Month: May 2024

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Euro zone inflation rises to 2.6% in May 2024

Euro zone inflation

Eurozone inflation increased to 2.6% in May 2024, according to Eurostat’s announcement on Friday 31st May 2024.

Analysts had anticipated a 0.1% rise from the 2.4% headline figure reported in April 2024.

Core inflation, which omits the unstable effects of energy, food, alcohol, and tobacco, rose to 2.9% from April’s 2.7%. Contrary to the flat reading projected by economists.

A deviation from the expected 0.25% cut at the ECB’s June 2024 meeting would significantly surprise the markets, given the strong signals from policymakers in recent weeks.

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Quality investing advice from one of the best, if not the best investor the world has ever seen!

A Wise Owl

Warren Buffett, renowned as one of history’s most successful investors, has imparted invaluable insights that can help steer you on your investment path.

Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1

This straightforward statement has significant connotations. Although the aim of investing is to make a profit, it is just as important to avoid losses.

By reducing choices that put your portfolio at risk, you enhance the chance of earning profits. Consider it protecting your capital before pursuing returns. In contrast to those who gamble on the stock market, Buffett prioritizes careful risk management.

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price 

Rather than concentrating only on low-priced stocks, it’s wise to invest in outstanding companies with robust economic foundations and competitive edges. Although top-notch companies seldom seem inexpensive, their enduring profitability may warrant a fair premium. Notable firms that Buffett has backed include Apple, American Express, Coca-Cola.

Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble 

Be ready to grasp opportunities as they come. Instead of a small thimble, arm yourself with a bucket to gather the metaphorical riches. That is, capitalize on favorable market conditions and make smart investments when suitable chances emerge.

Invest in yourself 

Buffett advocates for self-improvement, highlighting the importance of effective communication, both written and verbal. Developing this skill can greatly enhance your value.

Diversify

Diversify your investments among various assets to mitigate risk. Look into index funds and exchange-traded funds (ETFs) – unit trusts, stocks and shares, gold and hold cash to achieve widespread diversification.

Start early

The effectiveness of compounding is maximized when you start investing early. Being consistently invested over time is more beneficial than attempting to predict market movements.

Automate

Establish automatic contributions to your investment accounts. Regular investments over time can result in significant growth.

The principles that capture the influence of fear and greed on investing were articulated by Warren Buffett.

Buffet advises: ‘Be fearful when others are greedy, and greedy only when others are fearful.‘ 

Fear and Greed

Fear

When investors collectively succumb to fear from ongoing stock market declines, they often resort to selling their shares, which in turn exacerbates the fall in prices.

Greed

In bull markets, it’s common for investors to exhibit excessive greed, pursuing rapid wealth and speculative trends.

Buffett’s wisdom

Warren Buffett, often referred to as the ‘Oracle of Omaha’, is known for his disciplined, long-term approach to investing. He specializes in value investing, which involves purchasing companies that seem to be undervalued by the market.

The rule

When others exhibit greed (buying aggressively), it’s prudent to exercise caution. On the flip side, when others are fearful (selling in a panic), it may be an opportune time to be greedy (buying at reduced prices).

Application

Fearful times

In times when fear prevails in the market, prices might plummet as a result of panic selling. Buffett advises exercising caution in these situations.

Greedy times

When others display excessive optimism (greed), it presents an opportunity to acquire undervalued assets.

Successful investing requires maintaining balance, adhering to fundamental principles, and steering clear of emotional extremes.

Investing is a marathon, not a sprint; hence, patience, discipline, and ongoing education are crucial.

Remember… ALWAYS do your own careful research! Or better still, take professional financial advice. Actually – just do both!

RESEARCH! RESEARCH! RESEARCH!

Disclaimer: this article is for informative purposes only! Do not trade nor invest unless you FULLY understand what you are doing – even then it is wise to take qualified financial advice.

Possible read: Buffet – The Biography (Amazon listing – other good outlets available)

Wikipedia: Warren Buffet

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AI power hungry data centres go green in Singapore

AI thirst for power

Singapore is actively addressing the dual challenges of the increasing demand for artificial intelligence (AI) and the pressure on energy resources. The nation recently unveiled a green data centre roadmap to bolster its digital economy aspirations.

Growing AI Demand and Energy Strain

With the increasing demand for digital and AI computation, the requirement for data centre capacity has grown. This heightened demand is exerting pressure on national energy networks, calling for urgent attention.

Goals

The Green Data Centre plan is designed to deliver a minimum of 300 megawatts of extra capacity. Singapore’s strategy includes improving energy efficiency in all data centres, implementing energy-efficient IT equipment, and providing incentives or grants to promote resource efficiency.

Sustainability

Singapore acknowledges the substantial contribution of data centres to its ICT sector’s emissions, accounting for 82% of the sector’s emissions and 7% of the nation’s total electricity consumption. By prioritizing energy efficiency, renewable energy, and sustainability, Singapore strives to maintain its position as a premier digital hub while reducing its environmental impact.

International status

Singapore’s data centers capitalize on the nation’s global standing as a commercial and digital centre. The city-state ranks as the second-largest data center market in Southeast Asia and holds the sixth position in the Asia-Pacific region.

In conclusion, Singapore’s focus on green data centres demonstrates its pledge to sustainable development amidst increasing energy needs driven by AI. With an emphasis on energy efficiency and renewable energy, Singapore seeks to harmonize technological progress with ecological stewardship.

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Nasdaq 100 and Nasdaq Composite hit all-time highs on 28th May 2024


The Nasdaq Composite closed at an all-time high above 17,000 for the first time, propelled by a rise in Nvidia shares, despite a generally uneventful market day.

Nasdaq 100 all-time high of 18907

Nasdaq 100 all-time high of 18907

Nasdaq Comp hit all-time high of 17019

Nasdaq Comp hit all-time high of 17019

The S&P 500 saw a marginal increase of 0.02%. Following remarks from Minneapolis Federal Reserve President Neel Kashkari.

The Dow Jones Industrial Average dropped over 200 points.

These levels were not held and were lost over subsequent trading days as even Nvidia could not stop the Nasdaq from losing ground.

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What is the Hindenburg Omen? A recent report suggests it has been triggered…

Red Stock market

The Hindenburg Omen is a technical indicator that signals a higher likelihood of a stock market crash.

It measures the percentage of new 52-week highs and lows against a set reference percentage. The simultaneous occurrence of new highs and lows suggests a statistical anomaly from the norm, potentially foreshadowing a stock market downturn.

The four main criteria for a Hindenburg Omen signal

  • The daily number of new 52-week highs and 52-week lows in a stock market index must be greater than a threshold amount (typically around 2.2%).
  • The ratio of 52-week highs to 52-week lows cannot be more than two times.
  • The stock market index must still be in an uptrend (determined using a 10-week moving average or the 50-day rate of change indicator).
  • The McClellan Oscillator (MCO), which measures the shift in market sentiment, must be negative.

Once the criteria are satisfied, the Hindenburg Omen remains active for 30 trading days, and any subsequent signals within this time frame should be disregarded.

Confirmation of the Hindenburg Omen occurs if the McClellan Oscillator (MCO) stays negative throughout this period, while a positive MCO invalidates it.

Traders typically employ this indicator alongside other technical analysis methods to determine optimal selling times. However, it’s crucial to remember that the Hindenburg Omen is not infallible and should be used in conjunction with other market factors.

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Microsoft’s AI system Recall can take screenshots

Copilot

The UK’s data protection authority, the Information Commissioner’s Office (ICO), is reportedly making inquiries into a new screenshot feature available from Microsoft.

This feature, known as Recall, is a component of the Copilot+ suite and aims to take encrypted snapshots of a user’s laptop screen at intervals, storing them on the device. The ICO is examining the feature to determine the privacy protections in place.

Recall is designed to enable users to search their computer usage history using natural language, effectively creating a type of photographic memory of their activity. Concerns have been voiced about the feature’s potential to become a ‘privacy nightmare’ due to its ability to capture sensitive information. Microsoft has clarified that Recall is a voluntary feature, giving users the choice over the snapshots it collects. The data is kept on the local device and is inaccessible to Microsoft or others without access to the device.

The ICO’s investigation aims to ensure that companies thoroughly evaluate and address any risks to individual rights and freedoms prior to launching new technologies. Microsoft has reiterated its dedication to privacy and security, noting that these principles were integral to the development of Recall. The company has also indicated that users can specify the snapshots collected by Recall and that Microsoft Edge’s private browsing mode is not included.

Awareness of software features and privacy settings is crucial for users, particularly regarding personal data handling. The ICO’s inquiries represent a move towards addressing privacy concerns and safeguarding user data.

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IMF upgrades China’s growth forecast to 5%

China GDP

On Wednesday 29th May 2024, the International Monetary Fund increased its projection for China’s economic growth this year to 5% from the previous 4.6%, citing robust first-quarter figures and recent policy actions.

This revision reportedly came after the IMF’s routine evaluation visit to China. The institution now predicts that China’s economy will expand by 4.5% in 2025, an increase from the earlier estimate of 4.1%.

However, by 2029, the IMF expects China’s growth to slow to 3.3%, influenced by an aging demographic and a decline in productivity growth. This is a decrease from the previous medium-term growth forecast of 3.5%.

China’s economy experienced a stronger-than-anticipated growth of 5.3% in the Q1, bolstered by robust exports. Meanwhile, April’s data indicated that consumer spending continued to be weak, although there was a resurgence in industrial activity.

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Chinese EV makers continue their BIG push into European markets

EV

This expansion occurs as the European Union investigates subsidies provided to Chinese electric vehicle manufacturers, a situation that may lead to the imposition of tariffs.

In May 2024 Nio opened a new EV showroom in Amsterdam, while Xpeng introduced its G9 and G6 sports utility vehicles in France.

Over the years, China’s electric vehicle industry has flourished due to the government’s incentives and support, raising concerns among politicians in Europe and the U.S.

Public marketing campaigns are unfolding against the backdrop of a European Commission investigation into subsidies provided to Chinese electric vehicle manufacturers. The outcome of this inquiry may result in EU tariffs being imposed on Chinese EV imports.

The United States has preempted such measures, with the Biden administration enacting a 100% tariff on Chinese EV imports.

Meanwhile, Chinese EV producers are intensifying their international expansion efforts, aiming to compete with Elon Musk’s Tesla on a global scale and secure an early advantage over traditional car manufacturers.

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IMF recommends UK interest rates should be cut to 3.5% by end of 2025

UK Charts

The International Monetary Fund (IMF) advises that the Bank of England should contemplate reducing its interest rates to 3.5% by the end of 2025.

This suggestion is made as the UK’s economy steadily recovers from the recession caused by the pandemic, while policymakers are dealing with inflationary challenges.

The ‘thinking’ behind the recommendation

Economic Recovery and Inflation Outlook

The IMF’s recommendation is grounded in its assessment of the UK’s economic trajectory.

Growth Forecast

The International Monetary Fund has upgraded its growth forecast for the UK in 2024, signaling a positive outlook. It anticipates growth of 0.7% this year and 1.5% in 2025.

Inflation

The IMF anticipates that UK inflation will decline to near the Bank of England’s target of 2% and stabilise at this rate in early 2025, indicating that inflationary pressures are within manageable limits.

Soft Landing

The UK economy is said to be approaching a ‘soft landing‘ following the mild recession of the previous year. Policymakers are focused on finding a balance between fostering growth and managing inflation.

Monetary Policy Considerations

The Bank of England’s Monetary Policy Committee (MPC) has been closely monitoring economic indicators and inflation trends. Here’s why the IMF’s recommendation matters:

Interest Rate Peaks

The Monetary Policy Committee has indicated that interest rates might have reached their peak. The current restrictive monetary policy is having an impact on the actual economy and the dynamics of inflation.

Market Expectations

Analysts anticipate the first interest rate cut by September 2024 at the latest. Market expectations align with this projection, with the base interest rate likely to be lowered to 4% by the end of 2025.

Balancing Act

Policymakers face the delicate task of supporting economic recovery while preventing runaway inflation. The IMF’s suggestion aims to strike this balance.

Implications for Borrowers and Savers

Mortgage Holders

Variable Rate Mortgages

If you have a variable rate mortgage, a rate cut could reduce your monthly payments. However, keep an eye on your lender’s response to any rate changes.

Fixed Rate Mortgages

Fixed-rate borrowers won’t immediately benefit from rate cuts, but they should still monitor the situation. If rates continue to fall, refinancing might become attractive.

Savers

Savings Accounts

Lower interest rates typically lead to diminished returns on savings accounts. It may be wise to diversify your investments to seek potentially higher yields in other areas.

Fixed-Term Deposit

Current fixed-term deposits will remain unaffected; however, new deposits might generate lower yields. It is advisable to carefully assess your alternatives.

Conclusion

The IMF’s recommendation highlights the intricate balance between fostering economic recovery and managing inflation. As the Bank of England considers its next steps, it is crucial for borrowers and savers to remain informed and adjust their financial strategies as needed.

For homeowners, investors, and savers alike, grasping the potential consequences of rate cuts is key to making well-informed choices in an ever-changing economic environment.

Disclaimer: The information provided here is based on current projections and should not be considered financial advice. It is not given as financial advice – it is for discussion and analysis only!

Consult a professional advisor for personalised recommendations.

Remember – always do your careful research first!

RESEARCH! RESEARCH! RESEARCH!

Update

The Bank of England has given its strongest hint yet that interest rates could be cut this summer. This comment was observed in a recent speech given by the deputy governor of the Bank of England.

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Wall Street is in love with Nvidia as results beat estimates – but can the stock maintain these meteoric gains?

AI GPU

Nvidia’s shares surpassed $1,000 for the first time during extended trading on Wednesday 22nd May 2024, following the chip manufacturers report of fiscal first-quarter (Q1) earnings that exceeded analysts’ expectations.

Investors have been using Nvidia’s performance as a barometer for the AI industry’s growth, which has captivated the market over the past year. The robust results indicate that the demand for Nvidia’s AI chips continues to be strong. However, there may be an argument that it is time to take some profits from these massive gains. Can it continue its meteoric climb?

It was also announced that revenues from the upcoming next-generation AI chip, ‘Blackwell‘, are expected later in the year.

In extended trading, the stock increased by around 7%. Additionally, Nvidia announced a 10-for-1 stock split. Given the post-market activity, the shares are on track to reach a new high on Thursday 23rd May 2024.

Nvidia one year share price

Nvidia one year share price

Earnings Per Share: $6.12 vs. $5.98 – (Nvidia financial reports)

Revenue: $26.04 billion vs. $24.65 billion – (Nvidia financial reports)

Nvidia anticipates sales of $28 billion for the current quarter, surpassing Wall Street’s expectations of $26.61 billion sales, as reported – (Nvidia financial reports)

The company declared a net income of $14.88 billion, or $5.98 per share, a significant increase from $2.04 billion, or 82 cents per share, in the same period last year. (Nvidia financial reports)

Over the past year, Nvidia’s sales have surged, driven by purchases from tech giants like Google, Microsoft, Meta, Amazon, and OpenAI, which have invested billions in Nvidia’s GPUs. These high-end, expensive chips are essential for the development and deployment of artificial intelligence (AI) applications.

Nvidia’s primary business segment, data center sales, encompasses AI chips and other necessary components for operating large AI servers.

The revenue for Nvidia’s data centre sector soared over 400% compared to the previous year. This growth was attributed to the delivery of the company’s ‘Hopper’ graphics processors (GPU’s), including the H100 GPU.

It was also reported that Meta’s Lama 3, their newest large language model utilizing 24,000 H100 GPUs, as a notable income stream this quarter.

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UK retail sales flop 2.3% in April, missing estimates

UK retail sales

Wet weather was to blame for the U.K. retail sales volumes drop of 2.3% in April 2024.

Shoppers were deterred from the high street, the Office for National Statistics (ONS) said Friday 24th May 2024.

Economists expected a smaller retail sales fall of 0.4%.

Sales volumes declined across multiple sectors, with clothing retailers, sports equipment, games and toys stores, and furniture outlets experiencing a downturn as adverse weather conditions led to a decrease in customer visits, according to the ONS.

March’s figure was revised from flat to a 0.2% decline.

Sales increased by 0.7% over the three months leading up to April, compared to the preceding three months, despite a sluggish December and holiday season. However, there was a 0.8% decline when compared with the same period last year.

Will the Bank of England (BoE) drop interest rates in June now that inflation is down to 2.3% – close to the target of 2%?

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SEC approves rule change to allow creation of ether ETFs

Ethereum crypto

On Thursday 23rd May 2024, the SEC sanctioned a rule amendment that clears the path for ETFs investing in ether, one of the largest cryptocurrencies globally.

This move occurs less than half a year after the Securities and Exchange Commission greenlit Bitcoin ETFs. These funds have been a significant triumph for the industry, with net inflows reportedly exceeding $12 billion.

May was widely anticipated as a likely verdict time for the ether funds, aligning with the SEC’s deadline to determine the fate of the VanEck Ethereum ETF.

Numerous firms that back Bitcoin ETFs – such as Bitwise, BlackRock and Galaxy Digital – have been reported to have initiated the process to launch their own ether ETF.

Ether’s value saw a modest increase following a 20% climb earlier in the week in anticipation of the SEC’s ruling. However, some investors might be holding back, considering the SEC’s approval of the rule change doesn’t ensure the launch of all proposed funds.

Ethereum one year chart (CoinMarketCap)

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Amazon plans to give Alexa an AI make-over

Smart speaker

Amazon is reportedly set to launch an enhanced version of its long-standing voice assistant this year, which will be available for a monthly fee, according to sources.

This new service reportedly will not be part of the Amazon Prime subscription. The news emerges as OpenAI introduced a chatbot capable of engaging in two-way conversations, contrasting with Alexa’s current common uses such as setting kitchen timers and providing weather updates.

Now what’s wrong with that – that’s how I use my Alexa!

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UK Prime Minister announces snap general election for 4th July 2024

UK election

On 22nd May 2024, UK Prime Minister Rishi Sunak announced a snap general election for 4th July 2024 This decision caught many by surprise, as the election was called more than around six months earlier than legally required.

Election Date: 4th July 2024 – let the fireworks begin

The Conservative Party, led by Rishi Sunak, is facing significant challenges in opinion polls, trailing behind the opposition Labour Party.

The economy, immigration, health services, and cost of living have been identified as key issues for voters.

Labour, led by Sir Keir Starmer, is considered the clear frontrunner, with a substantial lead in recent polls.

Since 2010, the Conservatives have seen five prime ministers: David Cameron, Theresa May, Boris Johnson, Liz Truss, and now Rishi Sunak.

Sir Keir described the past 14 years as “Tory chaos” and emphasised that it’s time for change.

So, the UK is gearing up for an early election, and the outcome will be closely watched both domestically and internationally

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Big tech companies pledge AI safety commitments

AI Kill Switch!

Leading technology companies, such as Microsoft, Amazon, and OpenAI, have united under a significant international accord for artificial intelligence (AI) safety measures, established at the Seoul AI Safety Summit on Tuesday 21st May 2024.

Following the agreement, firms from various nations, including the UK, China, Canada, the U.S., France, South Korea, and the United Arab Emirates, have pledged to voluntarily commit to the secure development of their cutting-edge AI models.

Framework

AI model developers who have not already done so agreed to issue safety frameworks that detail how they will address the challenges posed by their advanced models, including the prevention of technology misuse by malicious entities.

These frameworks will feature ‘red lines’ that tech companies will establish to delineate the types of risks associated with advanced AI systems that are deemed ‘unacceptable.’ These risks encompass, but are not limited to, automated cyberattacks and the potential for bioweapons.

Kill switch

In the event of such dire scenarios, companies have declared their intention to introduce a ‘kill switch’ that would halt the development of their AI models should they be unable to ensure the mitigation of these risks.

“It is unprecedented for so many prominent AI firms from diverse regions of the world to concur on identical commitments regarding AI safety,” Rishi Sunak, the UK Prime Minister reportedly said on Tuesday 21st May 2024.

He further noted that these commitments would guarantee that the world’s foremost AI companies will maintain transparency and accountability concerning their safe AI development strategies.

This agreement builds upon a prior set of pledges made in November 2023 by entities engaged in the creation of generative AI software.

The involved companies have consented to seek feedback on these standards from ‘trusted actors,’ which include their respective national governments when suitable, prior to their publication in anticipation of the forthcoming AI summit – the AI Action Summit scheduled to take place in France in early 2025.

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EU gives greenlight to the world’s first significant law on artificial intelligence

Human and humanoid

On Tuesday 21st May 2024, European Union member states reached a consensus on the world’s first significant law to regulate artificial intelligence, a move echoed by institutions globally to implement controls on the technology.

The EU Council announced it has granted final approval for the AI Act, a pioneering regulation designed to establish the first extensive framework for artificial intelligence.

The EU Commission is authorized to impose fines on companies violating the AI Act, up to 35 million euros ($38 million) or 7% of their annual worldwide turnover, whichever is greater.

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UK headline inflation rate falls to lowest in three years but comes in hotter than expected

The April inflation came in higher than anticipated, falling to 2.3%, as reported by the Office for National Statistics on Wednesday 22nd May 2024.

Traders have now reduced their expectations of a June interest rate cut by the Bank of England (BoE). Markets reacted negatively in early trading.

The headline inflation rate decreased from 3.2% in March, marking the first instance since July 2021 that inflation has fallen below 3%, nearing the Bank of England’s target of 2%.

Contrary to the predictions of economists surveyed by Reuters, who expected a more significant drop to 2.1%, services inflation – a critical indicator monitored by the BOE due to its significance in the UK economy and as a gauge of domestically generated price increases – only fell marginally to 5.9% from 6%, missing the anticipated 5.5% from the BOE.

Core inflation, which excludes energy, food, alcohol, and tobacco, decreased to 3.9% in April from 4.2% in March.

The substantial decline in the headline rate was largely anticipated due to the year-on-year decrease in energy prices. However, investors shifted their attention to core and services inflation following indications from BOE policymakers of a potential interest rate cut later in the summer, contingent on new data.

After the data release, the market-makers probability of a June rate cut plummeted to 15% from 50% and the chance of an August cut also fell to 40% from 70%.

Lingering concerns over underlying inflationary pressures mean a June rate cut is unlikely. However, these figures may convince more rate setters to vote to ease policy, providing a signal that a summer rate cut is still a possibility.

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Nasdaq Composite Index hits a new all-time high on Monday 20th May 2024

Nasdaq all-time high

The Nasdaq is a stock market index predominantly comprising technology and internet-related companies. Investors and traders closely monitor its performance as it serves as a barometer for the technological sector’s robustness and the general market mood.

Nasdaq all-time high

The Nasdaq Composite surpassed its previous highest value, marking a significant milestone in its history.

Contributing factors

Tech success

The surge was propelled by robust performances from leading tech companies like Apple, Amazon, Microsoft, and Alphabet (Google).

Economic optimism

Positive economic data, the lingering promise of interest rate cuts, and optimism about future growth contributed to investor confidence.

Market sentiment

The all-time high indicates a positive sentiment in the stock market; however, it is crucial to keep an eye on current trends and potential corrections.

Note

Keep in mind that stock markets are subject to volatility, with prices capable of swift fluctuations. It’s crucial for investors to proceed with caution and take into account their individual risk tolerance before making any investment choices.

If in doubt – do nowt!

RESEARCH! RESEARCH! RESEARCH!