAIL shows they're serious about early cancer detection. Sure, they've had some regulatory speed bumps, but with a market cap of about $33 billion in Q3 2024, they're not going anywhere.
Don't overlook the big pharma players either. Bristol-Myers Squibb (BMY) is betting big on precision medicine, teaming up with 10X Genomics to bring single-cell analysis into their drug development pipeline.
With BMY’s oncology portfolio raking in $17.3 billion in 2023, they've got the cash to make big moves.
Gilead Sciences (GILD) is another one to keep an eye on. Their purchase of Kite Pharma put them in the cell therapy game, and they're not shy about using genomic data to develop new cancer treatments. In fact, their cancer segment grew by 22% in 2023.
And let's not forget Bio-Rad Laboratories (BIO). They might have seen a slight dip in net sales from $2.9 billion in 2022 to $2.68 billion in 2023, but their Single-Cell ATAC-Seq Solution is still a key player in epigenomic analysis.
Now, let's zoom out and connect the dots. The genomics market is on a tear.
We're looking at a jump from $18.85 billion in 2020 to a projected $62.9 billion by 2028. That’s a massive growth, and it's directly impacting companies across the board.
Take 10X Genomics, for instance. Their Q2 2024 revenue hit $156 million, a 25% year-over-year increase that's directly tied to the surging demand for their single-cell and spatial genomics tools.
The single-cell genomics market alone was worth $2.4 billion in 2022 and is looking at a CAGR of 16.7% from 2023 to 2030.
Meanwhile, the precision medicine market, fueled by these genomic advancements, is projected to balloon from $66.1 billion in 2023 to $140.6 billion by 2030.
Let's not kid ourselves, though. Biotech investing is not for the faint of heart. You've got to have the stomach for high R&D costs, regulatory labyrinths, and cutthroat competition.
Just look at NanoString Technologies - one minute they're reporting a 29% revenue increase, the next they're filing for Chapter 11. It's a rollercoaster, but for those who can hang on, the potential payoff is enormous.
So, where does this leave us? Well, I didn't spend decades in this game to tell you to play it safe, but I'm not here to see you bet the farm either. Instead, I’m here to tell you to play it smart.
Add those nimble upstarts like 10x Genomics to your watchlist - they're the racehorses that could leave the pack in the dust.
And when the market gets jittery, that's your cue to swoop in on steady workhorses like BMY and Gilead. They might not be as sexy, but they’ve got the tried-and-tested staying power.
Remember, in biotech, today's underdog can become tomorrow's alpha faster than you can sequence a genome.
So stay alert, keep your powder dry, and for Pete's sake, don't wait for a gilded invitation to buy the dip.
