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Big Sports Weekend
Market Update
Big Tech Earnings (Meta, Amazon, Microsoft, Google)
The Canadian Housing Crisis
Recommendations and Predictions
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📈📊Market Update💵📉
BUY WHAT YOU KNOW!
Recap of Big Tech Earnings This Week:
What a crazy week for earnings.
The consumer remains resilient but credit card data is showing a slowdown in consumption for the American consumer. This is echoed by Amazon's 0% sales growth YoY and this excerpt from the Capital One confrence call:
Meta’s family of apps continues to show signs of strength in the face of ATT, ticktock, and a slowing consumer/ad spend.
Highly recommend reading Eric Seufert’s twitter thread on revenue and ATT here.
With that said, the return of big tech dominance is mind-numbing. Consider the below:
Apple and Microsoft have accounted for nearly 50% of the S&P500 move YTD.
Add the rest of FAANG and it has accounted for a whopping 94% of the S&P500 return YTD.
With Amazon having reported yesterday after the close with beats, FAANG outperformance could account for the entire S&P500 gain when the US opens today.
Microsoft accounted for 140% of the NDX move on Thursday. The equal-weighted Nasdaq was actually down.
The question around markets has become - “Is this a flight to safety in America just for big tech? Or is there a flight out of US equities ex-big tech into Europe and emerging markets?
Or both?
Chart below is from: Jim Bianco
And the story about the chart from Jim’s Tweet thread:
The contribution to the year-to-date return of the S&P 500.
Through yesterday (April 26), the year-to-date return S&P 500 (black line) was 5.13%
The top eight FAANG+ M N T (names on the chart) contributed 5.57% to the overall 5.13% of the S&P 500
The "other 492" contributed a -0.44% return to the S&P 500; the "other 492" has collectively dragged the S&P 500 lower. So, what is the message from the stock market?
The economy is good as the stock market is up more than 5% after four months.
The economy is suspect as collectively, "other 492" stocks are dragging the S&P 500 lower again this year like last year.
💸Reformed Millennials - Post of The Week
The main conversation I’m having with clients right now is whether or not housing prices have bottomed…
Obviously this is impossible to know. But I do think putting into perspective the rise in the price of a home and the subsequent rise in the cost of financing helps people think about what could happen to rents and the price of housing.
My thoughts regarding the Discipline funds chart above: if rates stay higher for much longer then...that puts downward pressure on the economy AND house prices.
Further, disposable income hasn't nearly kept pace with rent increases so landlords don't even have the pricing power to push rents up at the current rate of change.
This doesn't mean house prices have to crash. I don't think they will. But I do think the much more probable outcome here is a multi-year muddle through where house prices continue to fall modestly and rents grow modestly as the two converge in the coming years.
Wild card continues to be supply… prices bouncing hard up here recently on terrible supply.
And is why I don't think prices will crash. But supply shortage is also running into a demand shortage which is only going to get worse as lending standards continue to tighten.
Canadian Tweet of The Week🇨🇦
https://twitter.com/ronmortgageguy/status/1653022875710902275?s=20
🎙Podcast & YouTube Recommendations🎙
Elon’s full interview with Bill where he talks about Twitter, AI, Water and Electric Vehicles.
“When copies are free, you need to sell things that cannot be copied. Well, what can’t be copied? Trust, for instance.” ~@kevin2kelly
🔮Best Links of The Week🔮
Books might be a colossal waste of productivity because we absorb very little of what we read. Is it time to design a medium that helps us understand ideas more effectively? This article explores that question. - Source: Andy Matuschak
RBC Consumer Spending Tracker Report - Source: RBC Special Reports
Investing’s Big Blind Spot - Source: Sapient Capital
"Elon Musk expects SpaceX to spend about $2 billion on its Starship rocket development this year, as the company pushes to build on its first launch earlier this month. “My expectation for the next flight would be to reach orbit,” Musk said, speaking during a discussion on Twitter Spaces on Saturday... Musk said the company does “not anticipate needing to raise funding” to further bolster the Starship program and its other ventures... He put the probability of reaching orbit with a Starship flight this year at “probably” 80%, but espoused that he thinks there is a “100% chance of reaching orbit within 12 months"." -Source: CNBC
ChatGPT is going to change education, not destroy it - The narrative around cheating students doesn’t tell the whole story. Meet the teachers who think generative AI could actually make learning better. - Source: MIT Technology Review
👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
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