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China initiates investigation into Nvidia as the microchip battle rumbles on

Tech tug 'o' war

China has reportedly initiated a probe into Nvidia, the US computer chip manufacturer, over purported breaches of anti-monopoly regulations.

The company’s shares fell by over 3% following the announcement, signalling the latest development in the ongoing tech conflict between the U.S. and China over the profitable semiconductor market.

Over recent weeks, the U.S. imposed stricter restrictions on the sale of certain exports to Chinese firms, and the dispute over the industry is anticipated to persist as Donald Trump returns to the White House.

Established in 1993, the company initially gained recognition for producing computer chips designed to process graphics, especially for video games.

Today, the tech giant leads in developing chips that drive artificial intelligence (AI), boasting a market value exceeding $3 trillion.

Its increasing control over the market has drawn scrutiny from competition regulators in the U.S. and internationally. Recently, the firm confirmed that it had been approached by regulatory bodies globally, including those in the U.S., UK, European Union, South Korea, and China.

The business finds itself at the centre of escalating geopolitical and economic tensions between the U.S. and China, with both nations vying for supremacy in advanced chip technology.

Nvidia disclosed last month that sales to China, including Hong Kong, represented approximately 13% of this year’s revenue to date.

However, this figure has declined following Americas enhancement of restrictions on sophisticated technology exports to Chinese companies, citing national security concerns. Chinese state media reported that Beijing had initiated an investigation.

The inquiry alleges that Nvidia breached commitments established during its 2020 acquisition of Mellanox Technologies, a smaller entity.

This development follows the U.S.’s recent intensification of restrictions, affecting sales to 140 entities, including Chinese chip companies such as Piotech and SiCarrier, barring special authorisation.

In retaliation, China reportedly imposed stringent new regulations on the export of crucial minerals to the U.S., such as antimony, gallium, and germanium. Observers have highlighted the significance of these measures, noting they specifically target the U.S rather than imposing general restrictions.

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Google unveils ‘mind-boggling’ quantum computing microchip

Quantum computing power

Google has unveiled a new chip which it claims takes five minutes to solve a problem that would currently take the world’s fastest super computers ten septillion or 10,000,000,000,000,000,000,000,000 years to complete.

Google’s Quantum Leap: The Willow chip

In a groundbreaking achievement, Google has unveiled its latest quantum computing chip, named Willow. This new chip marks a significant milestone in the journey toward realising the full potential of quantum computing, a technology that promises to revolutionise numerous fields through its unparalleled processing power.

Unprecedented speed and efficiency

At the core of Willow’s innovation is its remarkable ability to perform computations at speeds previously deemed impossible. To put this into perspective, Willow can solve a complex problem in just five minutes – a task that would take the world’s most advanced supercomputers an astounding 10 septillion years to complete. This leap in speed and efficiency showcases the potential of quantum computing to tackle problems beyond the reach of classical computers.

This quantum power combined with artificial intelligence will become a formidable force in the world, potentially a foe!

Breakthrough in Quantum error correction

One of the most significant advancements with the Willow chip lies in its approach to quantum error correction. Traditionally, error rates in quantum computations have posed a substantial barrier to practical applications. Willow, however, exhibits an exponential reduction in errors as more qubits (quantum bits) are integrated into the system. This breakthrough in error correction brings the technology closer to practical, large-scale quantum computing, paving the way for more reliable and accurate results.

Potential applications and future prospects

While Willow represents a monumental step forward, experts caution that a fully functional, widely applicable quantum computer is still years away. Nonetheless, the potential applications of quantum computing are vast, ranging from breakthroughs in medicine and drug discovery to advancements in artificial intelligence and energy solutions. With continued investment and research, Willow could be the precursor to a new era of technological innovation, fundamentally altering how we approach complex problems.

Expert insights

Leading experts in the field commend Google’s achievement, highlighting Willow’s significance in the broader context of quantum computing development. While challenges remain, the unveiling of Willow underscores the rapid progress being made and the exciting possibilities that lie ahead. As we stand on the brink of a quantum revolution, Willow serves as a beacon of what the future may hold.

Conclusion

Google’s Willow chip is more than just a technological marvel; it represents the relentless pursuit of innovation and the profound impact that quantum computing can have on our world.

As research continues and technology evolves, Willow stands as a testament to the incredible possibilities that lie within the realm of quantum physics.

Quantum computers operate on a fundamentally different principle than the computer in your phone or laptop. They utilise quantum mechanics, which governs the peculiar behaviour of particles at the smallest scales, to solve problems much more quickly than conventional computers.

The hope is that quantum computers will one day accelerate complex tasks, like the development of new medications. However, there are concerns that this power could be misused, such as breaking certain forms of encryption that safeguard sensitive information.

Google shares climbed 6% after the announcement.

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UK business confidence falls to lowest level in almost two years after Labour budget

In November 2024, business confidence in the U.K. dropped to its lowest point since January 2023, as reported by BDO, a business advisory and accountancy firm.

Concurrently, KPMG noted that UK job vacancies decreased at the quickest pace since the pandemic began. This downturn coincides with warnings from businesses that the Labour Party’s ‘pro-growth’ budget could exacerbate inflation and decelerate hiring.

Tax increases do not fit well with a ‘pro-growth’ agenda. Also, GDP predictions made by the UK chancellor for 2025 through 2027 are lame.

The Labour budget has notably affected U.K. business confidence for a variety of critical reasons:

  • Tax Increases: The budget introduced a substantial hike in National Insurance contributions for employers, raising the rate to 15% on salaries above £5,000. This increase has led to concerns about higher operational costs, which many businesses fear will result in job cuts and reduced investment.
  • Minimum Wage Hike: The budget also included an inflation-busting increase in the minimum wage. While this aims to improve living standards, it has added financial pressure on businesses, particularly those in sectors with tight margins like retail and hospitality.
  • Economic Uncertainty: The combination of these measures has created a sense of economic uncertainty. Businesses are worried about their ability to absorb these additional costs, leading to a decline in overall optimism.
  • Investment Concerns: The increased costs have forced many businesses to reconsider their investment plans. Some have already announced cuts to expansion projects and other growth initiatives.
  • Next Increase: in public workers pay looms nigh.

These factors have collectively contributed to a significant drop in business confidence, with many firms bracing for a challenging economic environment ahead

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Bitcoin breaks the $100,000 barrier

In a historic moment for the cryptocurrency world, Bitcoin has finally breached the $100,000 mark.

This milestone, reached on 5th December 2024, signifies a notable triumph for Bitcoin enthusiasts and investors who have endured the market’s volatility over the years.

The cryptocurrency value surge past $100,000 followed Donald Trump’s election as President of the United States. Trump’s favorable stance on crypto and his commitment to deregulate the sector are believed to have enhanced investor confidence. The momentum was further increased by his decision to nominate Paul Atkins, a recognized proponent of cryptocurrency, as the new chairman of the Securities and Exchange Commission (SEC).

Since the creation of the first Bitcoin ETF there have been massive inflows invested in this asset helping to push Bitcoin ever higher.

Bitcoin’s ascent to $100,000 has been tumultuous. Beginning the year at approximately $38,505, the cryptocurrency has experienced an impressive 155% increase to date. The surge was especially notable in the fortnight after Trump’s victory, with Bitcoin’s value soaring by about 45%.

Bitcoin’s ascent has triggered a ripple effect throughout the wider cryptocurrency market, now valued at a combined $3.78 trillion. This upsurge has reinforced Bitcoin’s preeminence in the digital asset arena and garnered considerable interest from institutional investors.

Despite the festive atmosphere, some analysts warn that Bitcoin’s well-known volatility is still worrisome. Although numerous investors have realized significant profits, the asset’s high-risk profile may not be appropriate for all. Nevertheless, the prevailing mood within the cryptocurrency community is one of optimism, fueled by the expectation that the incoming administration will create a regulatory climate more conducive to digital assets.

Bitcoin’s record-breaking streak continues, signaling a bright future for the renowned cryptocurrency. Its evolution from a peer-to-peer electronic cash system to a trillion-dollar asset highlights the revolutionary impact of blockchain technology.

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U.S. stocks have a November to remember as Dow touches 45,000

High Dow

On Friday 29th November 2024, the Dow Jones reached a new record high, closing at 44,910 points after breaching 45,000 temporarily

This formed part of a wider market surge that led the S&P 500 and Nasdaq Composite to also hit record peaks. It concluded a remarkable month for the stock market, marked by the Dow achieving its most substantial monthly gain of the year, all thanks to Trump winning the U.S. election.

In November, the S&P 500 experienced a 5.73% rise, and the Dow Jones Industrial Average recorded a notable 7.54% increase, both marking their most robust monthly performances for the year. Concurrently, the Nasdaq Composite enjoyed a 6.21% surge, its largest monthly gain since May.

Recently, a host of factors have pumped up investors’ sentiment for stocks. 

The presidential election concluded with Donald Trump decisively securing the presidency. This eliminated any uncertainty, which is often disliked by investors. Additionally, Trump’s support for the stock market, tax cuts, cryptocurrency, and deregulation is well-received by investors.

The U.S. economy expanded at an annualised rate of 2.8% in the third quarter. Although the gross domestic product is projected to grow by 1.31% in the fourth quarter, this still signifies an expansion, countering concerns of a potential recession hitting the U.S. economy.

Even a slowing growth rate can have its advantages. It provides the U.S. Federal Reserve with greater motivation to implement a second rate cut this year at its December 2024 meeting, potentially boosting economic activity.

Moreover, the seasonal strength of stocks in November 2024 has infused investors with a sense of optimism.

Entering December 2024, it’s challenging to disregard the current bull market, given the favourable conditions.

U.S. stocks are experiencing a robust year-end rally, partly due to short sellers being compelled to purchase stocks to close their positions as the year concludes.

This surge of buying could propel the S&P 500 to reach 6,300, suggesting a 5% increase for December 2024 and a 32.1% rise throughout 2024, surpassing the 24.2% gain seen in 2023.

Additionally, there’s the significant boost in cryptocurrency values, often referred to as the ‘Trump pump,’ – and this too is currently underway.

Dow Jones one-day chart as of 29th November 2024

Dow Jones one-day chart as of 29th November 2024
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Bitcoin’s flirt with $100,000 may be one bitcoin too far

Bitcoin

Bitcoin flirted with the $100,000 mark, coming within less than $1,000 of that psychological threshold. However, it failed to breach this peak, falling back to as low as $90,702. on Tuesday 26th November 2024. It has since rallied, trading at approximately $96,697 early on 29th November 2024. But still off the $100,000 barrier.

Investors taking profits

One factor contributing to the fall was investors capitalising on Bitcoin’s exceptionally high price, which increased the supply of Bitcoin. Long-term holders began to release substantial quantities of Bitcoin during the recent surge.

However, there are deeper reasons why some strategists remain uncertain about Bitcoin’s ability to reach the six-figure milestone. The $100,000 mark seems to have become a significant obstacle, if not an outright barrier, to further increases.

Leveraged to the hilt

Indeed, the recent surge in Bitcoin’s value could be instilling a misleading sense of confidence among investors. Viewing Bitcoin as a speculative bet or a means to achieve returns, it appears that investors are flocking to Bitcoin primarily for potential capital gains rather than its intrinsic value or practical applications.

The recent introduction of options for spot Bitcoin exchange-traded funds could be influential. Options provide investors with a way to speculate on Bitcoin’s price fluctuations without the need to invest in Bitcoin directly.

It’s leveraged to the hilt and there most likely will be a correction anytime soon.

That being said, a correction does not equate to lasting deflation. Should even a portion of U.S. President-elect Donald Trump’s commitments to the cryptocurrency sector materialise, the $100,000 mark might not represent a peak, but merely another milestone that Bitcoin surpasses during its triumphant ascent.

But remember, in my opinion and for what it’s worth – it is just a punt, not an investment.

Bitcoin one-day chart as of 29th November 2024 (11:16 am)

Bitcoin one-day chart as of 29th November 2024 (11:16 am)
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U.S. Fed’s preferred inflation measure rises to 2.3% 

U.S. inflation

The Personal Consumption Expenditures (PCE) price index announced 27th November 2025, rose by 0.2% monthly, matching a 12-month inflation rate of 2.3%, aligning with expectations.

Core U.S. inflation recorded more robust figures, climbing 0.3% monthly and reaching an annual rate of 2.8%, but also in accordance with forecasts.

Consumer spending increased by 0.4% monthly, as expected, while personal income surged by 0.6%, exceeding the estimated 0.3%.

The Federal Reserve is now likely searching for economic clues on how to proceed at its next interest rate meeting.

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“Let us be grateful to the people who make us happy; they are the charming gardeners who make our souls blossom.” – Marcel Proust

Flower garden

Marcel Proust (1871-1922)

He was a French novelist, essayist, and critic, best known for his monumental work “In Search of Lost Time” (originally titled “À la recherche du temps perdu”).

This seven-volume novel, published between 1913 and 1927, is considered one of the greatest achievements in modern literature1. It explores themes of memory, time, and society in late 19th- and early 20th-century France.

Proust’s writing is known for its intricate style and deep psychological insight. His work has had a lasting impact on literature and continues to be studied and admired today.

See Wikipedia for more information.

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Deflation worries linger as China’s industrial profits reportedly fall by 10% in October 2024

China economy

In October 2024, China’s industrial profits fell by 10% compared to the previous year, indicating that the stimulus measures have not yet countered the downturn in corporate earnings.

This decline represents the third consecutive month of falling profits, succeeding a 27% year-on-year drop in September 2024, which was the most significant decrease since March 2020.

Industrial profits serve as an important indicator of the financial health of China’s factories, mines, and utilities.

For the first ten months, profits at China’s industrial companies saw a 4.3% reduction from the previous year, as reported by the National Bureau of Statistics of China on Wednesday 27th November 2024. This is in contrast to a 3.5% decrease reported up to September 2024.

The statistics bureau reportedly noted that the less severe decline in October 2024 was due to the application of Beijing’s stimulus measures.

The second-largest economy in the world expanded at its most modest rate in the third quarter since early 2023, struggling with subdued domestic consumption and an extended slump in the housing market.

However, retail sales in October 2024 exceeded forecasts with a 4.8% increase compared to the same period last year, and there was an improvement in the unemployment rate.

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60 British inventions for the world

UK inventions

The United Kingdom has given the world an impressive array of groundbreaking inventions that have transformed various aspects of modern life

From Isaac Newton’s reflecting telescope in 1668 to Frank Whittle’s jet engine in 1937 and Tim Berners-Lee’s creation of the World Wide Web in 1989.

British inventors have continually pushed the boundaries of science and technology. The development of penicillin by Alexander Fleming in 1928 revolutionised medicine, while Michael Faraday’s work on the electric motor and electromagnetic induction laid the foundation for modern electrical engineering.

Innovations like the steam engine, the world’s first underground railway, stainless steel, and the hovercraft have significantly advanced transportation and industry.

Contributions such as the structure of DNA by Francis Crick and James Watson, the MRI scanner by Sir Peter Mansfield, and the vaccination by Edward Jenner have had profound impacts on health and science.

These inventions reflect the ingenuity and creativity that have positioned the UK as a leader in innovation and progress.

Top 60 list of British inventions – in no particular order

The Reflecting Telescope (Isaac Newton, 1668)

The Seed Drill (Jethro Tull, 1701)

The Steam Engine (Thomas Savery, 1698; improved by James Watt, 1765)

The World’s First Underground Railway (The Tube) (1863)

Penicillin (Alexander Fleming, 1928)

The Jet Engine (Frank Whittle, 1937)

The Electric Light Bulb (Joseph Swan, 1879)

The World Wide Web (Tim Berners-Lee, 1989)

Stainless Steel (Harry Brearley, 1913)

The Electric Motor (Michael Faraday, 1821)

The First Programmable Computer (Charles Babbage, 1837)

The Thermos Flask (Sir James Dewar, 1892)

Television (John Logie Baird, 1925)

Vaccination (Edward Jenner, 1796)

The Steam Locomotive – (George Stephenson, 1814)

The Lawnmower (Edwin Budding, 1830)

The Hovercraft (Christopher Cockerell, 1955)

The Safety Bicycle (John Kemp Starley, 1885)

The Cat’s Eye Road Reflector (Percy Shaw, 1934)

The Structure of DNA (Francis Crick and James Watson, 1953)

Concorde (British and French collaboration, 1969)

The Fax Machine (Alexander Bain, 1843)

The Electric Transformer (Michael Faraday, 1831)

Electromagnetic Induction (Michael Faraday, 1831)

Radar (Sir Robert Watson-Watt, 1935)

The Spinning Frame (Richard Arkwright, 1769)

The MRI Scanner (Sir Peter Mansfield, 1971)

The ATM (John Shepherd-Barron, 1967)

The Marine Chronometer (John Harrison, 1761)

The Tin Can (Peter Durand, 1810)

The Hydrogen-Oxygen Fuel Cell (Sir William Grove, 1839)

The Floating Breakwater (Sir Samuel Bentham, 1804)

The Sinclair ZX80 (First Affordable Home Computer) (Sir Clive Sinclair, 1980)

The Universal Joint (Robert Hooke, 1667)

The Submarine Periscope (Sir Howard Grubb, 1914)

The Identity Card System (Sir Edward Henry, 1916)

The Collapsible Baby Carriage (Owen Maclaren, 1965)

Thermal Insulation (Lord Kelvin, 1894)

The Jet Engine (Sir Frank Whittle) – successfully tested in 1941

The Jet Engine Afterburner (Sir Frank Whittle, 1946)

Carbon Fibre (Sir Harold Kroto, 1961)

The Modern Ship Propeller (Francis Pettit Smith, 1836)

Automatic Windshield Wipers (Gladstone Adams, 1921)

The Computer From early mechanical computers to modern electronic computers by Charles Babbage, ADA Lovelace (1842) to modern electronic computers – Sir Clive Sinclair

The Fire Extinguisher (George William Manby, 1818)

The Postage Stamp (Rowland Hill, 1840)

The Flushable Toilet – Sir John Harrington (1596) – (Thomas Crapper, 1861)

Torpedo (Robert Whitehead, 1866)

The Triple Expansion Steam Engine (Arthur Woolf, 1804)

The Bicycle – Kirkpatrick Macmillan (1842)

IVF – Robert Edwards, Patrick Steptoe & Jean Purdy

The Telephone – Alexander Graham Bell (1876)

The Cat’s Eye – Percy Shaw (1934)

Pneumatic Tyre – Robert William Thompson (1847)

The Refrigerator – William Cullen (1755)

The Steam Engine – Thomas Newcomen (1712)

Cement – Joseph Aspdin (1842)

The Thermos Flask – Sir James Dewar (1892)

The Cat Flap – Sir Isaac Newton

The above are just a few examples of British ingenuity and creative inventive ability.

The UK is renowned for its inventiveness and continues to have a wealth of contributions to offer the world

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Has BIG tech just bought the most pro-crypto U.S. Congress ever?

DOGE

In a significant turn of events, the 2024 U.S. elections have ushered in what many are calling the most pro-crypto Congress in history.

The significant shift in political dynamics is largely due to the substantial financial support from the cryptocurrency industry, which has strategically funded political campaigns to foster a legislative environment favourable to digital assets.

Political Action Committees

Recognising the existential threat of strict regulations, the cryptocurrency industry has deployed unprecedented resources to sway election outcomes. Data from the Federal Election Commission reveals that crypto-related Political Action Committees (PACs) and other industry groups have raised over $245 million. These funds were channeled to endorse candidates favourable to the industry’s interests and to challenge those critical of it.

Money talked

A prominent example is Bernie Moreno’s election to the U.S. Senate. Moreno, a former car salesman with minimal political experience, succeeded in defeating Democratic incumbent Senator Sherrod Brown, a known critic of the cryptocurrency industry. Moreno’s campaign was bolstered by an impressive $40 million from the cryptocurrency sector, underscoring the industry’s commitment to influencing legislative representation.

Powerful crypto lobby

The crypto lobby’s success is credited to its tactical approach, which extends beyond post-election lobbying to active involvement in the electoral process. This strategy included targeting pivotal states and backing candidates supportive or neutral toward the industry. Consequently, Congress now includes nearly 300 pro-crypto legislators, granting the sector substantial sway over legislative priorities.

The ramifications of this development are significant. With a Congress inclined toward cryptocurrency, the industry anticipates more accommodating regulations and clearer guidelines on matters like digital asset classification and the creation of regulatory sandboxes. This shift could be a catalyst for innovation and expansion within the cryptocurrency domain.

Concerns

This development has also sparked concerns regarding the impact of money on politics. Critics contend that the cryptocurrency industry’s electoral success highlights the urgency for campaign finance reform to curb the potential of industries to purchase political sway. They caution that such tendencies could compromise the democratic process and result in policies that prioritise special interests above the common welfare.

As the newly elected Congress assumes power, attention is focused on its approach to the intricate domain of cryptocurrency regulation. The ensuing months are pivotal in deciding if the industry’s political contributions will yield substantial advantages for the cryptocurrency sector and its participants.

Whichever way you package this, for or against – money buys political influence. The bias is obvious. It likely will be a bad thing in the long-term. Let’s hope it helps the people and not just the profits of big business.

We’ll see.

And don’t forget, the biggest tech and business influence in the new U.S. government (to be) just happens to be the richest person in the world, Elon Musk. He’s in charge of the newly announced Department of Government Efficiency – DOGE.

Business and not just money is in charge of the U.S. government with very few obstacles in its way!

This ‘influential’ purchase is big!

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Securities and Exchange Commission Chair Gary Gensler’s resignation is good news for crypto

Bitcoin

Bitcoin reaches a new record high, nearing the $100,000 mark as the cryptocurrency rally marches on.

Other altcoins are rallying too, basking in the aftermath of the SEC resignation news.

Gary Gensler, Chair of the Securities and Exchange Commission, will step down on 20th January 2025 (Trumps inauguration day), an announcement made by the SEC on Thursday 21st November 2024, which clears the path for President-elect Donald Trump to appoint a more crypto friendly successor.

During Gensler’s tenure, the SEC engaged in numerous high-profile conflicts with the cryptocurrency industry, including a lawsuit against Grayscale over Bitcoin ETFs – a case Grayscale won, leading to a significant influx of capital into these funds since their inception in January.

The SEC has also pursued legal action against several major digital asset firms concerning their crypto dealings, such as Coinbase, with varying outcomes.

Additionally, the SEC has been in conflict with Tesla CEO Elon Musk, particularly regarding his acquisition of the social media company Twitter, now known as X, for $44 billion in 2022. The commission is currently seeking sanctions against Musk for failing to appear for court-mandated testimony related to this matter.

Under Gensler’s leadership, the SEC has scrutinised Musk’s adherence to a previous settlement that mandated a securities lawyer review certain Tesla-related social media posts before they were published.

Musk, a vocal critic of the SEC who supported Trump’s election campaign with his time and a donation of at least $130 million and campaigned alongside him, is poised to join the incoming administration as a co-leader of the newly proposed Department of Government Efficiency (DOGE).

With Gensler’s impending departure and the upcoming expiration of the terms for two other commissioners, Trump will have the chance to significantly influence the future composition of the SEC.

A green light for crypto investors, but a worry (maybe) for the retail trader long-term?

Bitcoin one-day chart as of 22nd November 2024 (09:49am GMT) – Snapshot

Bitcoin one-day chart as of 22nd November 2024 (09:49am GMT)

Bitcoin one-year chart as of 22nd November 2024 (09:51am GMT) – Snapshot

Bitcoin one-year chart as of 22nd November 2024 (09:51am GMT)
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Nvidia beats on Q3 earnings but shares still slide

Next generation AI chips

Is Nvidia competing with itself now?

Nvidia third-quarter earnings beat expectations, but shares dropped 2.5% in extended trading.

The company’s revenue surged 94% year on year to $35.08 billion in the quarter ended 27th October 2024.

Net income climbed 109% from a year ago to $19.3 billion. Sales of Nvidia’s next-generation chip Blackwell, will be limited by supply, not demand, the company reportedly said.

Nvidia didn’t disappoint in terms of third-quarter revenue and net income, but it wasn’t enough for Wall Street. The forecast for the fourth quarter indicates a year-over-year growth of approximately 70%, marking a deceleration from the 265% growth experienced in the corresponding period the previous year.

Nvidia has emerged as the main beneficiary of the current artificial intelligence surge. Its shares have almost tripled in 2024, positioning it as the most valuable publicly traded company.

Numerous end-customers of Nvidia, including Microsoft, Oracle, and OpenAI, have begun receiving the company’s latest AI chip, known as Blackwell.

Nvidia one-year share price chart as of 20th November 2024

Nvidia one-year share price chart

The share price decline appears to be due to reserved guidance for Q4, with Nvidia’s management anticipating supply challenges for its next-generation Blackwell GPU. Investors were hoping for a more optimistic forecast, but the cautious outlook was disappointing.

It’s interesting to see how even strong earnings can sometimes lead to a drop in share prices if the future outlook doesn’t meet investor expectations.

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Are U.S. Stocks Overvalued?

The U.S. stock market has been a topic of much debate among investors and analysts, especially regarding its valuation levels. As of the end of 2024, several indicators suggest that U.S. stocks might be overvalued.

Buffet indicator

One of the most watched metrics is the Buffett Indicator, named after the legendary investor Warren Buffett. This indicator compares the total market capitalisation of U.S. stocks to the country’s gross domestic product (GDP).

Historically, a ratio above 100% is considered overvalued. As of September 30, 2024, this ratio stands at approximately 208%, significantly above the historical average and suggesting that the market is strongly overvalued.

P/E and CAPE

Another important metric is the Price-to-Earnings (P/E) ratio, which measures the price of stocks relative to their earnings. The cyclically adjusted P/E ratio (CAPE), popularised by economist Robert Shiller, provides a long-term view by averaging earnings over ten years.

The CAPE ratio for the S&P 500 is currently around 35, well above the historical average of 16-17. This high level indicates that investors are willing to pay a premium for stocks, which could be a sign of overvaluation.

Several factors contribute to these elevated valuations. Low interest rates have played a significant role, making bonds less attractive and pushing investors toward stocks. Additionally, the rapid technological advancements and growth in sectors like technology, AI, and healthcare have driven up stock prices. Companies in these sectors have experienced significant revenue growth, leading to higher valuations.

High valuations

However, these high valuations come with risks. The market’s current levels are pricing in a lot of optimism about future growth and profitability. Any economic slowdown, policy changes, or unforeseen global events could trigger a market correction. Investors must remain cautious and consider the potential for volatility.

On the other hand, some analysts argue that the current valuation levels can be justified by the robust corporate earnings and strong economic fundamentals. They point out that the U.S. economy has shown resilience in the face of challenges, and many companies have adapted well to the changing environment.

Summary

In conclusion, while U.S. stocks are currently expensive and may be overvalued by historical standards, it’s essential to understand the underlying factors and potential risks.

Investors should stay informed, diversify their portfolios, and be prepared for possible market fluctuations. As always, a balanced approach to investing, considering both the potential rewards and risks, is crucial.

Always do your own and careful – RESEARCH! RESEARCH! RESEARCH!

An seek professional financial advice.

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UK inflation unexpectedly rises to 2.3% in October 2024

UK shoppers

The inflation rate, which measures price changes, hit 2.3% in the year to October 2024, a bigger-than-expected increase from 1.7% in September 2024.

The increase was in part due to an increase in the regulator-set energy price cap that took effect in October 2024, which is expected to increase energy price inflation through the winter.

The Office for National Statistics (ONS), said while higher energy costs had contributed, this increase was offset by falls in live music and theatre ticket prices.

October 2024 UK inflation

October 2024 UK inflation
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Trump rumour to relax U.S. vehicle self-driving rules pushes Tesla stock higher

Autonomous driving

Tesla shares enjoyed a Trump pump on Monday 18th November 2024 after reports that President-elect Donald Trump’s team intend to prioritise a federal framework for regulating autonomous vehicles within the U.S. Department of Transportation.

Elon Musk was a prominent advocate in the business sector for Trump’s re-election campaign leading up to this month’s elections.

Recently, Trump appointed Musk and former Republican presidential candidate Vivek Ramaswamy to head the newly established Department of Government Efficiency.

Tesla 5-year share price chart

Tesla 5-year share price chart

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Mega port opens in Latin America to Chinese fanfare

Container port

The inauguration of Chancay Port in Peru represents a significant development in China-Peru relations and is set to revolutionise trade facilities within Latin America.

This $3.5 billion mega port, opened by Chinese President Xi Jinping and Peruvian President Dina Boluarte, is a component of China’s Belt and Road Initiative (BRI) and seeks to improve connectivity between South America and Asia.

Located about 80 kilometres north of Lima, the deep-water port is anticipated to emerge as a significant trade hub, especially for commerce with China. Boasting a draft depth of 17.8 metres, the Chancay port is capable of hosting the largest container ships in the world, which is expected to considerably cut down shipping durations and logistical expenses.

The port has the potential to process over 1 million TEUs (twenty-foot equivalent units) each year, enhancing Peru’s position as a key logistical centre in the region.

Job creation

The Chancay Port is expected to generate over 8,000 jobs in the coming decade, aiding in the export of minerals such as lithium and copper from Chile and Peru. It will also facilitate the import of Asian electronics, textiles, and other consumer goods, further connecting Latin American markets with Asia.

Peruvian authorities see the port as a move towards transforming Peru into the ‘Singapore of Latin America’, boosting its role as a global trade centre.

The Chancay Port aims to rival other significant ports in the area, like Mexico’s Port of Manzanillo and California’s Long Beach, by offering direct routes to Asia and cutting shipping times by as much as 20 days.

Expansion

This progress highlights China’s expanding role in Latin America and its dedication to strengthening economic relationships within the region. The Chancay Port represents not only a conduit for commerce but also a sign of the increasingly close partnership between China and Latin America.

President Xi Jinping himself attended the inauguration of the Chancay port, an indication of just how seriously China takes the development.

There is a strong perception that the U.S. is losing ground in Latin America as China forges ahead with its Belt and Road Initiative (BRI).

The deep-water port also potentially carries military implications for the U.S. too.

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Trump U.S. election win drives gold price down and Crypto up!

Gold prices have fallen to near a two-month low as the dollar strengthens in the wake of Donald Trump’s election victory last week.

This downturn has halted the bullion’s rally, which had achieved a series of record highs over the past year. Gold has seen a decline in six of the seven most recent trading sessions following Trump’s win, interrupting its streak of record-breaking milestones over the last twelve months.

On the other hand, Crypto has relished the Trump pump with Bitcoin and many altcoins setting new all-time highs!

Gold price charts – 3 month and one-year snapshot as of: 15th November 2024 (08:10 GMT)

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UK growth slows – it’s the ‘budget’ stupid!

Low UK growth figures

The UK economy expanded by just 0.1% from July to September 2024, as announced in the most recent official data release.

The growth was less than anticipated, and the Office for National Statistics (ONS) reported that most sectors experienced subdued activity over the quarter.

Labour, having prioritised economic growth upon assuming power, found Chancellor Rachel Reeves expressing dissatisfaction with these figures, which represent the initial three months of the new administration.

Several economists have attributed the uncertainty surrounding the contents of October’s Budget as a factor impeding growth.

This impact was notably pronounced in September, when the economy saw a contraction of 0.1%.

Moreover, the government is contending with criticism from certain businesses that are opposed to the tax increases introduced in the Budget.

Whichever way you look at these figures; they’re utterly dire.

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U.S. inflation rate at 2.6% in October 2024 as expected

U.S. inflation

In October 2024, the U.S. consumer price index rose by 0.2%, bringing the annual inflation rate to 2.6%, aligning with expectations, according to the U.S. Bureau of Labor Statistics.

The core CPI, which excludes food and energy, saw a monthly increase of 0.3% and an annual rate of 3.3%, also in line with projections.

For the month, the consumer price index, assessing a range of goods and services, went up by 0.2%. This increment raised the year-over-year inflation rate to 2.6%, a 0.2% increase from September 2024.

These figures matched estimates. When food and energy were excluded, the core CPI’s monthly rise was even more significant, at 0.3%, with an annual rate of 3.3%, confirming the forecasts.

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Trump announces the new ‘Department of Government Efficiency’- DOGE – Dogecoin climbs over 150% on the news

DOGE

The purchase of Meme coins is often viewed as indicators of retail interest and the willingness to take risks in the cryptocurrency market. Increased activity in meme coins typically signals that retail investors are engaging and are inclined to speculate more aggressively on the risk spectrum.

Trump initially proposed the concept of an efficiency commission in September 2024. Since that time, Musk -who has previously referred to himself as the ‘Dogefather’ – is known for making public statements about the meme coin that affect its value, has posted on his social media platform X, referring to the commission as the ‘Department of Government Efficiency’ or ‘D.O.G.E.‘

Dogecoin’s relevance surged in 2021 due to Elon Musk’s endorsement and the continuous hype on social media, which became a significant catalyst for the cryptocurrency. In May of that year, Musk’s tweets propelled Dogecoin to its peak value around 67 cents, according to market analysis. However, his reference to Dogecoin as ‘a hustle’, caused its value to plummet.

Recently, Dogecoin’s value increased following the post-election announcement by President-elect Donald Trump about the establishment of the ‘Department of Government Efficiency‘, which he acronymized as ‘DOGE’ in his statement.

Elon Musk, CEO of Tesla, and Vivek Ramaswamy, the former Republican presidential candidate and co-founder of Strive Asset Management, have been appointed to lead this department.

According to Trump’s statement, their role will be instrumental in his administration’s efforts to dismantle government bureaucracy, reduce unnecessary regulations, eliminate wasteful spending, and reorganise federal agencies.

It’s time for D.O.G.E.

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Why has Sumsung fallen behind in the AI boom?

A Cartoon AI chip

Samsung’s struggle in the AI race

Samsung, previously a powerhouse in the semiconductor industry, has encountered significant hurdles in the AI competition, leading to a notable decline in market value. The company’s faltering stance can be attributed to a variety of factors, such as strategic errors, fierce competition, and swift technological progress in the AI field.

Missteps

A key factor in Samsung’s downturn in the AI sector is its insufficient investment in high-bandwidth memory (HBM) technology, which is vital for AI applications due to its ability to expedite data processing and enhance performance.

Although Samsung was once at the forefront of memory technology, it did not leverage the increasing demand for HBM, thus ceding ground to competitors such as SK Hynix. SK Hynix made significant investments in HBM and forged a robust partnership with Nvidia, an influential entity in the AI domain.

Competition

The AI sector is fiercely competitive, featuring key companies such as Nvidia, Google, and Microsoft, which are making substantial advancements in AI technology. Nvidia has notably become a frontrunner with its GPUs, crucial for AI training. Samsung’s struggle to match these developments has resulted in a decline in both market share and revenue.

Rapid technological advancements

The swift advancement of technology in the AI sector has presented challenges for Samsung. The company’s emphasis on conventional memory technology did not fully prepare it for the transition to AI-centric applications. With the rise of AI applications such as OpenAI’s ChatGPT, the need for sophisticated memory solutions surged, highlighting Samsung’s insufficient investment in High-Bandwidth Memory (HBM) as a notable shortcoming.

Financial implications

Samsung’s difficulties in the AI sector have significantly affected its finances. The company has seen a reported loss of around $122 billion in market value since July 2024, marking the most substantial drop among global chipmakers. This decline is largely due to Samsung’s challenges in adapting to the evolving AI industry and competing with its rivals.

Prospects

Despite facing challenges, Samsung is actively striving to advance in the AI domain. The company has recently introduced its next-generation Bixby AI, which utilizes large language model technology, positioning it to better contend with competitors such as ChatGPT and Google Gemini.

Additionally, Samsung is cultivating its proprietary AI model, named Samsung Gauss, with the goal of augmenting device functionality and elevating the consumer experience.

Samsung’s lag in the AI sector is due to strategic errors, fierce competition, and swift technological progress. Despite considerable financial setbacks, the company is vigorously pursuing new AI initiatives and investments to recover its standing in the industry.

The path forward is fraught with challenges, yet Samsung’s commitment to innovation and adaptation could enable it to regain its status as a frontrunner in the AI domain.

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Elon Musk wants to make Tesla a $25 trillion company by 2040

Autonomous vehicle

Elon Musk’s Vision for Tesla’s Trillion Dollar Future

Elon Musk, the visionary CEO of Tesla, has consistently set ambitious goals for the company. Among his most audacious claims is that Tesla could potentially become a multi trillion-dollar company and even reach a valuation of $25 trillion, largely driven by the deployment of robotaxis.

Robotaxi vision

Tesla’s robotaxi concept is centred around autonomous vehicles that can operate as self-driving taxis. These vehicles are equipped with Tesla’s Full Self-Driving (FSD) technology, which Musk believes will revolutionize transportation. By transforming Tesla cars into autonomous ride-sharing vehicles, the company could generate significant revenue without increasing the number of cars sold.

Projections

Musk’s financial projections are based on the immense potential of the robotaxi market

  1. Revenue Generation: Each Tesla vehicle could earn substantial income as a robotaxi. If Tesla owners opt into the robotaxi network, Tesla could take a share of the revenue generated from these rides.
  2. Cost Efficiency: Autonomous driving reduces the need for human drivers, leading to lower operational costs. This efficiency could make robotaxis more affordable for users and highly profitable for Tesla.
  3. Reduced pollution: will help meet green energy goals.
  4. Market Penetration: As autonomous technology matures, the adoption of robotaxis could grow rapidly, capturing a significant share of the global transportation market.

Market potential

The global ride-hailing market is already valued at hundreds of billions of dollars, and with the introduction of autonomous vehicles, this market is expected to expand further. Tesla’s early entry and continuous advancements in FSD technology position it to be a dominant player in this space.

Challenges

While the potential is enormous, there are several challenges and scepticism surrounding Musk’s projections

  1. Regulatory Hurdles: Autonomous vehicles must navigate a complex regulatory landscape. Approval processes and safety standards vary by region, which could delay widespread adoption.
  2. Technical Milestones: Achieving full autonomy is a significant technical challenge. Tesla’s FSD technology is still in development, and perfecting it for widespread use requires overcoming numerous technical obstacles.
  3. Market Competition: Tesla is not the only player in the autonomous vehicle market. Competitors like Waymo, Cruise, and traditional automakers are also investing heavily in autonomous technology.

Conclusion

Elon Musk’s vision of making Tesla a trillion-dollar and eventually a $25 trillion company through robotaxis is both bold and captivating. The success of this vision hinges on the successful deployment and adoption of autonomous driving technology. While there are significant challenges to overcome, Musk’s track record of defying odds and achieving groundbreaking innovations keeps the possibility within the realm of achievable dreams.

The future of transportation, as envisioned by Musk, could fundamentally reshape how we move and how Tesla thrives as a pioneer in autonomous mobility.

Tesla’s future does seem promising with the introduction of Optimus, their humanoid robot, as well as their advancements in solar energy and battery technology.

The future looks very bright for Tesla.

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Bitcoin breaks $82,000 with billions bet on it reaching $90,000

Bitcoin

Bitcoin has achieved a new all-time high, surpassing $82,000, and has continued to climb.

This suggests that investors are confident the world’s leading cryptocurrency will gain even more, following U.S. elections that resulted in a significant number of pro-crypto candidates being elected.

During his campaign, President-elect Donald Trump vowed to make the United States the ‘crypto capital of the world.’

Trump reportedly committed to several initiatives for the crypto community, such as creating a national cryptocurrency reserve using $16 billion in Bitcoin accumulated by the U.S. government from asset seizures and from reducing interest rates.

Generally, an easing of monetary policy aligns with an increase in cryptocurrency prices, as it lowers the cost of borrowing money.

The Fed recently lowered U.S. interest rates for the second time this year.

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U.S. stocks just keep hitting new highs!

U.S. stocks up!

The U.S. stock market sunbathed in another day of records on Friday 8th November 2024.

The Dow and S&P 500 recorded their best week in a year after Trump’s election win.

The Dow Jones Industrial Average rose 259.65 points to close at 43,988.99 and broke the 44,000 barrier in intraday trading. The Dow Jones traded above 44,000 for the first time ever during the session.

The S&P 500 closed at 5,995.54, after briefly trading above 6,000 – a first for the S&P 500.

The tech-heavy Nasdaq Composite slowed at 19,286.78 but set an intraday record high as well.

Dow Jones one-year chart as of: 8th November 2024

Dow Jones one-year chart as of: 8th November 2024

S&P 500 one-year chart as of: 8th November 2024

S&P 500 one-year chart as of: 8th November 2024