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- The Weekly Wrap-Up - January 20th, 2023
The Weekly Wrap-Up - January 20th, 2023
The S&P 500 makes new all time highs!
CMG Venture & Mark Roussin
January 20, 2024
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Market Talk
The S&P 500 ended the week at new all time highs.
*Note - premium subscribers received our “Earnings Recap” earlier this morning where we covered Goldman Sachs, Morgan Stanley, Charles Schwab, Prologis and Taiwan Semiconductor. Become a member of the IE community today to check it out.
5 Stories Moving the Market
These are some of the biggest stories from the past week that had an influence on market action.
US judge blocks JetBlue from acquiring Spirit Airlines
In a major twist of events, a federal judge has slammed the brakes on JetBlue Airways' ambitious $3.8-billion takeover of ultra-low-cost carrier Spirit Airlines. The U.S. Department of Justice scored a win in convincing the judge that the deal was a no-go due to anticompetitive concerns, citing potential harm to ticket buyers.
U.S. District Judge William Young's ruling not only delivers a blow to JetBlue but also throws a shadow of uncertainty over Spirit's future. The struggling ultra-low-cost carrier, grappling with financial challenges, is now exploring options to refinance its debt.
Meanwhile, the ruling is a triumph for the White House's mission to prevent excessive consolidation in the U.S. airline industry. As the dust settles, questions loom over the fate of other proposed deals, including Alaska Air's pursuit of Hawaiian Airlines.
The airline industry's turbulence just got a whole lot more intriguing.
Meta is spending billions of dollars on Nvidia AI chips
In a jaw-dropping move, Meta, led by Mark Zuckerberg, is shelling out billions of dollars on Nvidia's cutting-edge computer chips, which are at the heart of artificial intelligence research and projects.
Zuckerberg spilled the beans on this colossal investment in an Instagram Reels post, revealing that Meta's "future roadmap" for AI demands the creation of a "massive compute infrastructure." By the end of 2024, this ambitious infrastructure is set to boast a mind-boggling 350,000 H100 graphics cards from Nvidia. But that's not all – including other GPUs, Meta's compute infrastructure will swell to nearly 600k H100 equivalents.
Zuckerberg remained tight-lipped about the exact number of graphics processing units (GPUs) already in Meta's possession. The H100 only hit the market in late 2022 and was in limited supply. Considering each H100 comes with a hefty price tag of $25,000 to $30,000, if Meta did snag them at the lower end, we’re looking at a staggering $9 billion expenditure.
The race for AI dominance just got a lot more interesting, and Meta just got a turbo boost!
Elon Musk wants more control of Tesla, seeks 25% voting power
Tesla and SpaceX CEO Elon Musk, who also owns the social network X (formerly known as Twitter), said that he wants about 25% of voting control over his electric vehicle business.
Musk already owns around 13% of Tesla, or approximately 411 million shares of the company’s 3.19 billion shares in common stock outstanding. Now, Musk is angling for even more control over Tesla.
Specifically, Musk wrote on X, “I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned. Unless that is the case, I would prefer to build products outside of Tesla.”
Talk about a power play.
Strong US retail sales underscore economy's momentum heading into 2024
Holiday shopping turned out even better than expected in December as shoppers picked up the pace to close out a strong 2023. Retail sales increased 0.6% for the month, better than the 0.4% estimate, thanks to a pickup in online purchases. Sales increased 5.6% on a year-on-year basis.
Online sales advanced 1.5% as shopping has moved to online vendors and away from the traditional brick-and-mortar retailers, a trend that accelerated during the pandemic.
The upbeat report from the Commerce Department, which prompted economists to upgrade their economic growth estimates for the fourth quarter, cast further doubt on financial market expectations that the Federal Reserve would start cutting interest rates in March. Markets are now pricing in a 46% chance for a rate cut, compared to a 77% chance prior to the report.
Looks like the economy is chugging along with consumer spending leading the way.
Apple $3,499 Vision Pro headset now available to order ahead of Feb. 2 release
Apple is diving headfirst into the immersive world with its much-anticipated Vision Pro headset, up for preorders at a cool $3,499. Set to hit the U.S. markets on February 2, this marks Apple's first foray into a new product category since the game-changing Apple Watch back in 2015.
While Wall Street doesn't anticipate Vision Pro sales to mirror the frenzy of iPhones or Macs, it's still making waves. Analysts, like UBS' David Vogt, predict a revenue windfall of about $1.4 billion in 2024 if Apple ships around 400,000 headsets. To put it in perspective, that's a fraction of the $43.81 billion iPhone revenue in the last fiscal quarter.
What's under the hood? The entry-level Vision Pro boasts 256GB of storage and packs the formidable M2 chip, a familiar powerhouse from Apple's Mac lineup. If you crave even more storage, options include a 512GB model for $3,699 and a 1TB beast for $3,899.
The Vision Pro is not just a gadget; it's a glimpse into Apple's vision of the future.
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Premium Posts of the Week
We continue to push out more and more content every week to give investors that edge. Here are the posts premium subscribers received this week.
Edge Report
Mondays are for the investors. Every Monday morning we share exactly what we’re watching in the week ahead, how we’re positioning, and even get a sneak peek into our systems and models. This week we offered our view on oil and shared an options strategy for one very special oil company, plus we did pretty well with most of our earnings predictions. See the full report here:
Stock Deep Dive - Vici Properties
Our Deep Dive focused on VICI Properties this week. We not only broke down the financials of the REIT but we also shared our valuation models and price targets for 2024. You can see the full analysis here:
Earnings Recap
Every week during earnings season we share a recap of the quarterly reports from stocks that we cover. You can see this week’s earnings recap here:
The Week Ahead
It’s another big week ahead for the market as Q4 earnings season warms up.
Earnings Reports
Earnings season is in full swing now. We will be covering Johnson & Johnson, Procter & Gamble, 3M, Verizon, Netflix, Abbott Labs, Tesla, IBM, Union Pacific, Visa, Intel and L3Harris.
Economic Reports
The PCE report will be main focus next week as investors look for any signs of inflation picking back up. PMI data and housing reports will play a smaller role in market movement.
Poll of the Week 📊
Will you buy an Apple Vision Pro at some point? |
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Until next time investors!
Mark & Chris
The Investor’s Edge
Disclosure
This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.
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