Day: 13 February 2024

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U.S. inflation ticks back up to 3.1%

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Stocks dropped on Tuesday 13th February 2024 after hotter-than-expected inflation data for January caused Treasury yields to spike

The new inflation figure raised doubts that the Federal Reserve would be able to cut rates several times this year, a key part of the equity market bull run case.

The consumer price index rose 0.3% in January 2024 from December 2023. CPI was up 3.1% year-to-year. Economists expected CPI to have increased by 0.2% month over month in January and 2.9% from a year earlier.

U.S. inflation ticks back up in January 2024 figures
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Jeff Bezos sells nearly 12 million Amazon shares worth $2 billion

2 billion

Jeff Bezos filed a statement indicating his sale of nearly 12 million shares of Amazon stock worth more than $2 billion

The Amazon executive chairman notified the U.S. SEC – Securities and Exchange Commission of the sale of 11,997,698 shares of common stock on the 7th and 8th February 2024.

The collective value of the shares of Amazon, which is based in Seattle where he founded the company in a garage around thirty years ago, was about $2.04 billion.

More to come

In a separate SEC filing, Bezos listed the proposed sale of 50 million Amazon shares on or around 7th February 2024 with an estimated market value of $8.4 billion.

Taxing decision?

Jeff Bezos moved from Seattle to Miami in November 2023, shortly before he announced his plan to sell up to 50 million Amazon shares by January 2025. 

Florida does not have a capital gains tax, unlike Washington state, which imposes a 7% tax on any gains of more than $250,000 from the sale of stocks and bonds. Therefore, by moving to Florida, Bezos could save up to $600 million in taxes on his stock sale – more than enough for a luxury yacht and 2 or 3 more luxury properties.

But, of course, we do not know if this was the real reason for his move.

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Arm taking its place in the AI race

AI chip stock up

Arm’s strong growth forecast has led investors to declare it an AI darling

Arm shares soared 29% on Monday, extending last week’s rally as investors continue to applaud the chipmaker’s better-than-expected third-quarter earnings and its position in the artificial intelligence boom.

Up 93% since 8th February 2024

Arm is now up 93% since it reported quarterly figures on 8th February 2024. There is no obvious reason for the 29% climb on Monday. The fear of missing out (FOMO) could be playing a part in the meteoric share price move.

The stock has almost tripled since Arm’s initial public offering in September 2023, closing at $148.97 and is now worth almost $153 billion, that’s a little more than $30 billion below Intel’s market cap.

Arm 1 year chart showing huge gain in February 2024

Arm 1 year chart showing huge gain in February 2024

AI demand fuels Arm’s success

Last week, Arm said it could double the price for its latest instruction set, which accounts for 15% of the company’s royalties, suggesting it can expand its margin and make more money off new chips. It also said it was breaking into new markets, such as cloud servers and automotive, due to AI demand.

Its royalty strength combined with Arm’s optimistic growth forecast has made the company the latest AI darling among investors, despite a higher earnings multiple than Nvidia or AMD.