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.
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.
The index continues its march breaking all-time records on its way
The index continues on its march breaking all-time records on its journey
Nasdaq 100 climbs to new record 9th February 2024
A solid earnings season, easing inflation data and a resilient economy have charged 2024′s market rally. It has helped propel the Nasdaq 100 to close at these new highs!
We are enjoying good news at an economic and earnings level, and the market is reacting positively. The longer the good news story plays out, the more likely it will be that the market will hold from here.
FOMO or the fear of missing out is likely playing its part here too.
The S&P 500 climbed to a new all-time high of 5026 on 9th February 2024
Stocks rose on Friday 9th February 2024 after December’s revised inflation reading came in lower than first reported, and the S&P 500 closed above the key 5,000 level as strong earnings and economic news came in.
A solid earnings season, easing inflation data and a resilient economy have charged 2024′s market rally. It propelled the S&P 500 to close above the 5,000 level after first touching the milestone during the trading week. The index first crossed 4,000 in April 2021.
We are enjoying good news at an economic and earnings level, and the market is reacting positively. The longer the good news story plays out, the more likely it will be that the market will hold from here.
But it won’t take much to spoil the party, right now I don’t know what that might be…?
S&P 500 1-year chart 9th February 2024 – new all-time high of 5026
S&P 500 1 year chart 9th February 2024 – new all-time high of 5026
FOMO or the fear of missing out is likely playing its part here too.
After a decade-long bull run throughout the 1980’s, the Nikkei 225 index reached an all-time high of 38,915 on December 29, 1989, the last trading day of the year.
Few could have imagined, on New Year’s Eve of 1989, that the index would be lower 34 years later. As the New Year arrived, the bubble burst.
And now, Japan’s stock markets are on a tear and closing in on that elusive 38195 high of 1989 – but there’s a catch – the Zombies are coming.
Zombie companies
Zombie firms are businesses that are unprofitable and struggling to keep afloat. They don’t have excess capital to invest and grow the business, or to pay down the loan capital.
Concerns about zombie firms are coming into focus as the Bank of Japan is tipped to raise interest rates in 2024 for the first time since 2007.
It comes as the Nikkei 225 rises to its highest point in almost 34 years
Japan’s stock markets have been on a meteoric run since the start of 2023, repeatedly breaching 33-year highs and outperforming the rest of Asia.
However, there are rising concerns that so called ‘zombie’ firms, which are unprofitable and struggling to keep afloat, could cut short that rally. The Bank of Japan is widely expected to raise interest rates this year, and that could easily tip many of these firms into bankruptcy, which could have a broader impact on the economy and stock market,
Nikkei 225 1-year chart 9th February 2024
Nikkei 225 1-year chart 9th February 2024
Bankrupt businesses
Zombie firms are nothing new in Japan. They first emerged after the stock ‘bubble’ and subsequent crash of the 1990s, when banks continued to support companies that would have otherwise gone bankrupt.
The pandemic of 2020 accelerated the problem of zombie businesses, with the number of zombie firms in Japan reportedly jumping by around 33% between 2021 and 2022.
At the end of 2023, Japan reportedly had around 250,000 companies that are technically zombie businesses
Some experts argue that zombie firms are a drag on Japan’s productivity, innovation, and growth, as they occupy resources and crowd out more efficient firms. The debate on how to deal with zombie firms is ongoing and may have implications for Japan’s economic recovery and future prospects.
Others suggest that zombie firms may have a positive effect, such as preserving employment, social stability, and industrial diversity.
Surely, there is no room for inefficiently run businesses making little or no profit in any economy.
U.S. stocks have had a good year in 2023, and a great start to 2024 with new record highs being set.
Many major indices have recorded double-digit gains. However, some analysts have warned that the rally may not last, as it has been driven by a few large-cap technology and growth stocks, while many other sectors and regions have lagged behind.
A stock market rally is a broad and rapid rise in share prices, often defined as a 20% increase from a recent low.
This could indicate a lack of breadth and sustainability in the rally, and potentially signal a market pullback, correction or even a crash in the future.
Bull bear, bull?
Chartists with their technical analysis might see a pattern that points to a substantial upside, but they should not get too carried away with their own observations, right now would be a sensible time for markets to find level ground, if only temporarily.
The bullish view is that the ‘laggards’ should catch up the ‘mega cap’ stalwarts once again. The bearish view is that the ‘mega cap’ stocks’ will realise they’ve gone too far and need to ride back to the rest of the market. Too few stocks in the same sector hold the balance of power – go check out the Magnificent 7 or even the old FANG stocks.
Catch-up
Either way, there ought to be an opportunity for underrepresented sectors and industries to gain lost ground.
The question is, will there be a pause to allow laggards to catch-up, or will the mega caps simply continue on their march?
The S&P 500 climbed again Wednesday 7th February 2024 and edged ever closer to the 5,000 level.
S&P 500 hit a new high of 4995
S&P 500 hit a new high of 4995 on 7th February 2024
The index, which first breached the 4,000 level in April 2021, added around 0.82% to close at 4,995.06. During session highs, the S&P hit 4,999.89. Quarterly results signalled a thriving U.S. economy.
The Nasdaq 100 jumped to a new high of 15,755
The Nasdaq 100 jumped to a new high of 15,755 on 7th February 2024
The Dow Jones Industrial Average rallied 156 points to close at 38,677 and an all-time high
DJIA closes at new high of 38677on 7th February 2024
Euphoric
Are investors getting swept away with the latest wave of AI related tech results? Quite possibly, as some of what we’re seeing could be based on FOMO (fear of missing out) as traders/investors don’t want to be left behind like they were last year.
However, one undeniable fact is that the U.S. economy isn’t facing as recession any time soon as predicted by many.
THE DEPARTMENT OF GOVERNMENT JOB DISTRIBUTION AND OTHER THINGS LIKE THAT
‘Congratulations, you’re the only one to spell ‘gover ‘n’ ment’ correctly – you’ve got the job. Would you like education or something a little less taxing like… the treasury?’
Job creation in the U.S. surged in January 2024, as the economy continued to defy predictions of a slowdown
The U.S. economy added 353,000 jobs and average hourly pay jumped, while the unemployment rate held steady at 3.7%, the Labour Department said.
The report extended more job gains that has surprised economists, who have expected a jump in interest rates since 2022 to slow the economy. It hasn’t. No recession or slowdown in the economy so far.
Early rate cut less likely according to these figures
Average hourly earnings increased 0.6%. Year-on-year basis, wages jumped 4.5%, above the 4.1% forecast.
Non-farm payrolls expanded by 353,000 for the month, well above the 185,000 estimate. The unemployment rate held at 3.7%.
Job growth was widespread in January 2024. Professional and business services 74,000. Other sectors included health care 70,000 and retail trade 45,000.
Analysts now say the job market gain and strength make an early interest rate cut less likely.
The U.S. employment data delivered quite a shock, easily beating expectations, with earnings much higher than expected. Stock markets gained and are at elevated levels for the Dow, Nasdaq and the S&P 500. Record highs have been set – are the highs?
Market analysts said these numbers show the U.S. economy is strong and will change the mindsets of those expecting an early interest rate cut.
Expectations of a recession are off the table too, for now.
The world is looking at a debt crisis that will span the rest of this decade and well into the next
$307.4 trillion of world debt!
It’s not going to end well; economists warn with global borrowings hitting a record of $307.4 trillion in September 2023.
Debt at this level is unsustainable.
Both emerging markets and high-income countries have seen a substantial rise in their debt levels. These levels have grown by a some $100 trillion from 10 years ago. The debt has been fueled in part by a higher interest rate environment.
Initially, with borrowing costs at historic lows, countries have benefitted from very low interest rate for the debt. That’s changed.
The next 10 years will likely become known as the ‘Decade of Debt.’
Debt globally is coming to a head.
As a share of the global gross domestic product, debt has risen to 336%. This compares to an average debt-to-GDP ratio of 110% in 2012 for advanced economies, and 35% for emerging economies.It was 334% in the fourth quarter of 2022, according to the most recent global debt monitor report by the Institute of International Finance.
To meet debt payments, it is estimated that around 100 countries will have to cut spending on critical infrastructure including health, education and social projects.
Countries that manage to improve their fiscal situation could benefit by attracting capital, labour and investment. However, those that do not could lose talent and revenue and further increase their debt burden.
Facebook, the social media giant that connects billions of people around the world, celebrated its 20th anniversary on February 4, 2024.
Founded by Mark Zuckerberg and his fellow Harvard students in 2004, Facebook has grown from a college network to a global phenomenon, with over 3 billion monthly users and counting.
Facebook has also changed the way we communicate, share, and connect with each other online, enabling us to keep in touch with friends and family, discover new content and communities, and express ourselves freely.
Controversy
However, Facebook has also faced many controversies and challenges over the years, such as privacy issues, misinformation, child safety, and political scrutiny. Facebook has been accused of violating user data, spreading fake news and hate speech, enabling cyberbullying and online abuse, and influencing elections and public opinion.
How ‘the’ facebook looked 20 years ago
Facebook has also faced competition from other platforms, such as TikTok, Snapchat, and X, as well as regulatory pressure from governments and activists.
Evolving
As Facebook turns 20, it is still evolving and expanding under its parent company Meta, which also owns Instagram and WhatsApp. Meta’s vision is to create a metaverse, a virtual reality where people can interact and experience immersive digital worlds. Meta also aims to invest in artificial intelligence, blockchain, and cloud computing, as well as social good initiatives, such as connectivity, education, and health.
Facebook’s future is uncertain, but it is undeniable that it has shaped the history and culture of the internet and the world, for good and bad.
See BIG tech results here as Meta share price gains 20% after positive earnings impress Wall Street.
Mark Zuckerberg is currently the third richest person in the work coming with a wealth of $161 billion. Not a bad income for 20 years’ work.
A NFT is a non-fungible token, which means it is a unique digital identifier that cannot be copied, substituted, or subdivided.
It is recorded on a blockchain, which is a type of digital ledger that stores information in a secure and decentralised way.
A NFT is used to certify authenticity and ownership of a specific digital asset and specific rights relating to it, such as an artwork, music, a game, or a sports event.
A NFT can be bought and sold on digital markets and may also contain smart contracts that give the creator a share of any future sale of the token. NFTs are different from cryptocurrencies, which are fungible, meaning they can be exchanged for other units of the same value.
NFTs are also different from regular digital files, which can be easily and endlessly duplicated. NFTs are one-of-a-kind assets in the digital world that have value based on their scarcity, uniqueness, and verifiability.
Are NFTs still a thing in 2023?
According to Statista, the annual market cap of NFT transactions worldwide reached 30.7 billion U.S. dollars in 2021, but lost value from this high as the market drifted.
NFTs are also expanding into various segments and industries, such as art, music, gaming, sports, real estate, and more. Some of the top NFT trends to watch in the future may include artificial intelligence, fractional NFTs, music NFTs and NFT ticketing token. NFTs are also facing some challenges, such as regulation, legal battles, environmental impact, and market volatility. NFTs are a new way of creating, owning, and exchanging digital assets. But will it last?
Here to stay?
People may have different opinions on the future of NFTs. Some people may think that NFTs are here to stay, as they offer a new way of creating, owning, and exchanging digital assets that are unique, scarce, and verifiable. They may also see NFTs as a way of supporting artists, creators, and innovators, as well as a way of expressing themselves and their values. Some people may also believe that NFTs have a lot of potential to transform various industries and sectors, such as art, music, gaming, sports, real estate, and more.
A NFT is a non-fungible token, which means it is a unique digital identifier that cannot be copied, substituted, or subdivided.
However, some people may think that NFTs are not here to stay, as they face many challenges and risks, such as regulation, legal battles, environmental impact, and market volatility. They may also see NFTs as a hype, a bubble, or a scam, that are driven by speculation, greed, and FOMO (fear of missing out). Some people may also question the value and utility of NFTs, as they do not confer any ownership rights, benefits, or guarantees to the buyers. These same people likely thought cryptocurrency such a Bitcoin was also a fad.
Ultimately, the future of NFTs may depend on how they evolve, adapt, and innovate, as well as how they are perceived, accepted, and regulated by the society.
NFTs may be here to stay, or they may fade away, but they have certainly made an impact on the digital world.
AI ‘trading bots’ are software programs that use artificial intelligence (AI) to analyse market data, generate trading signals, and execute trades automatically.
‘I meant Artificial Intelligence Investing not ‘Alien’ Investing (AI)’
AI trading bots are becoming more popular among investors who want to take advantage of the speed, accuracy, and efficiency of AI technology. But is this a good thing for the future of investing?
Pros
AI ‘trading bots’ could transform the world of investing
Enabling more accessible and affordable trading for everyone, regardless of their experience, knowledge, or capital.
Enhancing the performance and profitability of trading strategies, by optimising entry and exit points, managing risk, and adapting to changing market conditions.
Providing more diverse and innovative trading opportunities, by exploring new markets, assets, and strategies that human traders may overlook or ignore.
Reducing the emotional and psychological biases that often affect human traders, such as fear, greed, overconfidence, and regret.
Cons
AI ‘trading bots’ also pose some challenges and risks
Increasing the complexity and volatility of the markets, by creating feedback loops, amplifying trends, and triggering flash crashes.
Exposing traders to technical glitches, security breaches, and malicious attacks, by relying on software and internet connectivity that may malfunction or be compromised.
Raising ethical and regulatory issues, by creating potential conflicts of interest, information asymmetry, and market manipulation.
Conclusion
AI ‘trading bots’ are not a mystical ‘get rich quick solution’ that can guarantee success in the world of investing. They are tools that require careful selection, evaluation, and supervision by human input and for the human trader to maintain ultimate control.
We should always be aware of the benefits and limitations of AI technology.
Are AI investing trading bots taking over? ‘I meant Artificial Intelligence Investing not ‘Alien’ Investing (AI)’
In January 2024, inflation logged its biggest monthly jump since August with a 6.7% rise from December 2023.
Year-on-year inflation hit nearly 65%, according to the Turkish Central Bank’s figures released Monday 5th January 2024
The consumer price index (CPI) for the country of 85 million people increased by 64.86% annually, up slightly from the 64.77% of December.
Sectors with the largest monthly price rises were health at 17.7%, hotels, cafes and restaurants at 12%, and miscellaneous goods and services at just over 10%. Clothing and footwear were the only sectors showing a monthly price decrease, with -1.61%.
Food, beverages and tobacco, as well as transportation, all increased between roughly 5% and 7% month-on-month, while housing was up 7.4% since December 2024.
Federal Reserve Chair Jerome Powell said in a U.S. TV interview on Sunday 4th January 2024 that the central bank will proceed carefully with interest rate cuts this year and likely will move at a considerably slower pace than the market expects.
Election year rate cuts?
In the interview and after last week’s Federal Open Market Committee meeting (FOMC), Powell expressed confidence in the economy. However, he promised he wouldn’t be swayed by this year’s presidential election and said the pain he feared from rate hikes never really materialised.
“With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully,” he reportedly said.
“We want to see more evidence that inflation is moving sustainably down to 2%,” Powell added. “Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”
Powell indicated that it was unlikely the FOMC will make that first move in March 2024, which markets have been anticipating.
It was a good day of earnings for Big Tech companies.
Three of the Magnificent 7 results dominated the headlines: Meta, Amazon and Apple. Nasdaq and S&P 500 gained in ‘after the bell’ trading. This after a punishing day for Alphabet and Microsoft, despite good results.
Nasdaq 100 closed at: 17344 but climbed above 17500 in after-hours trading.
Wall Street seemed impressed with Meta’s results.
Meta
Shares of Meta surged 15% after the social-media giant defied analysts’ estimates. It posted earnings of $5.33 per share on revenue of $40.11 billion. The company also declared its first-ever dividend payment. Share buy-back was also announced.
Meta platforms Inc. One year chart
Meta platforms Inc. One year chart
The results show Meta’s online ad business continues to recover well from a terrible 2022.
Sales in the Q4 jumped 25% year on year.
Expenses decreased 8% year over year to $23.73 billion.
Amazon
Investors also enjoyed Amazon’s earnings, which easily topped Wall Street’s predictions. The ecommerce giant also provided a strong positive outlook. The stock jumped 7% in extended trading.
Amazon.com Inc. One year chart
Amazon.com Inc. One year chart
Q4 was a record-breaking Holiday shopping season in the U.S. and closed out a robust 2023 for Amazon. Amazon has much planned for 2024.
Apple
But Apple didn’t benefit from the same treatment despite posting strong results.
Apple Inc. One year chart
Apple Inc. One year chart
Apple also exceeded estimates, reporting revenue growth for the first time in a year. But shares slid more than 2% in extending trading after it posted a 13% decline in sales in China.
Apple’s outlook suggesting weak iPhones sales may have also disappointed investors.
U.S. microchip giant Advanced Micro Devices (AMD) is investing in AI PCs to take on the likes of Nvidia and Intel and Arm as the AI race gains momentum.
As the AI market expands so too will AI powered personal computer (PC). These are personal computers embedded with processors specifically designed to perform AI functions such as real-time language translation. Intel has already announced its AI powered chip for the PC.
Tech research firm Canalys in a December report said the boom in generative AI is expected to boost PC sales as consumers are seeking devices with AI features, predicting that 60% of the PCs shipped in 2027 will be AI-capable.
AI tech interest explodes
An explosion of interest in AI was sparked by the launch of ChatGPT in November 2022 as the chatbot went viral for its ability to generate human-like responses to users’ prompts.
Microsoft was quick to adopt the Technolgy and incorporate AI into its Bing search engine. Other companies such as Amazon, Alphabet (Google), Arm, Meta, Tesla and Apple are all heavily involved in AI development too.
Gold demand hit record highs in 2023 on the back of persistent geopolitical tensions and continued weakness in some world economies, particularly China according to the World Gold Council.
Total gold demand stood at 4,899 tons in 2023 compared to 4,741 tons in 2022. Gold purchases from central banks led to last year’s surge, with purchases exceeding 1,000 tons for two consecutive years.
Prices reached an all-time high of around $2,135 an ounce in December 2023 as central banks and retail buyers increased their gold investments.
Carats at Costco
Buyers have many outlets from which to make their gold purchases. Costco recently reported selling over $100 million worth of gold bars in the final quarter of December 2023. Weird to think that we can now buy carats with carrots.
Gold bars for sale at Costco
Gold demand in 2024?
According to some analysts’ gold purchases this year are unlikely to meet 2023 levels, but a fall in inflation could prevent a drastic drop in demand.
When inflation drops significantly, consumers will start to feel ‘better-off’, and this could mitigate some of the drop in demand.
Gold carat
A Gold carat is a unit used to measure the purity of gold, with a carat representing 1/24th part of the whole.
Pure gold is 24 carats, meaning that it is 100% gold with no other metals added. However, gold used for jewellery and other applications is rarely pure, and its purity is measured in carats to determine its value.
UK interest rates have been left unchanged at 5.25% by the Bank of England as widely expected by commentators.
It is the fourth time in a row the Bank has held rates at 5.25%.
The Bank of England had previously raised rates 14 times in a row to curb inflation, leading to increases in mortgage rates but also creating better rates for savers.
Interest rate chart from 2007 to January 2024 demonstrates just how low interest were between 2009 and 2022
Interest rate chart from 2007 to January 2024 demonstrates just how low interest were between 2009 and 2022
Attitude shift
There is a noticeable shift in opinion as the committee entertained the possibility of discussing the feasibility of cuts.
There was a three-way split, with two members of the Monetary Policy Committee (MPC) voting to increase the bank rate to 5.5%; one to reduce it to 5%; and six were in favour of sticking with 5.25%.
With inflation falling it is very likely the interest rates will be reduced by 0.25% by March 2024. Just take a look at the reduction in savers rates that have already occurred.
The anticipation is for a rate reduction soon.
The clue is that savers rates are being cut.
But
The Bank of England Governor, Andrew Bailey, has made clear that for him the key question is: ‘For how long should we keep rates at the current level?’
There may be disappointment ahead then – but a rate cut is next and I still expect it by Easter.
HSBC fined £57.4m by the Bank of England for ‘serious failings’ to protect customer deposits.
The bank failed to accurately identify deposits eligible for the UK’s Financial Services Compensation Scheme, the Bank’s Prudential Regulation Authority (PRA) announced.
HSBC was fined by the Bank of England’s Prudential Regulation Authority (PRA) for failing to properly implement the depositor protection rules, which are meant to safeguard customer deposits in case of a bank collapse.
Serious concerns
The PRA said the failings were ‘serious‘ and ‘materially undermined the firm’s readiness for resolution’. HSBC reportedly said it was pleased to have resolved the ‘historic matter’ and cooperated with the investigation. The ‘failings’ occurred between 2015 and 2022. The fine is the second highest to date imposed by the regulator.
Protected up to £85,000 per person per institution
Under the scheme, customer deposits are protected up to the value of £85,000.
Under depositor protection rules, banks must have systems and controls in place to make sure that financial information is logged correctly. This information is needed if the FSCS has to make payments to customers upon a bank collapse.
However, the PRA said HSBC Bank incorrectly marked 99% of its eligible beneficiary deposits as ‘ineligible’ for FSCS protection.
Unfortunately this episode doesn’t give me much faith in the banking system that is supposed to protect the ‘saver’. At least the PRA discovered the failings.
The Federal Open Market Committee (FOMC) held interest rates steady and indicated a willingness stop raising interest rates.
But a cut anytime soon is unlikely until inflation is brought fully under control and nearer to the Fed’s 2% inflation target.
The Federal Reserve sent a signal that it is finished with raising interest rates but made it clear that it is not ready to start cutting, just yet. It also said there are no plans yet to cut rates with inflation still running above the central bank’s target.
Federal Reserve interest targets and increases since 2022 to January 2024
Nasdaq 100 futures declined around 0.75%. S&P 500 futures were also down around 0.4%
In after-hours trading, shares of Alphabet dropped more than 5%, while Microsoft slipped 2% after the tech giants, part of the Magnificent Seven posted quarterly earnings. However, both companies achieved on both top and bottom lines. However, advertising revenue for Alphabet came short of analysts’ expectations.
Tech powerhouse
The tech sector powered the market rally from 2023 into 2024 and is now trading at a relatively high valuation of nearly 29 times its 2024 earnings, according to recent figures. Investors will need to see earnings expansion in order for the tech companies to be able to maintain their elevated levels.
Results were good but not good enough according to Wall Street as stocks were priced for perfection and that wasn’t delivered.
Even though the results were better-than-expected, investors are likely selling because they just want to take some money off the table.
Absolute perfection comes at a price on Wall Street.
