Apple is considering joining forces with Meta to achieve its AI aims | Copper prices are slipping, but maybe not for long |
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Today's big stories

  1. Apple and Meta seemingly put the past behind them to talk about collaborating
  2. This investing adage could actually be dragging down your returns – Read Now
  3. Optimistic traders sent copper prices through the roof, but now the metal is starting to pick up dust

Passion Project

Passion Project

What’s going on here?

Apple has reportedly been considering integrating Meta’s Llama 3 AI model into its products, proving that there’s a thin line between love and hate.

What does this mean?

Apple has tinkered with its own AI models. But determined to catch up to its more technologically able rivals, the company is partnering up to access more sophisticated ones. Apple’s already buddied up with OpenAI’s ChatGPT, and this latest move would see Meta’s AI service used in iPhones and the like. Apple’s also been chatting to Google, Anthropic, and Perplexity. If those plans pan out, the firm will save billions in development costs, while still being able to offer customers a range of AI models and services. It’s a smart move for Apple to keep its options open, as no one knows which model will be the market leader in five or ten years.

Why should I care?

For markets: Competitors become collaborators.

Apple and Meta have had it out before, even taking fights around privacy settings and advertising dollars to court. But clearly, a mutually beneficial agreement is enough to make them bury the hatchet. See, Apple wants other companies to offer it their AI models for free. In return, partners would get their names in the roughly two billion active Apple devices around the world. On top of that, if any AI providers can sell premium versions of their services, Apple would take a cut of the subscriptions.

The bigger picture: Tied up in knots.

Beyond the US, the picture is a bit murkier for Apple. ChatGPT isn’t available in China – a massive market for tech companies – so the firm is looking for a local partner in the country. And in Europe, Apple is concerned about complying with the region’s Digital Markets Act, which it says would reduce the security of its products and services. So much so, in fact, that the company plans to withhold its AI offering, Apple Intelligence, in Europe this year.

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Analyst Take

That Old Diversification Advice Could Be Hurting Your Returns

That Old Diversification Advice Could Be Hurting Your Returns

By Theodora Lee Joseph, CFA, Analyst

Conventional wisdom would tell you to ditch your home bias and go global with your investments – because there are fantastic businesses everywhere.

And when you look beyond your borders, you can diversify your portfolio and potentially boost its returns.

Mind you, that theory is under a serious stress test now, especially among US investors.

The S&P 500’s dominance over the past decade makes it seem awfully unappealing to look elsewhere.

But before you toss out the whole idea, here are a few things you should consider.

That’s today’s Insight: how to diversify your portfolio, without suffocating it.

Read or listen to the Insight here

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Test The Mettle

Test The Mettle

What’s going on here?

Copper prices have started falling from their record highs, as Chinese buyers saw their resilience challenged.

What does this mean?

Copper hit a record high of $11,100 a ton last month, fueled by optimistic investors betting that the generally high-in-demand metal would stay scarce and, in turn, expensive. But while copper’s price is still relatively lofty, it has dropped nearly 13% from that peak. That’s because Chinese buyers are contending with stalling property and industrial sectors, so they don’t need to stock up on so much of the shiny stuff. As a result, warehouses in the country are full of unsold copper, marking the biggest surplus in four years. And as the golden rule goes, the more there is of something, the cheaper it tends to be.

Why should I care?

Zooming out: Welcome to the new world.

China usually accounts for more than half of global copper demand. So if the country’s buyers resume their old habits, some traders believe we’ll see a new record price later in the year. But if not, that might signal serious demand issues, which could send the metal’s price down even further. Look further ahead, though, and there will be more influences at play. The global shift toward clean energy should push up demand, as extra copper will be used to bolster the infrastructure around transport electrification, 5G, and AI.

The bigger picture: The surplus won’t last.

Unless billions are thrown into production, there might not be enough copper to go around in the years ahead. One hedge fund is even predicting that prices could hit $40,000 in that case. That would be the cue for stocked-up Chinese suppliers to sell their lot. And the mere prospect explains why mining company BHP wants to snap up rival Anglo American, eager to cover more copper-covered ground.

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🌳 Don’t Miss The Forest For The Trees

When you’re too nose-deep in market data, fixated on every tiny twitch in the inflation rate, it’s easy to miss the wider view.

It’s like being so intently focused on a single tree that you miss the fact that the forest you’re in has just been scorched by wildfire.

But right now, there's a lot more to the picture. Sure, inflation might be lower, but don't miss the forest for the trees.

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🤔 Q&A · RE: Uncertainty Has China In A Rush For Gold

When it comes to rare metals, how much of their future outlook is influenced by the balance of supply and demand, versus the amount of speculation from hedge funds?

– Felix, The Netherlands

Of the many rare metals in the world, gold, silver, platinum, and palladium are the easiest ones to trade on financial markets. As a result, they tend to attract the most attention from hedge funds. Supply is impacted by the rates of mining and production, as well as any ongoing technological advancements and changes in geopolitical stability. Demand for physical rare metals can be driven by factors including investment by central banks, jewelry sales, and industrial demand for electronics. You’re right to say that hedge funds will speculate on metal prices, Felix. Thing is, they primarily trade futures and exchange-traded funds to do so. That means they have limited activity in the physical market. So while their speculative behavior can impact prices in the short term, it has much less impact over the longer term.

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