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Sports roundup
NFL success
Market update
Bitcoin ETF
Tiger and Nike part ways
Recommendations and Links
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Market Update📈📉
Lets start with what happened last week.
Bonds traded down and equities traded slightly up.
But what matters to participants is the short end of the yield curve. And how interest rates are going to move as we trade through the year.
“If inflation falls towards target, unless they ease, they will be tight.” - Jerome Powell
What the market is betting on at he moment is that the inflation rate will fall to somewhere between 2.3%-2.5%. which will allow the fed to cut to 2% REAL.
Real interest rates are CPI minus the fed funds rate.
This is where the 4.3%-4.5% fed funds rate is coming from.
The problem is that CPI came in hotter than expected last week.
3.4% vs and expected 3.2%
A lot of people are still trapped in super short dated bills.
The reinvestment risk for most participants is enormous.
Most investors are looking to enter market slightly lower than where we are right now.
Moving forward. Will inflation drift towards target?
At the moment, the proper positioning is likely 60:40 (equity:bonds) for most wealthy long term investors.
40% in 3-4 year duration bonds.
60% long duration equities.
What do we sell? What do we buy?
There is some incredibly exciting opportunities in tech right now. Stuff that could significantly run into the future. But the market feels properly priced here.
None of this is financial advice but this is how I’m thinking through the first week of 2024.
Twitter links from the pod:
Everyone should check these links out:
Consumer Electronics Show (CES) 2024 wraps up an AI-laden week: CES 2024 wrapped up this week with almost every company having an AI featured announcement. Or so it seemed. Useful rounds ups of the plethora of announcements across Electronics, PCs/Laptops/TVs/Automobiles, and gadgets of every type can be read hare, here and here amongst many others, Of particular note of course was the focus by both chip and PC vendors to highlight the AI capabilities of their next generations of products this year. And Intel, AMD and other chip vendors did their best to make their case that they were also in the AI chip race vs Nvidia, which at the moment is running away with the AI infrastructure market. Now it’s on the software and services companies to ramp up their offerings to leverage the local hardware with innovative AI apps and services.
CES also saw a range of new AI Devices and Services: Ahead of Apple’s much-anticipated launch of its Vision Pro glasses which go up for pre-order on January 19, CES also saw new AI devices and services on offer. Sony previewed 'Spatial Content’ Headset against Apple’s upcoming focus on ‘Spatial Computing’. A new company launched its Rabbit R1 $200 AI device product below (no subscription), with an ambition similar to Humane AI’s pin product rolled out a few weeks ago. Samsung had fun with its Ballie AI robot. We’re going to see a cambrian explosion of AI gadgets and services this year, including AI services like ChatGPT stuffed into our VWs and BMWs. My deeper take on this trend here.
Podcast & YouTube Recommendations🎙
How to become a millionaire in your 20’s
Scott Galloway talks about his successes and failures investing
Parenting Podcast of the week
Best Links of The Week🔮
Permanent Equity Annual Letter. Joel’s favorite private equity gourp. - Link
"US crude oil and natural gas output is set to notch fresh records in 2024 and 2025, the government has forecast, despite mounting fears that the shale revolution that fuelled the nation’s energy boom has run its course. Average US oil production will amount to 13.2mn barrels per day this year, rising to 13.4mn b/d next year, according to an energy outlook released on Tuesday by the Energy Information Administration. The figures top the 12.9mn b/d estimated in 2023 — itself a record, surpassing levels reached before the pandemic." Source: FT
Google is going forward with sweeping changes to how companies track users online—moves that have been years in the making. Advertisers still aren’t ready. The changes, among the biggest in the history of the $600 billion-a-year online-ad industry, center on the use of cookies, technology that logs the activity of internet users across websites so that advertisers can target them with relevant ads. Starting Thursday, Google will start a limited test that will restrict cookies for 1% of the people who use its Chrome browser, which is by far the world’s most popular. By year’s end, Google plans to eliminate cookies for all Chrome users." Source: WSJ
"German inflation accelerated to its fastest rate for three months in December, casting doubt over investors’ hopes that the European Central Bank will start cutting interest rates as early as March. Inflation in Europe’s largest economy rose at an annual rate of 3.8 per cent in December, up from 2.3 per cent a month earlier... The reduction of government subsidies on gas, electricity and food that began last year has triggered a re-acceleration of annual inflation in much of Europe." Source: FT
"Eli Lilly started a new online service offering telehealth prescriptions and direct home delivery of its new anti-obesity drug Zepbound, an unusual move into the drug supply chain by a pharmaceutical company with one of the hottest-selling medicines." Source: WSJ
"Peloton is partnering with TikTok to bring short-form fitness videos and other content to the social media channel. The partnership comes as Peloton looks to attract a wider array of customers and boost subscribers amid falling sales and profits. In May, Peloton rebranded as a fitness company “for all,” and is still working to get that message out to the public." Source: CNBC
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Bitcoin ETF Approval, Tiger Drops Nike and How To Future Proof Your Portfolio