Monday, 6 May 2024

By Ryan Dinse Editor, Crypto Capital and Alpha Tech Trader

[4 min read]

Dear Reader,

What a week it was on the tech front last week!

A slew of good results from big-name tech companies saw investors pile in on Friday.

The most notable company reporting was Apple Inc. [NASDAQ:AAPL].

More on this shortly…

A weaker-than-expected April jobs report on Friday also helped the positive sentiment in tech.

The market thought this ‘bad news’ was ‘good’ for the possibility of interest rate cuts sooner rather than later.

The tech sector is particularly sensitive to interest rates as they feed into analyst models of future cash flows.

It’s a concept known as ‘present value’.

In short, any fall in interest rates makes future cash more valuable in today’s money.

Anyway, the tech-focused Nasdaq Index looks set for an attack on new all-time highs this week.

But beyond the index, several key areas are worth paying particular attention to.

Let’s dig in…

Are Apple’s best days behind it?

On Thursday, Apple announced their latest results.

The headline grabber was a whopping US$110 billion stock buyback. A stock buyback is when a company uses its own cash to buy back its own stock.

Prior to the 1980s, these buybacks were deemed illegal stock manipulation as they inflate a company’s share price and boost its earnings per share.

But investors generally like that as it can support or even drive up the stock price.

And that news seemed to take the edge off poor iPhone sales, which dropped 10% in revenue terms.

Apple ripped 6% higher on the day.

However, I wonder if this buyback is a sign that Apple’s best days are behind it.

Buying your own stock isn’t the same as investing in productive assets or new technologies.

It’s dead money.

And there’s an AI arms race on right now, so you’d think Apple wouldn’t be short of places to invest.

In saying that, CEO Tim Cook teased out the potential of incoming developments on the AI front on an analyst call, so perhaps they feel they can do both.

One notable seller last quarter was Warren Buffet, selling 13% of his position.

Though Apple still makes up almost one-third of Berkshire Hathaway’s US$364 billion portfolio, so this could simply be a bit of risk management.

Still, I’ll be eagerly awaiting news on Apple’s latest innovations — after all, it’s what Steve Jobs made the company famous for…not financial engineering.

Staying on the AI front…

On Wednesday, Microsoft CEO Satya Nadella pledged a US$2.2 billion investment to build digital infrastructure in Malaysia.

It’s part of a broader push into the fast-growing economies of Southeast Asia, which are investing heavily in an AI-led future.

There seems to be news about new data centre builds almost every week right now.

Which brings me to energy.

Bloomberg had an interesting story on the intersection of energy and AI.

The article noted that single data centres will need as much power as ‘several nuclear reactors’ because of AI.

Bullish on uranium!

Away from AI and onto another highly disruptive asset class…

Blackrock sees ‘influx of demand’

Crypto company Coinbase Global Inc. [NASDAQ:COIN] absolutely smashed analyst expectations over the first quarter.

As this tweet noted:

And some people think crypto is dead!

These numbers will certainly make Wall Street sit up and take notice.

Staying on the crypto theme…

Jack Dorsey’s Block Inc. (formerly Square) announced they will contribute 10% of gross profits from their Bitcoin operations into Bitcoin as a long-term Treasury asset on a regular basis.

This copying of the highly successful MicroStrategy playbook could be the start of a wave of corporate interest in Bitcoin.

As MicroStrategy’s CEO Michael Saylor put it:

‘It takes 2–10 companies to act and you kick off a roaring bull run’

Maybe that’s wishful thinking from the well-known die-hard Bitcoin bull.

But here’s the thing…

He wasn’t alone in voicing such opinions last week.

Despite the recent pullback in the price of Bitcoin, huge money manager Blackrock put out a note saying they were seeing an uptick in interest from traditional investors:

‘The coming months could see financial institutions such as sovereign wealth funds, pension funds and endowments start to trade in the spot ETFs, Mitchnick said in an interview.

‘The firm is seeing “a re-initiation of the discussion around bitcoin,” which turns on the topic of allocating to bitcoin (BTC) and how to think about it from a portfolio construction perspective.’

You’ve always got to be ready for risk and stiff price volatility — and a lot of drama — in Bitcoin and crypto.

But when you look under the hood, it’s clear this tech trend is gathering steam.

Indeed, in a strange twist of fate, some serious people think Bitcoin could be the native currency for AI.

Ex-Facebook executive, and former PayPal President David Marcus said this at the Bitcoin for Corporations event in Las Vegas (yes Bitcoin sceptics, I get the irony of this location!) last week.

As reported:

‘He argued that BTC could eliminate the inefficiencies and “friction” inherent in fiat currencies, predicting that AI agents will adopt this “digitally native” medium for value exchange.

‘Marcus claimed that Europeans won’t accept the American version of this theoretical medium for AI agents to exchange value or vice versa. “And what is the most neutral form of digitally native, internet money? It’s bitcoin,” Marcus insisted.

‘He noted that if BTC can meet the speed of AI it’s “basically going to be the native currency of AI.”’

This is a trend that I think will slowly sneak up on the world.

Paying attention now could pay dividends later.

Good investing,

Ryan Dinse,
Editor, Crypto Capital and Alpha Tech Trader

Ryan is a former financial advisor who over seven years helped more than 600 clients and had more than $150 million under management. This experience taught him that the mainstream investment industry has no interest in helping clients strive for greatness. He was told to make ‘safe’ investment plays and settle for average returns. It wasn’t good enough for Ryan.

In 2016, he embarked on a renewed mission: to help ordinary people lock onto extraordinary trends before they go mainstream. He’s an experienced small-cap trader and an expert in cryptocurrencies. He first bought Bitcoin [BTC] in 2013, when it was around US$600. Today, it’s around US$30,000.

His crypto advisory is a must for anyone looking to make digital assets a part of their long-term portfolio. Check it out here.

His tech advisory Alpha Tech Trader aims to identify and latch onto strong emerging opportunities in the tech sector, wherever they are in the world. Get more info here.

By Bill Bonner Editor, Fat Tail Daily

[2 min read]

Dear Reader,

‘Randall Mindy: The truth is way more depressing. They’re not even smart enough to be as evil as you’re giving them credit for. 

‘Kate Dibiasky: Would you please, just stop being so [bleep] pleasant? I’m sorry, but not everything needs to sound so goddamn clever or charming or likeable all the time. Sometimes we need to just be able to say things to one another. We need to hear things! Look, let’s establish, once again, that there is a huge comet headed towards Earth.’ 

Don’t Look Up (2021) 

As the nation keeps its head down...its eyes on its own feet...  

...it rejects the principles that made it great…and the comet speeds up.    

Setting aside Social Security contributions, the federal budget has not been in the black since the 1970s. The US dollar — a real money backed by gold — was replaced with ‘Federal Reserve Notes’, (IOUs from the Fed), in 1971.

Free enterprise has turned into managed enterprise...subject to control by Congress, the White House and bureaucrats in hundreds of agencies and departments, with mountains of paperwork and a plethora of rules and regulations. Just try to open a mine or factory in California! 

Free Speech is the easiest and simplest of the Bill of Rights protections. The Constitution says plainly that ‘Congress shall make no law’ that restricts our right to express ourselves.  

But here, in the news from yesterday... Congress is proposing just such a law. And it has the support of a majority of our elected representatives. First Amendment... first schmamendment... Washington Post: 

‘House passes divisive antisemitism bill as GOP denounces campus protests 

‘GOP leaders this week announced plans for new oversight investigations of elite universities where — in the words of House Republican Whip Tom Emmer (Minn.) — “pro-terrorist anti-Semites [are] taking over.” And on Wednesday, they passed the Antisemitism Awareness Act, which its advocates said would empower the federal government to crack down on anti-Israel protests on campuses by codifying a definition of antisemitism...’  

If this passes, we will still be free to criticise Albanians...Indonesians...or even those ‘cheese-eating surrender monkeys’ in France. But when it comes to Israelis, we will hold our tongues...lest we say too much. The deciders will determine what is permissible to say and what is not.  

We remind readers that we have nothing to add to the discussion of stupidity or venality of Congress...or to mass murder, Zionism, war in the Ukraine, white supremacism, racism, anti-semitism or any other kind of ‘ism’. Who’s right? Who’s wrong? It’s not for us to say. We’re just looking at how the dots connect...and wondering when the debt comet is going to strike.  

The question for us is not whether the proposed law is ‘good’ or ‘evil’...but what it means. Why would the elected representatives of ‘The People’ want to throw overboard a constitutional protection that has served us well for 233 years? Why now? 

Why would they want to ditch a common sense rule — such as, don’t spend more than you can afford — when everyone knows it is crucial to our financial security? 

Why would they want to entangle the US in fights all over the world...where it cannot win, has no clear objective...and no real business getting involved in the first place? 

At a practical, readily understood level, the answer is simple: Follow the money.

The Guardian: 

‘A handful of pro-Israel groups fund political campaigns in support of individual candidates in US elections, led by the American Israel Public Affairs Committee (Aipac), a powerful force in American politics. Before the 2024 election, Aipac plans to spend tens of millions of dollars against congressional candidates, primarily Democrats, whom it deems insufficiently supportive of Israel.’ 

Take representative Don Bacon, for example. He seems like a decent fellow. But he knows which side his bread is buttered on. He has received about a quarter of a million dollars from Pro-Israel donors. Naturally, he does what he is paid to do.  

‘Whatever Israel wants ... we should be there to help’, he says. 

And here we find the definition of corruption in the late, degenerate US empire. Tom Emmer, mentioned above, valiantly stands up for truth...at least for the part of it his paymasters want to be heard. Who butters his bread? Surprise, surprise...his largest single campaign donor is the American Israel Public Affairs Committee. 

Neither Bacon, Emmer, nor any other member of Congress may be particularly corrupt. The rot is deeper and more pervasive than that; decisions are made at the behest of special interests, not the US public. 

And it is not just the Israelis who have Congress bought and paid for. Here’s Breitbart: 

‘“People talk about how, you know, the Democrats are the problem, or the Republicans are the problem in Washington. And, you know, presidencies come and go and the swamp still remains the same,” [Brody] Mullins explained. “So, we wanted to dig deeper and say, ‘What’s really at the core of the problems in Washington?’ and we look at the lobbying community.” 

‘Corporate lobbyists spend so much money on Washington, they have both parties in their pockets and they really get passed, whatever they want for the last 40 or 50 years... corporations are spending to change public policy in ways that help companies, but hurts the rest of us.’ 

Follow the money. 

Regards,

Bill Bonner,
For Fat Tail Daily