The Woke Street Journal
Market
Yesterday we saw the AI rally pause and money move back into the Dow names. The question now is whether that was a one day wonder or the start of something. If it was the start of something, what was it? Was it a rotation into “value” type names, or the start of a general market sell off? So far this morning we are seeing some weakness across the board, but it’s early. Today we also have triple witching Wall Street’s $5.5 Trillion Triple-Witching to Test Market Calm-Bloomberg
The so-called ‘triple-witching’ will see some $5.5 trillion worth of options tied to indexes, stocks, and exchange-traded funds fall off the board, according to an estimate from options platform SpotGamma. As the contracts disappear, investors will adjust their positions, adding a burst of volume capable of swinging individual holdings.
and the Standard and Poor’s index rebals.
Keep an eye on NVDA. Nvidia’s Success Is the Stock Market’s Problem The market is overly reliant on the chip company, which on its own accounted for a third of this month’s gain in the S&P 500-WSJ
The Russell 2000 index of smaller companies is down 17% from its November 2021 peak and has made no progress at all this year.
In the S&P 500, which includes the biggest companies, the average stock is about where it was at the start of 2022, and more than half of the current constituents are down since then. Worse still, only 198 have managed gains this month, even as the index reached new intraday highs on 11 out of 13 trading days.
This narrowing of the market is prompting concern among technical analysts, who think broad gains by lots of stocks—so-called breadth—make a bull market more sustainable.
Regardless of what happens short term, I do think we are just in the early innings here. SoftBank CEO says AI that is 10,000 times smarter than humans will come out in 10 years -CNBC.com
The CEO first talked about another term — artificial general intelligence, or AGI — which broadly refers to AI that is smarter than humans. Son said this tech is likely to be one to 10 times smarter than humans and will arrive in the next three-to-five years, earlier than he had anticipated.
Then again, maybe this guy isn’t that smart. SoftBank Chief Rues Selling Nvidia Stake and Missing Out on $150 Billion-WSJ
Second order thinking in AI. What other areas of the market are going to benefit? Opinion: Nvidia’s power-hungry chips could give a boost to this once-esoteric technology-MarketWatch
Liquid cooling, a term once only associated with the earliest mainframes and the most powerful supercomputers in the world, is quickly becoming an essential technology for data centers in the era of artificial intelligence.
As the number of semiconductors increases in each data-center server for AI applications, so does the amount of electric power consumed by each chip. The more powerful and high-performance the semiconductor, the more heat it generates as it processes training, inference or ChatGPT queries.
If you have a shorter term time frame, like I do, then you don’t worry because you trade. If you have a longer term time frame, you also don’t worry. You do want to look beyond NVDA though. As Nvidia Soars, History Advises Caution. These 12 Stocks Are Now a Safer Way to Play AI.-Barron’s
And here’s the other thing. There are picks-and-shovels AI bets that don’t require the same heroic assumptions that Nvidia stock now entails. Here are a dozen ideas, many of which have been highlighted previously in this column or elsewhere in the magazine. None of these is growing triple digits, but they’ll all benefit from the continued growth of AI.
Don’t forget the Fed. Bullard Says Latest US CPI Sparks Hope of September Rate Cut-Bloomberg
Outside of AI, I continue to believe another big theme is the weight loss drugs. I do think they are going to cause problems and I am currently short LLY (purely technical as it is overbought and I’m currently down .53% on the trade). However, I think the lure of just taking a shot vs. putting in the work is too big to ignore. Why Wall Street Is Chasing Ozempic Wannabes Big Pharma can’t seem to get investors hyped on much beyond obesity, so many are jumping in. Most won’t win.-WSJ
Putting aside the fact that a sell-side analyst’s job is to look for investment ideas, the fact that Gilead got caught up in the obesity hype highlights a broader problem for the healthcare finance world: There just isn’t anything that comes close to the obesity drug market to drum up investor interest.
As Jared Holz, a healthcare equity strategist at Mizuho pointed out, the popular Health Care Select Sector exchange-traded fund would be flat instead of up this year, if not for the fact that Lilly makes up 13% of its holdings. “As a broader therapeutic category, there is nothing remotely close to obesity in terms of market value creation or potential,” wrote Holz.
Nothing. We have so much left to happen this year—-FOMC moves, inflation numbers, economic number, and oh yeah, an election. I do think you buy protection when nobody else wants it though. The stock market’s volatility gauge remains subdued. What that may say about rest of 2024.-MarketWatch
No it doesn’t. Bitcoin weakness flags ‘imminent summer S&P 500 correction,’ says Stifel-MarketWatch
Woke Companies
Help Me, Bob Iger. You're My Only Hope.-Creators
Trying to find some support here. If it breaks the 200 day then it’s shortable again.
I thought this was a joke, can’t believe it’s real. NBC's medical drama New Amsterdam goes viral for woke episode where patient develops a tumor because of 'internalized racism'-Daily Mail
When the mother seems confused, the psychiatrist says: 'Racism - I think your son's tumor was caused by racism.'
ESG
Is ESG a scam?-Financial News
ESG is a scam. At least if you ask Desiree Fixler.
Fixler, who is best known for blowing the whistle on her former employer DWS over greenwashing, is now a zealous anti-ESG advocate and isn’t afraid who knows it.
Louisiana enacts anti-ESG measure targeting underwriters-The Bond Buyer
We could end up looking back on this and realizing it was extremely significant. Elon Musk Foils the Proxy Firms Like Exxon Mobil, Tesla went directly to investors and over the heads of the left-leaning advisers.-WSJ
Votes by Tesla shareholders to reinstate Elon Musk’s pay package and approve the company’s reincorporation in Texas aren’t only a victory for Mr. Musk over the Delaware judge who invalidated the CEO’s compensation deal in January. They are also a stinging rebuke to the proxy advisory firm Glass Lewis and the left-wing agenda it pushes on public companies.
If you want to be investor first then focus on profits. Reflection Asset Management founder offers new twist to ESG debate-Investment News
“It stands for stakeholders, environment and ethos,” said Britton. “It’s our spin on values-based investing. A dirty little secret in ESG is that most of the data is from a corporation’s perspective and around materiality and avoiding business risk. It’s not specifically designed for the investors. We want it to be investor first.”
DEI
‘This is about readiness’: Sen Schmitt pushes to eliminate DEI at the Pentagon-Fox News
"We’ve got to get this country, and certainly our military, back to being a true meritocracy," Schmitt said. "Our military has been the ultimate meritocracy where people can achieve great things no matter what their background is and be heroes and be celebrated by the country — and instead, you’ve seen this woke effort with DEI in the military, and it is contrary to our American values."
How affirmative action morphed into DEI Eroding the principles of meritocracy and equal opportunity-Washington Times
Over time, affirmative action evolved into a system of deeply entrenched racial preferences at almost all selective universities. As it became politically unpopular, university administrators worked hard to conceal the realities of affirmative action. Affirmative action’s initial goal of remedying past wrongs subsequently morphed into achieving a “compelling state interest” in “diversity” — a rationale fraught with logical contradictions and dubious empirical support.
This shift to “diversity” set the stage in the 2000s for the emergence of diversity, equity and inclusion initiatives, further eroding the principles of meritocracy and equality of opportunity.
Things That Get Blamed for Climate Change
It is summer. We’ve made it through summers before so I suspect we will make it through this one. Heat Is Scorching the U.S. It’s Time to Talk About the Economic Impact.-Barron’s
Why do I think genetic engineering cows to fight climate change is a bad idea? Opinion: AI drone fighters; robot cells, cows combating climate change — this fund manager focuses on life-altering technology-MarketWatch
Using clustered regularly interspaced short palindromic repeats (commonly known as CRISPR), scientists have found a way to edit the genes of methane-producing bacteria found in the stomachs of cows. Cows will swallow the treatment, potentially using lipid nanoparticles as a method of delivery. Once inside the cow, the gene edit “gifts” a member of the microbiome community with a genetic advantage, allowing it to proliferate until the entire community has the edit.
Politics
Very interested to see what comes of this. Do we have a global shift towards the right? Milei Basks in Right-Wing Election Gains as He Returns to Europe-Bloomberg
Javier Milei’s last trip to Spain ignited a diplomatic crisis of historic proportions on the eve of European elections he sought to influence. Emboldened by the success of his right-wing allies across the continent, the Argentine president is now going back for more.
Covid
I think this could end up being huge. If the Federal government won’t bring this issue up, which they won’t because they are all liable, then it’s up to the states. Didn’t bother to listen to Cuomo though, assume he will continue to defend the Vax.
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