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.
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.
Elon Musk’s neurotech startup Neuralink implanted its device in a human for the first time on Sunday 28th January 2024, and the patient is ‘recovering well,‘ the entrepreneur said in a post on X, on Monday 29th January 2024.
The company is developing a brain implant that aims to help patients with severe paralysis control external technologies using only neural signals.
Neuralink began recruiting patients for its first in-human clinical trial in the autumn after it received approval from the U.S. Food and Drug Administration to conduct the study back in May 2023, according to a blog post.
Musk, in an X post on Monday 29th January 2024 said that Neuralink’s first product is called Telepathy.
If the technology functions well, patients with severe degenerative diseases such as motor neurone disease could someday use the implant to communicate or access social media by moving cursors and typing with their minds.
Norway’s giant sovereign wealth fund reported record profit of 2.22 trillion kroner ($213 billion) in 2023, supported by returns on its investments in technology stocks.
Despite high inflation and geopolitical unrest, the equity market in 2023 was strong, compared to a very weak year in 2022. It follows a record loss of 1.64 trillion Norwegian kroner for the whole of 2022, which the fund attributed to ‘very unusual’ market conditions at the time.
The ‘Government Pension Fund Global’, one of the world’s largest investors, reportedly said the fund marked its highest return in kroner ever, with the fund’s return on investment last year coming in at 16% for the year.
Norway’s sovereign wealth fund, the world’s largest, was established in the 1990s to invest the surplus revenues of the country’s oil and gas sector. To date, the fund has put money in more than 8,500 companies in 70 countries around the world.
Quiet luxury is a fashion trend that emphasizes understated elegance, timeless style, and high-quality materials.
It is the opposite of flashy logos, loud colors, and fast fashion. Quiet luxury is about investing in pieces that are durable, versatile, and refined.
Some examples of quiet luxury brands are Hermes, Prada-owned Miu Miu, Brunello Cucinelli, Compagnie Financière Richemont and Swatch Group, The Row, Totême, Tove and LVMH. Quiet luxury is also influenced by social changes, popular culture, and economic factors. It reflects a desire for simplicity, sophistication, and sustainability in a seemingly never-ending chaotic world.
Quiet luxury was one of last year’s biggest viral fashion trends, but unlike other short-lived fads on TikTok or Instagram, this one has made its way into investor portfolios and shown lucrative returns.
Luxury stocks have long been regarded by some as an effective hedge against inflation.
LVMH success – one way to invest in luxury
LVMH shares jumped more than 8% on Friday 26th January 2024, after the world’s largest luxury group posted higher-than-expected sales for 2023 and raised its annual dividend.
The owner of Louis Vuitton, Moët & Chandon and Hennessy, as well as brands including Givenchy, Bulgari and Sephora, on Thursday night 25th January 2024 reported sales amounting to 86.15 billion euros ($93.34 billion) for 2023, forecasts. This equated to a 13% growth from the previous year.
The result was boosted in particular by 14% annual growth in the critical fashion and leather goods sector, along with 11% growth in perfumes and cosmetics. Wines and spirits meanwhile posted a 4% decline.
Bernard Arnault is one of the top 10 wealthiest people in the world.
Is there room in your portfolio for a luxury brand?
Chinese tech giant Baidu will partner Samsung to integrate its Ernie chatbot capabilities into Galaxy S24 smartphones.
The collaboration with Baidu will facilitate Samsung’s latest Galaxy S24 smartphone series with advanced features such as advanced typesetting, real-time call translation and intelligent summarization.
Samsung recently revealed its latest Galaxy S24 lineup with AI-powered features as it attempts to overtake the Apple iPhone.
In 2023 Apple became the biggest smartphone vendor by shipments in China for the first time.
Last year, Honor, a spin-off from Chinese company Huawei, held the second spot with almost a 17% market share, followed by Vivo, Huawei and then Oppo.
One of the biggest changes in 2023 was Huawei’s return to the top five in China in the Q4. The iphone has been one of the world’s best-selling selling products of all time.
Since the introduction of the Appleiphone in 2007 by Steve Jobs, its inventor and company joint founder, it has gone on to sell 2.3 billion and has over 1.5 billion ‘active’ users. Not bad for a product that investors initially called ‘dead on arrival’ due to lack of interest and sales.
Nokia 3310
In 2007 the Nokia 3310 was the clear market leader and easily king of the mobile phone market. Nokia sold 7.4 million units in 2007 – Apple sold just 1.4 million. Nokia was the ‘go to product’. But not for long.
Oh my, how things have changed. Apple is the now the world’s best-selling product (not just the world’s best-selling phone) – with Nokia and many others left trailing in the dust.
Apple app store
It was the apps that done it; having a product that could be any number of different ‘products’ in one and held in your hand was a game changer – and that changed the world.
The rest is history.
Apple share price chart from 1984 (the year the Apple Macintosh was introduced)
Apple share price chart from 1984 (the year the Apple mac was introduced)
The U.S. economy grew at a much faster pace than expected in the final three months of 2023.
The U.S. easily avoided a recession that many had forecast as inevitable, the U.S. Commerce Department reported Thursday 25th January 2024.
Gross domestic product (GDP), a measure of all the goods and services produced, increased at a 3.3% annualised rate in the final quarter of 2023, according to data from the Commerce Department.
Core prices for personal consumption expenditures (PCE), a preferred measure by the Federal Reserve as a longer-term inflation calculation, rose 2% for the period, while the rate was 1.7%.
On an annual basis, the PCE price index rose 2.7%, down from 5.9% a year ago, while the core figure excluding food and energy posted a 3.2% increase annually, compared with 5.1%.
Good news
Inflation falling, GDP rising, stabilizing interest rates and no recession thus far the U.S. economy is looking rock-solid despite all the negativity.
Turkey’s central bank on Thursday 25th January 2024 hiked its key interest rate to 45%.
It comes amid an ongoing struggle against double-digit inflation for Turkey’s policymakers, with the rate hike the latest step in that ongoing fight.
30 Turkish Lira to 1 U.S. dollar
Inflation in Turkey increased nearly 65% year-on-year in December 2023, up from 62% in November, and the country’s currency, the lira, hit a new record low against the U.S. dollar earlier in January 2024 at 30 Lira to $1.
Analysts predict this will be the last hike for some time, especially with local elections approaching in March 2024
Bitcoin climbed to touch $49,000 after the SEC recently gave the go ahead for the Bitcoin ETF. The last time I checked it was at $39,000 (23rd January 2024). Oh, dear me – the dramatic pain of volatility.
Bitcoin volatility has increased after the launch of the first spot Bitcoin ETFs in the United States. The price of Bitcoin (BTC) rocked wildly, reaching a high of $49,000 and a low of $46,000 in just hours of trading.
Liquidation
This caused liquidations of millions in the Bitcoin market. Some analysts predict that the ETFs will bring more institutional investors and liquidity to the Bitcoin market, while others warn of the risks and challenges of the new investment vehicle.
Bitcoin ETFs are funds that track the price of Bitcoin and trade on stock exchanges, allowing investors to gain exposure to Bitcoin without buying or storing it directly.
Bitcoin chart – 3 months 24th January 2024 at 15:26
Bitcoin chart – 3 months 24th January 2024 at 15:26
Leaders at some of the world’s leading artificial intelligence (AI) companies are expecting a form of AI on a par with, or even exceeding human intelligence to arrive sometime in the near future. But what it will eventually look like and how it will be applied are unknown.
Artificial General Intelligence or AGI is coming soon
Leaders from OpenAI, Microsoft and Google’s DeepMind, and many other major tech companies debated the risks and opportunities presented by AI at the World Economic Forum in Davos, Switzerland in January 2024.
AI has become the talk of ‘town’ around the world through 2023, mainly due to the success of ChatGPT, OpenAI’s popular generative AI chatbot, brought to us by Microsoft. Generative AI tools, like ChatGPT, are powered large language models, algorithms trained on vast quantities of data, but are not AGI.
Executives at some of the world’s leading artificial intelligence companies see ‘artificial general intelligence,’ or AGI, a hypothesized form of AI with intelligence on a par or better than humans. This prospect is both exciting and worrying.
Concern
AI and AGI have created concern among governments, corporations and public consultation groups worldwide, owing to the risks around the lack of transparency of AI systems; social manipulation through computer algorithms; job losses due to increased automation; surveillance; and data privacy and worse… the lack of human control!
Extinction event possible
Many industry leaders in technology have warned that AI could lead to an ‘extinction-level’ event where machines become so powerful they get out of control and wipe out humanity.
A new powerful AI is coming but the techies have no clue as to what it will look like
Several prominent technology leaders, including Elon Musk and Steve Wozniak for example, have called for a pause in AI development, stating that a moratorium would be beneficial in allowing society to catch up.
Turing test
AI chatbots like ChatGPT have passed the Turing test, a test called the ‘imitation game,’ which was developed by British computer scientist Alan Turing to determine whether someone is communicating with a machine and a human. The one big area where AI is lacking is common sense.
It has been reported on many occasions, that the tech world is taking steps to ensure that the AI race doesn’t lead to a ‘Hiroshima moment.‘
China, which consumes over half of the global coal demand and produces over 4 billion tonnes of coal per year.
India, which consumes about 14% of the global coal demand and produces over 900 million tonnes of coal per year.
The United States, which consumes about 9% of the global coal demand and produces over 600 million tonnes of coal per year.
Japan, which consumes about 3% of the global coal demand but imports most of its coal.
These countries accounted for about 82% of the global coal production in 2021 according to 2021 data set. China alone produced more than half of the world’s coal, followed by India with nearly 10%.
Global coal use in 2023 hits few high
Global coal use in 2023 has hit a record high, surpassing 8.5 billion tons for the first time, on the back of strong demand in countries like India and China, said IEA. These countries are the world’s largest consumers of the dirtiest fossil fuel, and continued modernization puts their energy consumption on a rapid growth trajectory.
China
China and India’s growing economies will continue to fuel demand for coal even as they set ambitious renewable energy targets, according to experts.
While China is the world’s largest energy consumer, India is ranked third globally, and both countries are the top consumers of coal as they strive to fuel economic growth.
Global coal usage in 2023hit a record high, surpassing 8.5 billion tons for the first time, on the back of strong demand in emerging and developing countries such as India and China, IEA noted in a recent report.
China’s electricity sector has been in the throes of a clean revolution over the past few years, with an almost five-fold growth in wind and solar generation since 2015. As a result, the share of coal generation has fallen by 17 percentage points, from 78% in 2000 to 61% in 2022.
China has suffered from drought in recent years, which reduced hydroelectric power generation in its southern provinces. To maintain the necessary power output, the country had to turn to coal.
United States
By contrast, U.S., which is the world’s second largest consumer of coal, has seen a decrease in its usage of the fuel. According to the Institute for Energy Economics and Financial Analysis, the amount of coal that the superpower consumes each day recorded a 62% drop from 2.8 million to 1.1 million tons a day.
75% of India’s power is derived via coal-fired plants. Coal accounts for 61% of China’s power generation, even though the country is recognized as the indisputable leader in renewable energy expansion. It has been adding new projects to the grid almost as fast as the rest of the world combined in 2022 and has ambitions of becoming carbon neutral by 2060.
Annual average capacity additions by country and region, 2016-2023
India’s coal production rose to 893 million tons during the financial year ending March 2023, jumping nearly 15% from a year earlier. China’s raw coal production in 2023 went up by 2.9% compared with the same period in 2022.
There are no signs of a slowdown, with the IEA saying coal consumption in India and Southeast Asia is projected to grow significantly.
Coal won’t go!
But the lack of reliability of renewables means coal has still very much been a critical fallback option for the two countries.
Top five coal producing countries in the world
China: 4,126.0 million tonnes
India: 762.0 million tonnes
Indonesia: 614.0 million tonnes
United States: 523.8 million tonnes
Australia: 467.1 million tonnes
Five of the Greenest energy producers in the world
Sweden
Norway
Denmark
Finland
Switzerland
The greenest were based on these five criteria: carbon emissions, energy transition, green society, clean innovation, and climate policy.
Top countries by renewable energy production
China: 2,271.9 TWh (28.2% of total electricity)
United States: 804.8 TWh (20.5% of total electricity)
Brazil: 491.9 TWh (83.3% of total electricity)
Canada: 433.6 TWh (66.9% of total electricity)
India: 303.5 TWh (24.5% of total electricity)
Note: three of the world’s worst offenders of fossil fuel use are also in the top five for energy production by renewables – China, U.S. and India.
According to the Bloomberg Billionaires Index, Elon Musk is the wealthiest person in the world, with an estimated net worth of $243.46 billion USD as of 8th Jan 2024.
Musk is the founder and CEO of Tesla and SpaceX, X and X.ai as well as the co-founder of PayPal and Neuralink. He made his fortune from various business ventures, starting from a web software company called Zip 2 that he sold in 1999 for around $307 million. He also inherited some wealth from his father, who owned an emerald mine in South Africa.
Think about this for a moment
It’s a little difficult to imagine such wealth so, maybe think of it like this… If you had been given $10,000 every day since the birth of Jesus Christ, 2024 years ago – you would have accumulated some $7.4 billion (without interest and leap years etc).
So, Mr Elon Musk has a net worth of around $243 billion and you would have $7.4 billion and that equates to only 3% of his current wealth.
Or, if you had been given $10,000 every day since the pyramids were built in Egypt around 4500 years ago – you would have accumulated $16.4 billion. That’s still only 6.75% of Elon Musk’s current wealth.
One last thought
A recent report conducted by Oxfam calculated that just 5 of the world’s richest men (including Musk) are worth $869 billion between them.
Your $16.4 billion accumulated over 4500 years would equate to less than 2% of that combined wealth.
Now that’s crazy!
Final thought
8 of the top 10 current billionaires made their money in…technology.
Please note:figures are estimated, but it perfectly demonstrates my point.
The world’s five richest men have increased their combined fortune from $405 billion in March 2020 to $869 billion in November 2023, according to a report from Oxfam.
Wealth increased at a rate of $14 million per hour for 5 people
A report by the charity highlighted the wealth of Tesla CEO Elon Musk, LVMH boss Bernard Arnault and family, Amazon founder Jeff Bezos, Oracle founder Larry Ellison, and investor Warren Buffett.
Oxfam is calling for restrictions on ‘corporate power’ to reduce the massive inequality between the super-rich and the rest of society. Two of the suggestions to correct the inequality is through capping CEO pay and introducing taxes on permanent wealth and excess profits.
This report was released to coincide with the Davos meeting as the rich and wealthy business leaders and bankers gather.
Oxfam says
Fortunes of five richest men have shot up by 114% since 2020.
Oxfam predicts the world could have its first-ever trillionaire in just a decade while it would take more than two centuries to end poverty.
A billionaire is running or the principal shareholder of 7 out of 10 of the world’s biggest corporations.
148 top corporations made $1.8 trillion in profits, 52% up on 3-year average, and dished out huge payouts to rich shareholders while hundreds of millions faced cuts in real-term pay.
Oxfam urges a new era of public action, including public services, corporate regulation, breaking up monopolies and enacting permanent wealth and excess profit taxes.
Japan’s Nikkei 225 index set a new record in nearly 34 years last week, breaking the 35000 barrier for the first time since February 1990. Its all-time high of 38915 was hit in December 1989? That’s a 35 year old record!
Some analysts think that the long-term prospects for the Japanese markets look good.
The Nikkei 225 index is a benchmark of the Japanese stock market. It is composed of 225 large companies listed on the Tokyo Stock Exchange. The index has been fluctuating between 20000 and 30000 points for most of the past decade. It recovered from the lows of the global financial crisis in 2008 and 2009.
According to some market strategists, the Nikkei 225 index could reach 40000 points in the next 12 months. Fundamentals are ‘pointing in the right direction’ and investor interest in Japan is increasing.
This would breach the Nikkei’s all-time high of 38915 reached in December 1989. However, others suggest the rally will struggle somewhere between 36000 and the all-time high. This suggest that much of the good news is already priced in.
I think I could probably have guessed that too. The Nikkei hasn’t reached the original high of 1989 for 35 years!
After years of regulatory rejection, the U.S. Securities and Exchange Commission on Wednesday 10th January 2024 finally approved the Bitcoin EFT.
It has approved what are known as ‘spot’ Bitcoin Exchange-Traded Funds (ETFs), which can be purchased by anyone from pension funds to retail investors. This now means that some of the biggest asset managers in the world, including BlackRock and Fidelity can trade a crypto related ETF.
Now, instead of using a crypto asset exchange such as Binance, Coinbase or Kraken to purchase and hold a token like Bitcoin, traders can now trade a ‘spot’ Bitcoin ETF for direct exposure to the digital asset market.
It may also mean that investors could pay lower fees than they would if they bought the digital currency from a crypto exchange directly.
Basically, it is now cheaper than ever to buy Bitcoin – but is this positive for the long-term?
Crypto fans can now invest in Exchange-Traded Funds (ETFs) – but what exactly are they?
A Bitcoin ETF allows investors to buy a product that tracks the price of Bitcoin through the same method they already use to buy stocks and other existing products. This also reduces additional worry of managing their crypto related holdings, which typically involves maintaining a cryptocurrency wallet and a safe storage system to safeguard that investment.
But what exactly is an ETF?
ETFs are holdings or portfolios that allow investors to ‘bet’ on multiple assets, without having to buy any themselves. Traded on stock exchanges like shares, their value depends on how the overall portfolio performs in real time.
An ETF could comprise a combination of gold and silver bullion, for example, or a mixture of shares in both big technology and energy companies. Some ETFs already contain Bitcoin indirectly – but a spot Bitcoin ETF will buy the cryptocurrency directly, ‘on the spot’, at its current live price, throughout the trading day.
Bitcoin, the first cryptocurrency
Based on an idea by someone called, Satoshi Nakamoto, Bitcoin was the first cryptocurrency and remains the most valuable and famous to-date. Its price is often seen as a barometer for the whole industry of thousands of other coins (altcoins), tokens and products built on the same blockchain technology.
Art illustration of Bitcoin blockchain
And with an influx of new money, many expect a surge in interest in cryptocurrency technology in general.
How will the decision affect cryptocurrency adoption and is this decentralisation as originally intended?
Some say this decision shows the existing ‘old financial school’ establishment is finally taking Bitcoin seriously, at least as a speculative asset. For those who consider Bitcoin legitimate ‘digital gold’, what better proof could there be than the biggest wealth-management institutions flocking to buy, and now overseen by regulators?
Others say cryptocurrency is about rejecting traditional financial systems in favour of a decentralised, people-powered alternative. And investment bankers buying Bitcoin just to get rich on U.S. dollars is not what Satoshi Nakamoto had in mind.
But judging from the chatter on social media, the prevailing sentiment is expecting the new cash injection will make existing Bitcoin investors and owners rich.
What are the risks to future investors?
It is possible to lose all of your investment
The price of Bitcoin can change rapidly and often without warning or explanation – it is a volatile asset. So investors will need to be aware when investing in ETFs linked to a digital coin.
Art illustration of Bitcoin trading
But ETFs are often sold as high-risk, high-reward products anyway. It is EXTREMELY high risk – don’t do it if you don’t understand it and even if you do, or think you do – BE CAREFUL! These products can rip the shirt off your back!
Cyber-crime risk
Another potential risk is cyber-crime. Bitcoin and other cryptocurrencies have been the subject of huge and costly attacks that have seen crypto companies drained of sometimes hundreds of millions of dollars overnight. And if the likes of Blackrock become major holders of Bitcoin, their cyber-security will be tested in ways never before. Let’s hope their security systems are extremely robust.
Cost of mining coins
Another downside is the heavy cost to the environment is that Bitcoin use a massive number of powerful computers around the world, to process transactions on the blockchain ledger and to create coins – this is known as mining.
Renewable energy use is growing – but it remains to be seen how investment companies will tackle the environmental cost of Bitcoin.
Be careful
ETFs are here now – but BE CAREFUL when entering a Bitcoin related ETF trade or investment, or any type of ETF for that matter. If it goes wrong, you will lose your money, and quickly.
The Magnificent Seven is a term coined to describe the seven most valuable and popularly owned tech companies in the U.S. stock market.
It was also a 1960’s movie…
The Seven
Apple (AAPL)
The world’s largest software company, known for its iPhone, iPad, Mac, Apple Watch, AirPods, and other devices, as well as its services such as iCloud, Apple Music, Apple TV+, and App Store.
Microsoft (MSFT)
The world’s largest software company, known for its Windows operating system, Azure cloud services, LinkedIn social media platform, Office professional software suite, and Xbox gaming brand.
Alphabet (GOOGL)
The parent company of Google, the world’s leading search engine, as well as other businesses such as YouTube, Google Cloud, Google Maps, Google Ads, and Waymo.
Amazon (AMZN)
The world’s largest online retailer, as well as a leading provider of cloud computing services through Amazon Web Services (AWS), and a major player in digital entertainment through Amazon Prime Video, Amazon Music, and Kindle.
Meta Platforms (META)
The former Facebook, the world’s largest social media network, as well as the owner of other popular platforms such as Instagram, WhatsApp, Messenger, and Oculus.
Nvidia (NVDA)
The world’s leading manufacturer of graphics processing units (GPUs), which are used for gaming, artificial intelligence, cloud computing, and cryptocurrency mining, as well as other products such as Nvidia Shield, GeForce Now, and Omniverse.
Tesla (TSLA)
The world’s most valuable automaker, known for its electric vehicles, battery products, solar panels, and self-driving technology, as well as its visionary founder and CEO, Elon Musk.
Market dominance
These seven companies are not only dominant in their respective fields, but also at the forefront of innovation and growth in the tech sector. They collectively make up some 30% of the S&P 500 index and more than half of the Nasdaq 100 index.
They have also delivered impressive returns for investors over the past five years, with Nvidia and Tesla leading the pack with more than 800% gains. The Magnificent Seven are often compared to the FAANG stocks, which include four of the seven companies, but exclude Microsoft, Nvidia, and Tesla, and include Netflix instead.
Some analysts suggest that the Magnificent Seven capture the current state and future potential of the tech industry. But is it now time to rotate out of tech into other areas that have been neglected. I wouldn’t be surprised to see the bull market charge on but with other ‘less’ loved companies leading the way.
It has been calculated that the combined market cap value of these seven companies is some $9 trillion.
According the High Pay Centre, a thinktank that campaigns for fairer pay, the average pay of FTSE 100 chief executives is 103 times the £33,000 average salary for full-time UK workers.
This means that by lunchtime on the third working day of 2024, a FTSE 100 company boss will have been paid more than a UK worker’s full annual salary.
So, this means that it takes approximately just three working days for a CEO to earn the FULL years pay of an average worker in the UK.
The study also shows that the pay gap between bosses and workers has increased since 2020, as executive pay has risen by 9.5% while worker pay has risen by only 6%.
Shocking inequality
This is a disturbing example of inequality in the UK workplace, which has been exacerbated by the cost-of-living crisis and the strike action by many low-paid workers.
Some economists have called for UK government to intervene and reduce the unfair pay gap, such as putting workers on company boards, taxing wealth more fairly, and working with employers and unions to create better living standards.
Wealth creators
There is a place for wealth creators but not for greedy wealth takers. We need businesses to be successful to maintain good levels of employment. But unnecessary wealth greed has no place in our modern society.
The metaverse is a hypothetical concept that has not yet been fully realized, but many experts and companies are working on developing it. Mark Zuckerberg is one of these ‘believers’.
Future challenge
The metaverse is quite likely to happen in the future, as technology advances and demand for immersive and interactive online experiences grows. Ai will help develop the metaverse at a greater speed.
However, there are also many challenges and uncertainties that could affect the development and adoption of the metaverse, such as interoperability, privacy, regulation, social issues, and user safety. Therefore, it is hard to predict when and how the metaverse will become a mainstream platform. Some estimates suggest that it could take another 10 to 15 years for the metaverse to reach its full potential.
What does Meta have to say about the Metaverse?
Meta and Mark Zuckerberg think that the metaverse is the next evolution of social technology and the successor to the mobile internet. They believe that the metaverse will enable people to feel present and connected with others in immersive and interactive digital spaces, where they can socialize, learn, work, play, and create. They also think that the metaverse will be a collaborative and open platform, where different companies and creators can build and interoperate with each other.
Product investment
Meta is investing heavily in developing the technologies and tools that will power the metaverse, such as virtual and augmented reality devices, software, and content.
Mark Zuckerberg has shared his vision and enthusiasm for the metaverse in various interviews and events, such as the Protocol interview, Connect 2021 keynote and the Lex Fridman podcast.
He has also demonstrated some of the impressive features and capabilities of the metaverse, such as photorealistic avatars, mixed reality experiences, and NFTs. He has said that he wants Meta to be a social technology company that helps bring the metaverse to life together with the community.
Time will tell if the Metaverse really is the future. So far it has failed to fully establish the following as Facebook enjoyed in its early days.
Mark Zuckerberg and Meta will not give up and will likely make his version of the Metaverse a success, one way or another.
‘Jimi, don’t forget to take the headset off if you go out again!’
Federal Reserve officials in December concluded that interest rate cuts are likely in 2024, though they appeared to provide little in the way of when that might occur, according to minutes from the meeting released Wednesday 3rd January 2024.
FOMC meeting minutes
The rate-setting Federal Open Market Committee (FOMC) agreed to keep its rate steady in a range between 5.25% and 5.5%. Members indicated they expect 0.75% cut by the end of 2024.
Uncertainty
However, the meeting summary noted a high level of uncertainty over how, or even if, that will happen. Markets have reacted negatively to this news.
The minutes noted an unusually elevated degree of uncertainty about the policy path. Several members said it might be necessary to keep the funds rate at an elevated level if inflation doesn’t cooperate, and others noted the potential for additional increases.
But, despite this cautionary tone from Fed officials, markets expect the central bank to cut rates in 2024.
Dot plot
The dot plot of individual members’ indications released following the meeting showed that members expect cuts over the coming three years. This will bring borrow back to the 2% desired target.
The minutes indicated that clear progress had been made against inflation, with a six-month measure of personal consumption expenditures even indicating that the inflation rate has edged below the Fed’s 2% target.
FOMC Dot plot projections through 2026
However, the document also noted that progress has been uneven across sectors, with energy and core goods moving lower but core services still moving higher.
The Dot plot – what is it?
The dot plot, in relation to the FED or FOMC, is a chart that shows the projections of the Federal Reserve Board members and Federal Reserve Bank presidents for the federal funds rate, which is the interest rate that U.S. banks charge each other for overnight loans.
The dot plot is updated four times a year, after each FOMC meeting, and reflects the individual views of the policymakers on the appropriate level of the federal funds rate for the current year, the next few years, and the longer run.
The graph (dot plot) can help markets and the general public understand the Fed’s monetary policy stance and expectations for the future path of interest rates.
However, the dot plot is not a policy commitment or a forecast, but rather a snapshot of the opinions of the FOMC participants at a given point in time. The dot plot can change over time as new information and economic conditions develop.
Wasted wind power will add £40 to the average UK household’s electricity bill in 2023, according to a think tank.
That figure could increase to £150 in 2026, Carbon Tracker has estimated.
When it is very windy, the grid cannot handle the extra power generated. So, wind farms are paid to switch off and gas-powered stations are paid to fire up. The cost is passed on to consumers.
The government said major reforms will halve the time it takes to build energy networks to cope with extra wind power. Energy regulator Ofgem announced new rules in November 2023, which it said would speed up grid connections.
Bottleneck
Most of the UK’s offshore wind farms are in England. Dogger Bank, off the coast of Yorkshire is the largest in the world. Meanwhile, around half of onshore wind farms are in Scotland but most electricity is used in south-east England.
Carbon Tracker said the main problem in getting electricity to where it is needed is a bottleneck in transmission.
Wind curtailment
The practice of switching off wind farms and ramping up power stations is known as wind curtailment. This cost is passed on to consumers, it said. Carbon Tracker researches the impact of climate change on financial markets. It said since the start of 2023, wind curtailment payments cost £590m, adding £40 to the average consumer bill.
It warned the costs were set to increase adding £180 per year to bills by 2030. Wind farms are being built faster than the power cabling needed to carry the electricity.
Cable issue
‘The problem is, there are not enough cables. The logical solution would be to build more grid infrastructure,‘ said an analyst at Carbon Tracker. ‘It’s not even that expensive,’ he added, compared with mounting wind curtailment costs.
Industry group RenewableUK reportedly said that grid constraints, ‘reflect a chronic lack of investment in the grid.’
‘We need to move from a grid which is wasteful, to one that’s fit for purpose as fast as possible.’
However, historically it has taken between 10 and 15 years for new transmission cables to be approved.
Maybe more battery storage plants around the UK would help reduce the bottlenecks? As renewable power continues to expand, this would enable the extra power to be stored to use later.
This would be better than firing up antiquated fossil fuel power plants.
Are you selling online and making a little extra income?
Well, if you are, as from 1st January 2024 you will now fall foul of UK tax rules if you do not declare the income generated from these sales.
Companies like Etsy, eBay, Vinted, Airbnb etc. are obliged to collect and share details of such transactions with the tax authorities. That will allow HMRC to zero in on anyone who should be declaring the extra income but isn’t.
While HMRC was already able to request information from UK-based online operators, from the start of this year there are new rules that the UK has signed up to in cooperation with the OECD – Organisation for Economic Cooperation and Development, as part of a global effort to clamp down on tax evasion.
New rules
The new rules require digital platforms to report the income sellers are getting through their site on a regular basis.
It will apply to sales of goods such as second-hand clothes and items that have been handcrafted, but also services such as: food delivery, taxi hire, freelance work and accommodation lets or even renting out your driveway for parking.
Rule summary
Online sellers already paying tax do not need to alter what they are already doing.
Individuals have a £1,000 tax-free allowance for money made through property.
There is also a £1,000 allowance for trading income – for example, if you offer tutoring or gardening, or if you are selling new or second-hand items online.
People earning below those thresholds may not have to fill in a tax return, but should keep records in case they are asked for them.
The information will be shared between countries that have signed up to the OECD tax rules.
The UK government said the new rules would help it ‘bear down on tax evasion’, as sellers on digital platforms would now be treated more like traditional businesses.
