Manage episode 347852288 series 2987371
* Market Update
* The End of FTX Is Just the Beginning
* Elon’s 6 Rules To Firing People
* NVDA Income Statement Breakdown
* GenZ Delinquencies
* Louis Vuitton Copies Restoration Hardware
* How Did Starlink Get Started?
* Iger Replaces Chapek at Disney
* England Wins World Cup?
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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
There is endless noise in the world right now.
So out the gate Im going to avoid the politics and twitter drama.
I want to talk about stocks.
People are convinced were in a bear market right now.
Consensus is were going to see above trend inflation and below trend global growth.
But when everyone agree on something, who is left to sell?
EVERYONE is bearish… but!
In bull markets, you get an expansion of stocks in uptrends.
In bear markets, you get an expansion of stocks in downtrends.
Were seeing an expansion of stocks in uptrends not down trends.
So now lets think… If we want to be on the other side of consensus what should we be looking at?
* Integrated co’s
* Health Care
Stocks making higher lows and higher short term highs.
But how do we decide when to care?
The USD Index and the VIX
The CBOE VIX Index continues to edge closer to its long run average of 20, closing today at 21.3. The same is true for the “VIX of” the NASDAQ 100 and Russell 2000. In 2022, US stocks have rolled over every time these measures of expected volatility have hit their long run means. Bottom line: the current rally off the October lows may be entering its final stage.
* The current investment environment, with uncertain future Fed policy and economic/corporate earnings growth, is anything but average. Since 1990, the VIX has averaged a reading of 20. Whenever it gets to that level, we think markets have grown too complacent about still-evolving risks.
* VIX readings of 20 or below have been good signals throughout 2022 that rallies were running out of steam. This was the case in late March/early April and mid-August.
The “VIX of” the NASDAQ 100 and Russell 2000 are just as effective as the CBOE VIX Index in calling near term tops for US equities, and all three are getting close to flashing a warning sign about the current rally. We may have a little further to go for US equities, just given that none of the “VIX” levels we have reviewed with you today are yet at their long-run averages. Even still, the data above says we are into the final innings of the upside move off the mid-October lows.
US stocks, trading for 17.7x expected earnings, are rich compared to EAFE (12.4x) and EM (11.4x). history favours US equities, however. EAFE/EM work best early in a global economic upturn.
* All Country World: 15.0x
* All Country ex-US: 12.0x
* EAFE (non-US developed economies): 12.4x
* Emerging Markets: 11.4x
* US: 17.7x
* Japan: 12.6x
* United Kingdom: 9.5x
* Germany: 10.8x
* China: 10.0x
* South Korea: 11.2x
* Taiwan: 12.0x
While basically any country/region looks cheaper – much cheaper – relative to US stocks, that was also the case at the start of 2022. Lower valuations did not insulate non-US equity markets from this year’s bear market, and nor did they draw enough capital into local equity markets to keep non-dollar currencies stable versus the greenback.
There will be a time to overweight non-US stocks, but not because they are “cheap”. The catalyst will be when the Federal Reserve is done with its current rate hiking cycle. Non-US equities, especially Emerging Markets, do well in the first stages of a global economic recovery.
💸Reformed Millennials - Post of The Week
Tech Is In A Recession:
And it’s the cost of money’s fault. But also our inability to see the future cash flows of today's investment in tomorrow.
- third world internet distribution
- cheap rocket travel
The future of tech hasn’t been this uncertain in over a decade, which means the opportunity to profit hasn’t been so big in that same time frame.
From Derek Thompson’s attached article:
The period after the Great Recession was defined by a weak economy with low aggregate demand and low interest rates. This created the perfect conditions for an era of endless cash that venture capitalists, seeking high rates of return, poured into low-marginal-cost software companies. As smartphone penetration rose in the U.S. and around the world, the app revolution took off. Social-media and consumer-tech companies became some of the richest and fastest-growing in the world. Hollywood went streaming, content went digital, and the services economy became intermediated by smartphones.
Then came the surge of post-pandemic inflation. Rising interest rates have meant the end of easy money. The Millennial Consumer Subsidy—my term for VCs splitting the bill with consumers to grow their companies—has come to a close. As the cost of risk has gone up, venture funding has gone down, and companies have had to cut costs, raise prices, or both. Meanwhile the narrative in markets has flipped from growth to profits, and valuations for tech companies have crashed.
One chapter was closing, and the most prominent tech executives and investors were looking for the next story.
Executives of the largest tech firms have for years been shifting resources toward new ventures with uncertain returns. Amazon recently employed more than 10,000 people to work on its AI product, Alexa. (Jeff Bezos stepped away from the company he founded to work on rocket ships.) At Meta—the parent company of Facebook, Instagram, and WhatsApp—Reality Labs, the division working to build a metaverse, has about 15,000 employees. Apple reportedly has 3,000 people working on an augmented-reality headset, and thousands more are working on Google’s voice assistant. At the same time, the venture-capital community has been looking for its own moonshot, and many investors have found one (or, at least, have wanted people to believe that they have) in crypto. VCs have reportedly bet dozens of billions of dollars in the space, even though, for all the bluster and investment, it mostly remains a technology in search of a use case beyond betting money on tokens that cash out in dollars. Meanwhile, in what may be a literal midlife crisis, Elon Musk, a car and rocket executive, has installed himself at the helm of a digital delivery mechanism for news outrage with, at best, a chaotic plan for resurrecting its business.
These explanations—the macroeconomic one and the psychodynamic one—intersect. The tech industry, which had perfected the art of optimizing digital spaces for engagement and ad placement, was prepared to invest deeply in the next adventure. But it’s gotten smacked by post-pandemic inflation and rising interest rates, which has made this pivot harder to execute. The result is the current news: mass layoffs across companies that just a few years ago seemed utterly unstoppable.
We are in an intermission between technological epochs. We’ve mostly passed through the browser era, the social media era, and the smartphone-app-economy era. But in the past few months, the explosion of artificial intelligence programs suggests that something quite spectacular and possibly a little terrifying is on the horizon. Ten years from now, looking back on the 2022 tech recession, we may say that this moment was a paroxysm of scandals and layoffs between two discrete movements.
🎙Podcast & YouTube Recommendations🎙
* A16Z Why Technology Still Matters with Marc Andreessen - With much coverage of technology lined with pessimism, the a16z Podcast returns to highlight the bright side of technology, alongside the founders building it. But before featuring the solutions in progress, we wanted to explore why building the future is still so important.
* Two Greatest Minds of The Century (Gary Vaynerchuk) | The Tim Dillon Show - Tim Dillon sits down with Gary Vaynerchuk aka (Gary Vee) to talk about topics such as FTX, a possible rebrand for Poland, how the Weinstein Company could make a comeback, Vee Friends, and some talk about The Crypto Winter.
🔮Best Links of The Week🔮
* "[Virus] cases in China are spiralling towards record highs, forcing officials to again lock down large swaths of the country. The world’s second-biggest economy reported almost 28,000 new [virus] cases on Tuesday, with outbreaks in Beijing, the southern manufacturing hub of Guangzhou and the southwestern metropolis of Chongqing continuing to grow. The country’s battle to suppress the virus has battered China’s economy, disrupting global supply chains and threatening world growth." Source: FT- LINK
* "Russia has threatened to restrict gas supplies to western Europe through the only pipeline still connecting the regions, warning that it could lower flows through Ukraine from next week." Source: FT - LINK
* "Flights are packed. Airport parking lots are filling up. Tickets are expensive. In short, Thanksgiving travel is getting back to normal, for better or worse. The Transportation Security Administration expects travel volumes this week could approach prepandemic levels, with 2.5 million passengers or more passing through U.S. airports on the busiest days. Daily airport volumes have neared that level several times in recent months, but they haven’t surpassed it since the pandemic wiped out travel demand in 2020." Source: WSJ - LINK
* Amazon launched its second cloud region in India. The company is investing $4.4 billion through 2030 to set up its second Amazon Web Services (AWS) region in India as it looks to expand that business segment globally. Prime Minister Narendra Modi’s $1 Trillion Digital Economy vision will require a lot of expansion and innovation, leaving room for tech giants like Amazon to tap into this market to fuel future growth. This investment joins several multi-billion dollar investments Amazon has planned for Spain, Switzerland, Thailand, and the UAE. Source: TC - LINK
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