New job, new firm but the same Free Whelan. Thank you for your continued support and keep unlocking valuable insights into the global market every week with me!
Wonderful podcast recorded on Friday last week with lots to take into this week. Earnings really ramp up with more of the Mag 7 telling us the scores and commodities looking a little sketchy.
Listen here for all the market news you need.
A funny old week that it was. Seemed like a lot was going on but not much going on but beware of geopolitical events too with the Olympics finally having kicked off. Opening Ceremony organisers will be hoping for anything at all to take the attention away from whatever most of that was. I had my parents down for the weekend and spent an evening on the couch watching the first events with Mum. Watching the Olympics is great because every four years you get to tut-tut at the absolute best athletes in the world while drinking wine in your house clothes.
Source: 4livs - X
Mum is reading this so she knows that I was keeping an eye on the clock to see how long it would take for the Couch Commentator to chip in.
About 1 minute 45 seconds into the Dressage part of the Equestrian she picked up a sluggish transition from canter. That’s not a bad time.
My wife arrived home, poured a glass and sat down while we had the men’s gymnastics on. Took her about 18 seconds to comment that a gymnast had underdone his launch off the vault.
Just phenomenal areas from my couch. But we love the Games and will have the TV locked on for 2 weeks. Having grown up with just one channel which would spend the first week on swimming heats I love that we can find some more obscure sports (to obviously become instant experts).
Now on with the show
The well-timed article last week on stretched market valuations with the S&P 500 taking a bit of a hit.
We look to the Nasdaq 100 Index to find our entry points properly and if you go back to 2017 there are some key points to keep an eye on.
Source: TradingView
So borderline corrections for the big end of the Nasdaq while small caps still remain relatively robust. Some reasoning for why this rotation for bigs to smalls is so impactful appeared in a Goldman Sachs “Is the Big Tech Trade Over?” podcast I was listening to in the gym over the weekend:
“Just to give you a sense of the size, because of the huge market cap concentration, if just 1% of assets comes out of the S&P 500 and flows into, for example, the Russell 2000 small cap index, that 1% of S&P 500 market cap would represent more than 15% of Russell 2000 market cap.”
They go on with something about dip buying too:
“If you look historically, an investor who just closed their eyes and bought the S&P 500 when it dipped 5% would be higher three months later, about 80% of the time.”
Both quotes are attributable to Ben Snider, senior strategist on the U.S. Portfolio Strategy Team at GS.
Earnings
Monstrous weeks ahead for earnings as AMD, MSFT, META, ARM, AMZN, APPL and a host of other tech names.
A great expression came out of the Commsec morning report this morning that when it comes to these big names and their Artificial Intelligence (*drink*) gains the “tell me” phase is over and the “show me” phase is upon us.
So true. Big question marks continue to appear over where the benefits of all this expenditure on AI is going to be found.
It’s hyperbole, but this summarises where we are in the adoption cycle.
Source: Funky Dynamite - X
You’ll see the lack of new trade ideas in this piece because I’m recommending the same as last week. Continue to hide in small caps until the coast is clear then push back into the big end once you’re sure it’s safe. A lot of that is gut check country so stay tuned for more updates. Anyone who has been reading my nonsense for long enough knows how much I loathe intra-day analysis on company reporting because I’m a long-term guy.
If you believe in the AI “thing” long term then the ETF for you is Global X’s AI ETF. The stock code is GXAI and it invests in the companies most likely to benefit from the AI boom. I personally would like to see this a little more tailored to the smaller end that will benefit the most but it is what it is.
Source: Seeking Alpha
Speaking of long-term issues…
The façade of EV is starting to crack. This is a paywalled article by the Telegraph in the UK but here is the first paragraph. My gosh.
Source: The Telegraph
Here is the link but the years of taxpayer subsidies to prop up a whole forced industry are starting to come undone in Europe.
China will own the market and Europe can’t compete.
Two things to end on while we ride out earnings, wait for the geopolitical escalation in some part of the world, call out minor errors in elite athletes while we’re in our track pants on the couch and I’m in the mood of saying “enough is enough” on the waste of space and money being misdirected in the EV goose chase.
This is, according to the US Office of Nuclear Energy, 20 years of spent nuclear fuel from the former Maine Yankee nuclear plant. That’s it.
Source: Reddit
And finally one great tip on why your stock is going up by one of the all-time greats.
Source: Quora
Finally finally, the US is now 100% going to cut rates in September and here’s a chart telling you that there’s more strain on the consumer than many would have you think.
This goes back to 2012 so it’s not a nothing chart.
Source: Federal Reserve Bank of Philadelphia
Stay safe and all the best and go Aussie!
James
A quick detour to announce the BPC NRL Tipping Competition!
Welcome to the BPC NRL Tipping Competition for 2024. The season has kicked off with a bang in the glittery lights of Las Vegas. Panthers are favorites to take the crown again but the Broncos look like a formidable opponent to take revenge from the heartbreak of 2023. BPC loves its footy and we're very excited for the season ahead. We also love to win stuff so please keep an eye out for the prizes on offer. Sign up and join the game!
