“If we’re able to produce a general purpose robot that could observe you and learn how to do a task, that would supercharge the economy to a degree that would be insane….Working could become a choice,” said Elon Musk, founder of PayPal, Space X, Tesla, Solar City, The Boring Company, Neuralink, and owner of “X”, the former Twitter.
(A THANKSGIVING TAKE ON THE MARKETS)
November 24, 2023
Hello everyone,
The market has just closed 100 points higher today. Our year-end rally continues. You may ask “What’s next after the end of the year?” Short term, may be some volatility; long term, the market is looking good.
Retailers are hard at work endeavoring to attract customers to Thanksgiving sales. Some people will always part with their money for what they think is a bargain. Others are more conscious of their spending and where their money is going. With all that being said, some items are worth a look – especially electronic items.
Bitcoin rose to a new high for the year on Friday – above $38,000. As I have said before, if you hold it, think about taking half off the table. It could come down to $20,000 or even lower before eventually rallying to new highs.
Don’t rule out a retest of 1900 in Gold before moving higher. Certainly, we could well test the 1940 to 1960 area. Within the next five years, Gold could move to around 2,800.
Be mindful that we could get another retest of the higher levels in yields. If the yield on the 10-year Treasury note begins to move above 4.55%, that could put some pressure on the equity market.
“Edge AI” will be the trend going forward in artificial intelligence. This theme involves running AI algorithms directly on a user’s device, be it a smartphone, laptop, or wearable, among other things. Morgan Stanley argues that 2023 has been all about Generative AI, cloud, GPUs, and hyperscales, and they will remain core to the secular machine learning trend. Edge AI can help save costs and reduce latency (or lag time), among many other benefits. Everyday examples of Edge AI include facial recognition on smartphones and voice recognition in smart speakers. Morgan Stanley points out that with the advent of Generative AI, the impetus for device upgrades to enable greater computational power natively on consumer hardware is accelerating and spanning beyond often narrowly used smart speakers. The bank goes on to say that such AI-driven consumer use cases will become integrated into everyday devices – presenting several opportunities for investors.
The bank named four companies that are set to be key beneficiaries of this trend and likely to outperform in 2024 and 2025.
Apple – well-positioned to expand all facets of Edge AI. The consumer trust in Apple’s data gathering and large user base gives Apple another leg up in using Edge AI applications to harness and apply new data. Price target - $210 or a potential upside of around 10%.
Dell – best positioned to capitalize on both the cyclical rebound in hardware markets and the long-term growth of AI-related infrastructure (PCs, Servers, Storage) over the next two years. Dell is expected to launch new AI-enabled laptops and workstations in the next 12 months. The price target is $89 or a potential upside of nearly 21%. (Watch for some volatility in this stock in the next few months).
MediaTek – the largest chip design house in Asia is gearing up for Edge AI. Price target is 1,000 New Taiwan dollars ($31.70) or a potential upside of 6%
STMicroelectronics – The key attribute of this stock will be its energy-efficient computing. Long-term value in its efficiency in automotive, mobile, healthcare, and industrial IoT. Price target of 48 euros ($52) or potential upside of nearly 16%.
Enjoy your break.
Cheers,
Jacquie
Global Market Comments
November 24, 2023
Fiat Lux
Featured Trade:
(MY UPDATED PERSONAL ECONOMIC INDICATOR),
(HMC), (NSANY), (GM), (F), (TSLA)
(HERE IS YOUR TOP PERFORMING INVESTMENT FOR THE NEXT FIVE YEARS),
(ITB), (PHM), (KBH), (DHI)
(TESTIMONIAL)
There is no limit to my desire to get an early and accurate read on the US economy, which at the end of the day is what dictates the future of all of our trades and investments.
I flew over one of my favorite leading economic indicators only last weekend at the controls of a vintage Cessna 172.
Honda (HMC) and Nissan (NSANY) import millions of cars each year through their Benicia, California facilities, where they are loaded onto thousands of rail cars for shipment to points inland as far as Chicago.
In 2009, when the US car market shrank to an annualized 8.5 million units, I flew over the site and it was choked with thousands of cars parked bumper to bumper, rusting in the blazing sun, bereft of buyers.
Then, “cash for clunkers” hit (remember that?).
The lots were emptied in a matter of weeks, with mile-long trains lumbering inland, only stopping to add extra engines to get over the High Sierras at Donner Pass.
The stock market took off like a rocket, with the auto companies leading.
I flew over the site last weekend, and guess what?
The lots are empty.
U.S. new vehicle sales, including retail and non-retail transactions, are estimated to reach 1,354,600 units in August, a 15.4% jump from a year earlier, according to the joint report by J.D. Power and GlobalData. Consumers are estimated to spend $47.8 billion on new vehicles, the highest on record for the month of August, and 10.5% higher than last year, the report said.
Japanese cars are suddenly selling so fast that vehicles are being sold even before they land on the dock.
It is all further evidence that my increasingly optimistic view on the US economy is correct, that multiple crises this year are fully discounted, and that the stock market is poised for new highs.
The conventional auto industry should lead to the upside, as it has already done, led by General Motors (GM) and Ford (F). But the move may not happen until the second half of 2024 when the market’s love affair with big tech stocks reaches the point of temporary exhaustion.
As for Tesla (TSLA), better to buy the car than the stock at these depressed prices. Once the EV price wars end, the stock should double again to new all-time highs.
This is a big deal because the auto industry directly and indirectly accounts for about 10% of the total US economy.
It is also the largest manufacturing employer, with the legacy Big Three accounting for 6 million jobs, 4.87% of the 124 million US total.
Not only do you have to include the big four automakers, but you also must include the vast number of parts suppliers, advertisers, and the national dealer networks.
Since so many car purchases are financed with loans, it turns out that the industry is a great play on falling interest rates.
There are $1.6 trillion in subprime auto loans on lenders’ books now.
If you don’t believe me, check out the resale market price of your wheels at Kelly Blue Book (click here for the site)
You will see they have recently risen steadily in value.
It is all further evidence of the hard data/soft data conundrum, which I have written about extensively in the past.
Look no further than Consumer Sentiment, which has held up remarkably well for the past three consecutive months.
Sorry the photo below is a little crooked, but it's tough holding a camera in one hand and a plane's stick with the other, while flying through the never-ending turbulence of the San Francisco Bay’s Carquinez Straight.
Air traffic control at nearby Travis Air Force Base usually has a heart attack when I conduct my research in this way, with a few joyriding C-130s having more than one near miss in recent years.
Will gold be your best-performing asset for the next five years?
Is it high-growth technology stocks?
Energy stocks?
Or maybe biotech shares?
How about French collectible postage stamps or vintage racing cars?
Nope, you’re not even close. I’ll give you a hint: you’re probably sitting in it.
Yes, the best-performing investment you will own for the next five years will most likely be the home you live in.
Psshaww you may say. Perhaps even balderdash!
However, if you look at the crucial data that drives this long-ignored sector, my conclusions are unassailable.
You can count on your home to appreciate at a 3%-4% annual rate until well into the next decade, and more if you are fortunate enough to live on the red-hot West Coast.
Net out the copious tax breaks that come with home ownership, and your take home will be even higher than that.
For a start, the Federal Reserve’s imminent interest rate cuts are hugely pro-housing.
The conventional 30-year fixed home mortgage can now be had for a bargain of 7.40%%. They are on their way to 5.0%. And many finance their properties with the 5/1 ARM’s that I have been recommending which are currently going for only 6.60%.
Wait a few quarters and you’ll probably get a lower rate than you can get now.
That is, assuming you still have a job and haven’t been replaced yet by an algorithm.
The good news for those homeowners who rely on the floating rates of an adjustable-rate mortgage is that this is not a low-interest-rate decade coming, but a low-interest-rate century.
Another big housing positive is plunging fuel prices, which have cratered 35% in two months.
Cheap fuel means that consumers have more money in their pockets with which to qualify for loans, buy houses, and meet their mortgage payments.
Not only will this be a low-interest-rate century, but it will also be a low-energy cost century as well. If solar energy costs continue their dramatic rate of improvement, around 50% every four years, it will nearly be free by 2030.
Not only will free energy provide a big underpinning under home values, but it will also increase the value of suburban homes where commuting is a major factor.
It gets better.
You know that Millennial of yours who’s been living in your basement since he graduated from college?
Go downstairs and take a look. Chances are he probably moved out when you weren’t looking, turning his prodigious gaming skills into a high-paying coding job.
What’s more, he’s now dating a girl. You know, the one with the nose ring, the streak of purple hair, and tattoos up and down both arms.
That leads to family formation.
And you know what? The most important trend affecting the economy that no one knows about is that THE UNITED STATES IS ABOUT TO ENJOY ANOTHER BABY BOOM!
That’s why new household formations are likely to jump from the current 1.2 to 1.5 million a year in the coming decade.
However, only 1 million homes a year are being built, thanks to the halving of construction capacity in the aftermath of the Great Recession. Subtract from that 250,000 houses a year that get demolished.
Does anyone hear the words “short squeeze”?
That means 86 million Millennials will be chasing the homes of only 55 Gen Xers. Americans aren’t the only ones buying homes.
Are you convinced now? Are you ready to jump into the real estate boom and participate more than just through your residence?
Fortunately, there are several ways you can achieve this.
Residential Real Estate Investment Trusts (REITs), like Anally Capital Management (NLY), offer the opportunities of both a high yield and capital appreciation.
Better yet is that all of these trade at deep discounts to book values because of the wreckage caused by the recent interest rate spike.
They include traditional new homebuilders, such as KB Homes (KBH), Pulte Homes (PHM), and DH Horton (DHI). Another option is to take a basket approach by picking up the iShares US Home Construction ETF (ITB).
See you at the next open house!
Dear John,
I want to thank you for the outstanding conference in Miami.
The hotel and food were first class along with the very informative presentations.
I felt that the information I learned will more than pay for the trip. Hope to see you in Incline Village.
Thanks
Rich
Detroit, Michigan
“Instead of buying low and selling high, you’re buying high and crossing your fingers,” said Bill Gross, former head of the bond giant PIMCO.
(SYM), (GM), (AMZN), (ACI), (TGT), (WMT)
The realm of artificial intelligence (AI) is not just burgeoning; it's revolutionizing industries. Amid this technological renaissance, AI's integration with robotics is weaving a tale that was once mere science fiction into our daily reality.
ChatGPT, a brainchild of OpenAI, exemplifies this surge, marking its territory as perhaps the fastest-growing application in history. OpenAI's ballooning valuation mirrors the transition of AI from potential to palpable reality.
While predicting the exact trajectory of AI's evolution is complex, its synergy with robotics is undeniable.
This fusion is pivotal as it represents a significant shift in the way we approach technology and its applications in the real world.
The image of AI-powered robots, reminiscent of iconic figures like Star Wars' R2-D2 or C-3PO, is no longer a distant dream. These robots, now equipped with AI, are evolving into sophisticated entities capable of learning and adapting in real-time.
This is more than a technological leap; it's a revolution in problem-solving and task execution. This evolution marks a shift from automated to intelligent, adaptive technology, a trend that is reshaping industries globally.
At the heart of this AI and robotics movement is Symbotic (SYM), a company whose AI-driven warehouse automation systems exemplify the next wave of computing.
Symbotic represents a blend of AI's potential and the practical application of robotics, a combination that is increasingly becoming the backbone of various sectors.
The robotics sector, with its rich history dating back to 1962 with Unimation, the first company to commercialize robots, has continuously evolved.
Unimation's first robots were installed at a General Motors (GM) factory in New Jersey, and since then, the sector has seen exponential growth. Today, this evolution is evident as companies like iRobot and Amazon’s (AMZN) acquisition interest in it highlights the sector's growth and potential.
Symbotic stands out in this landscape with its end-to-end AI and robotics integration for warehouse management, already attracting giants like Albertsons (ACI), Target (TGT), and Walmart (WMT). Its partnership with SoftBank for the GreenBox initiative further cements its position as a leader in this evolving market.
What's remarkable about Symbotic is its approach: a blend of AI with robotics that not only processes tasks but learns, adapts, and evolves.
This is not just about automation; it's about creating intelligent systems that can independently solve problems and improve efficiency. With clients like Walmart holding stakes in Symbotic, the company's growth trajectory seems promising.
Notably, the fiscal figures for Symbotic paint a vivid picture of its growth.
With revenue reaching $311.8 million in the fiscal third quarter, marking a 78% increase year-over-year, the company is on a steep upward curve. This financial growth proves the increasing relevance and demand for AI-integrated solutions in various industries.
The anticipated revenue for the fiscal fourth quarter further underscores this growth. However, a caveat remains – Symbotic is yet to tip the scale towards profitability, recording a net loss of $162.5 million in three quarters of the fiscal year.
This points to a common challenge in high-growth tech sectors – balancing rapid expansion with the journey toward profitability.
The reliance on a handful of major clients for a substantial part of its revenue poses a risk. However, the high switching costs for clients and Symbotic's continued expansion indicate a potential for long-term client retention and growth. This aspect of Symbotic's business model is crucial for investors to consider.
The AI and robotics industry is on a trajectory of explosive growth, further highlighting Symbotic's potential in this booming market.
The global AI market, currently valued at $142 billion, is expected to soar to $1.8 trillion by 2030.
In robotics, Symbotic finds itself in a sector where the global market size is anticipated to reach almost $150 billion by 2030, growing at a CAGR of 27.7% from 2021.
Clearly, the intersection of AI and robotics heralds a new era of technological advancement.
For the risk-averse, keeping Symbotic under observation can provide insights into how AI and robotics will shape future market trends.
For those with higher risk tolerance, investing in Symbotic offers a front-row seat to the unfolding story of AI and robotics – a sector rich with potential but not without its challenges.
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Technology Letter
November 22, 2023
Fiat Lux
Featured Trade:
(YEN COULD DRAG DOWN TECH STOCKS)
(FXY), ($COMPQ), (WEWKQ), (SOFTBANK)
