Election and UK politics
It started off soggy and now it’s just… wet!
“Let me introduce you to my secret election weapon – the election protection device – it can even stop rain!”
UK GDP flatlines – not so helpful for Sunak and his election campaign
In April 2024, the U.K.’s economic growth came to a standstill, figures released on Wednesday 12th June 2024 indicated, putting a pause on the subdued recovery from the previous year’s recession just weeks before the UK election.
Analysts had anticipated growth a levelling off following a 0.4% expansion in March 2024.
Over a longer period however, the outlook was slightly more positive, with a 0.7% increase in gross domestic product (GDP) in the three months leading up to April 2024.
The construction sector saw a 1.4% decrease, marking its third consecutive decline, and production output fell by 0.9%. However, the U.K.’s dominant service sector witnessed growth, with a 0.2% increase.
The UK had managed modest growth each month in the first quarter of the 2024 as the country emerged from a mild short technical recession.
Nasdaq and S&P 500 hit new all-time highs as Fed feeds scraps to the AI frenzy!
The S&P 500 soared to a new high, surpassing 5400 for the first time on Wednesday 12 June 2024, following the Federal Reserve’s latest policy statement and the May 2024 inflation report, which suggested a softening of inflationary pressures.
The S&P 500 index rose by 0.85%, closing at around 5421 while the Nasdaq Composite advanced 1.53%, finishing at 17608.
Both the S&P 500 and Nasdaq reached unprecedented levels and set closing records on Wednesday 12th June 2024. Conversely, the Dow Jones Industrial Average marginally declined by 0.09%, or around 35 points, to settle at 38712.
S&P 500 at new all-time high 12th June 2024
Nasdaq Composite at new all-time high 12th June 2024
The Federal Reserve maintained the interest rates, aligning with widespread expectations. The Fed also acknowledged some progress on inflation. Modest further progress has been made toward the Committee’s 2% inflation goal and this was more than enough coupled with the recent jobs report to push U.S. markets even higher.
A tiny glimpse of the ‘2% inflation future’ was all it took to send markets on an AI led feeding frenzy to push the S&P 500 and Nasdaq to new all-time highs.
One caveat though, the Fed’s recent forecasts predict only one rate reduction this year, a decrease from the three rate cuts anticipated earlier in 2024.
It was enough to propel markets to fresh all-time highs!
Apple’s stock reaches a record high following the unveiling of its AI software
Apple’s shares reached a new record high of approximately $207 per share on Tuesday 11th June 2024, surpassing the previous record set in December.
At its annual developer conference on Monday 10th June 2024, the company launched its highly anticipated venture into AI. Apple is playing catch-up in the AI race and this announcement cheered its loyal followers.
Analysts predict that the introduction of new AI features will prompt consumers to update their devices, as these features are exclusive to the latest models.
This is the perfect business model – new products driven by new features, this time it’s ‘AI’ for Apple Intelligence. I wish I thought of it – ‘A‘ for Apple and ‘I‘ or Intelligence. Not just any intelligence, this is Apple intelligence.
So, now we have Apple AI – let’s see what Apple’s version of AI really is.
Apple share price one year chart hitting $207 on 11th June 2024
S&P 500 and Nasdaq close at new all-time highs again
The S&P 500 and Nasdaq Composite reached new closing highs on Tuesday 11th June 2024, propelled by Apple as the tech giant’s stock hit a record itself.
The S&P 500 index climbed to a new high to close at 5375, while the Nasdaq Composite finished the day at 17343. Both indices also hit new intraday highs. However, the Dow Jones Industrial Average fell by around 120 points to close at 38747.
S&P 500 reaches new all-time high on 11th June 2024
Nasdaq Composite hits new all-time high on 11th June 2024
Investors seemed to be cashing in on Nvidia, a leader in artificial intelligence, and shifting focus to Apple, which recently introduced new features likely to drive a surge in iPhone upgrades.
Apple’s stock reached a new high during the trading session, its first since December 2023, with around a 7% increase. Nvidia’s stock declined by 0.7% as some profit taking ensued.
“Plenty of potholes, poo, party politics and politicians but where are the policies to fix the real issues?”
‘Just a load of… p’s!’
Probably just unachievable pledges and false ‘election’ promises in the manifesto… again!
Apple finally now has AI and it’s called: Apple Intelligence (AI)
Apple has entered the artificial intelligence race with the announcement of its version of AI – Apple Intelligence on Monday 10th June 2024, in its attempt to catch up in the AI race.
Reportedly to use it on your phone, you’ll need at least the high-end iPhone 15 Pro from this year’s lineup.
According to Apple’s website, Apple Intelligence will also be compatible with devices equipped with the M1 chip, including the iPad Air, iPad Pro, and Macs.
Apple Intelligence, set to launch in beta this autumn, will offer a variety of features. It will be able to proofread and rewrite your text in different tones, create personalized emojis known as ‘Genmoji,‘ and search for specific messages on your iPhone.
Additionally, it will summarize and transcribe phone calls, manage priority notifications, and integrate OpenAI’s ChatGPT for enhanced Siri responses.
Nothing new here then, just AI features already available elsewhere. Hopefully it will have a decent Apple AI make-over when it finally and fully arrives across all Apple products and platforms.
Apple isn’t leading in AI… yet – it’s just following for now!
Raspberry Pi tech IPO to raise £166 million in London listing debut
The British computing startup Raspberry Pi is aiming to raise £166 million ($211.2 million) from its initial public offering in London on Tuesday 11th June 2024.
The company, known for its compact single-board computers, has set its share price at 280 pence each. Conditional dealing of Raspberry Pi shares will commence on Tuesday, allowing specific investors, such as institutional buyers, to begin trading.
Based on the pricing of its shares, the company is valued at around £542 million.
This is a rare win for London’s stock exchange which has struggled to attract technology listings in recent time, losing out to the U.S.
In early morning trading Tuesday 11th June 2024 – Raspberry Pi shares climbed over 30%
Microsoft rolls back on AI feature that captures screenshots on new PCs
After Microsoft announced its Recall feature for Copilot+ AI PCs, security analysts reportedly said it could expose user data to hackers and cyber-crime.
Microsoft reportedly said Friday 7th June 2024 that the feature will be ‘off‘ by default.
The software company also announced security protections.
Gold: a precious dilemma as it becomes scarce
The shimmering appeal of gold has enchanted humans for ages, yet beneath its radiant exterior, miners face escalating challenges.
According to the World Gold Council, the gold mining sector is finding it increasingly difficult to maintain production growth as the reserves of this precious metal become scarcer.
Depletion
Discovering new gold deposits is becoming increasingly challenging as many potential areas have already been scouted, leaving limited unexplored territories. Large-scale gold mining requires extensive exploration and development, often spanning 10 to 20 years before a mine becomes operational.
Exploration
Approximately 10% of global gold discoveries produce enough metal for mining operations. The success rates for exploration are quite low, and the chances of a discovery advancing to the stage of mine development are minimal.
Production
Despite record first-quarter mine production in 2024, the overall trend is concerning. Since around 2016-2018, global gold production has plateaued, with no sustained growth.
In 2023, mine production increased by a mere 0.5% compared to the previous year. The growth rates have steadily declined over the past decade.
Reserves
Globally, around 187,000 metric tons of gold have been extracted. China, South Africa, and Australia are at the forefront of production. The United States Geological Survey estimates that there are approximately 57,000 tonnes of minable gold reserves remaining.
Regulation
The process of obtaining government permits has grown increasingly difficult, with bureaucratic procedures causing delays in mining operations. Additionally, remote mining projects necessitate infrastructure such as roads, power, and water, which adds to the costs and complexity.
In summary, the glittering seams of gold are thinning. Miners grapple with scarcity, regulatory hurdles, and the diminishing promise of new discoveries.
As we dig deeper, the quest for gold becomes a delicate balance between ambition and reality.
Gold chart over one year
Countries holding largest gold stockpiles of gold
U.S. job gains reached 272,000 in May 2024 – exceeding expectations of 190,000
The U.S. economy exceeded job growth expectations in May 2024, alleviating concerns of a labour market downturn but potentially diminishing the Federal Reserve’s motivation to cut interest rates.
Non-farm payrolls surged by 272,000 for the month – a significant increase from April’s 165,000 and surpassing the consensus forecast of 190,000.
Concurrently, the unemployment rate increased to 4%, marking the first instance it has reached this level since January 2022.
Is the diamond industry ‘in trouble’ as lab-grown gems gain market share?
The demand for diamonds has declined as its allure fades in a key consumer market, China.
“Diamonds don’t really fit in anymore despite the strong legacy of De Beers under Anglo,” independent diamond industry analyst Paul Zimnisky reportedly said.
According to Zimnisky’s rough diamond index, diamond prices have decreased by 5.7% this year, marking a decline of over 30% from their peak in 2022.
Lab-grown diamonds, potentially up to 85% less expensive than natural ones, are created in a controlled environment using high pressure and heat to mimic the formation of natural diamonds in the Earth’s mantle.
Sales of lab-grown diamonds have increased from a mere 2% of the global diamond jewellery market in 2017 to 18.4% in 2023, as reported by Zimnisky.
A fall in marriage rates as well as growing popularity for gold and lab-grown gems all drove down Chinese demand for diamonds, according to market research firm Daxue Consulting.
The lifting of pandemic restrictions has led consumers to redirect their spending towards travel experiences rather than diamond products.
The preference for lab-grown diamonds plays a critical role in driving down prices of natural diamonds.
Is this German chipmaker about to gain more traction in the AI race
While Nvidia continues to dominate the AI chip market headlines, Infineon, a German semiconductor company, is also making waves.
Infineon is capitalizing on the AI surge, aiming to generate billions in revenue through the sale of premium chips.
As AI applications proliferate, encompassing data centre servers and integrated chipsets for PCs and mobile devices, the demand for AI chips is skyrocketing. This trend has only one direction, and that is up.
Infineon is certainly one to watch – it may just become the next major player in the industry.
Others to watch: ARM Holdings, AMD and Intel
China’s exports up by 7.6% in May – more than expected
China’s exports in May increased more than anticipated, whereas imports fell short of expectations, according to customs data released on Friday 7th May 2024.
Exports increased by 7.6% in May from the previous year, surpassing the analysts’ expectations of 6% growth. Imports, however, increased by 1.8% during that time, missing forecasts of an expected 4% growth.
According to analysts’ calculations based on official data, China’s imports and exports to the U.S. and EU declined during that period. However, trade with the Association of Southeast Asian Nations (ASEAN) increased, with a 4.1% year-on-year rise in China’s exports to the region from January to May.
China’s exports to Russia decreased, but its imports from Russia grew by 7.5%. Despite trade tensions with the U.S., China’s exports have remained robust, contributing to the country’s overall economic growth.
European Central Bank (ECB) cuts interest rate by 0.25% to 3.75%
On Thursday, 6th June 2024, the European Central Bank announced a reduction in interest rates, a move that was widely expected, despite persistent inflationary pressures in the eurozone, which comprises 20 nations.
The central bank’s primary rate has been lowered to 3.75%, a decrease from the historic high of 4% where it has remained since September 2023.
The money markets had completely anticipated the 0.25% reduction at the June meeting. This marks the first decrease since September 2019, when the deposit rate was below zero.
Nvidia $3 trillion market cap propels S&P 500 and Nasdaq to new all-time highs
The S&P 500 reached a new high as Nvidia surpassed the $3 trillion mark for the first time, and the anticipation of an interest rate cut grew due to softer-than-expected job data.
S&P 500 all-time high as of 5th June 2024
Similarly, the Nasdaq 100 and Nasdaq Composite achieved new record highs
AI boom catapults Nvidia passed Apple’s market cap’ valuation
Artificial intelligence (AI) chipmaker Nvidia passed Apple’s market cap’ to become the world’s second most valuable company after Microsoft.
Nvidia’s shares have surged 24% following its impressive earnings report in May, in contrast to Apple’s shares, which have increased by only 5% this year amid a slowdown in sales growth in recent months.
Nvidia one year share price as of 5th June 2024
Nvidia Market Cap at $3.01 trillion as of 5th June 2024
Election UK style. “Take me to your leader.” “Err… we don’t have one!”
Election UK style. “Take me to your leader.” “Err… we don’t have one!”
Election UK style – “New rules please!”
Conservative Party HQ – “I have a plan!”
How about if we sell ‘slogan’ advertising space on the lectern. ‘I Have a plan‘ and ‘Change‘ spring to mind. A plan to do what and a change to what… exactly?
Banknotes with King Charles III enter circulation for the first time
Banknotes featuring a portrait of King Charles III entered circulation on Wednesday 5th June 2024.
Charles’s portrait will be featured on the front of the £5, £10, £20, and £50 banknotes, visible through the notes’ transparent security window. He is only the second monarch to appear on British banknotes, following Queen Elizabeth II.
Currently, there are more than 4.6 billion Bank of England notes in circulation, with a combined value of around £82 billion.
“Don’t walk in front of me… I may not follow. Don’t walk behind me… I may not lead. Walk beside me… just be my friend” – Albert Camus
Albert Camus 1913 – 1960
Albert Camus was a French philosopher, author, dramatist, journalist, world federalist, and political activist. He received the 1957 Nobel Prize in Literature at the age of 44, becoming the second youngest recipient in history.
See Wikipedia
Little know company Kneron launches latest AI chips – backed by Qualcomm
Kneron, a startup specializing in artificial intelligence chips, unveiled its latest products on Wednesday 4th June 2024.
The company aims to exploit the growing world-wide interest in AI and provide an alternative to industry heavyweights such as Nvidia and AMD.
The company, headquartered in Taiwan and supported by American semiconductor leader Qualcomm and major iPhone assembler Foxconn, introduced the KNEO 330, its second-generation ‘edge GPT’ server.
GPT, short for generative pre-trained transformer, is an AI algorithm trained on vast datasets capable of generating text and images, with OpenAI’s ChatGPT being the world leader right now.
Intel unveils new AI chips as it seeks to reclaim market share
Intel announced its new Xeon 6 processors at the Computex tech conference in Taiwan on Tuesday 4th June 2024.
This announcement coincides with the recent launches of new artificial intelligence chips by rivals Nvidia and AMD on Sunday and Monday 2nd and 3rd June 2024 – as they compete for dominance in the rapidly growing industry.
Intel is making efforts to catch up with Nvidia and AMD, having been relatively absent from the AI surge that led tech giants such as Meta, Microsoft, and Google to purchase a significant number of Nvidia chips.
This comes half a year after Intel’s release of its 5th Gen Intel Xeon processors for data centre workloads and a couple of months following the announcement of the Gaudi 3 processor for AI model training and deployment.
Intel also disclosed that the Gaudi 2 and Gaudi 3 AI accelerators are priced lower than those of its competitors.
Furthermore, Intel shared architectural details of its forthcoming Lunar Lake processors, aimed at expanding the AI PC category. These processors, slated for release in the third quarter, are set to rival Nvidia’s and AMD’s offerings tailored for AI PCs.
While Nvidia and AMD focus on chip design, Intel stands out by both designing and manufacturing its chips. Nevertheless, Intel’s foundry business has faced challenges, with its operating loss widening to $7 billion in 2023 compared to the previous year.
Cisco’s ThousandEyes has unveiled an AI product designed to predict and rectify internet outages
ThousandEyes, Cisco’s internet monitoring division, has introduced a new suite of AI-driven features known as Digital Experience Assurance, or DXA, on Tuesday 4th June 2024.
The firm asserts that this new AI technology will allow customers to not only monitor but also automatically address issues affecting network quality.
Describing itself as the ‘Google Maps’ of the internet, Cisco ThousandEyes offers a comprehensive, end-to-end perspective of every user and application across all networks.
Established 15 years prior, the company has been heavily investing in AI technology in recent years.
ThousandEyes is now implementing significant AI-centric modifications to its platform, which are designed to enhance its clients’ oversight of network quality and robustness.
Bad economic news can be good for stocks
Bad economic news appears to have had an interesting impact on the stock market recently.
Traditionally, negative economic data might be anticipated to result in falling stock prices; however, recent trends have diverged from this norm.
News trend
In the past two months, negative economic news has had a paradoxically positive effect on equities. Investors have responded well to poor economic indicators, partly due to the belief that these could lead the Federal Reserve to begin reducing interest rates.
Dollar and the stock market
In recent times, the S&P 500, a large-cap equity index, and the U.S. dollar have exhibited a nearly perfect correlation. As the dollar has seen a gradual decline, the stock market has conversely experienced a rise. Typically, investors flock to the security of cash, and consequently the dollar, in times of uncertainty, yet they also channel investments into stocks upon the arrival of favourable news.
Economic data
Despite the upbeat trend in the stock market, real economic data has frequently fallen short of Wall Street’s predictions. The Citi Economic Surprise Index, a gauge that compares data to expectations, has been on a downward trajectory. This suggests that expectations have been surpassing the actual economic conditions, signalling that the economic situation may not be as favorable as previously thought.
Dilemma for the Fed
The Federal Reserve methodically reviews economic indicators to influence their interest rate decisions. Typically, unfavorable economic reports might prompt the Fed to reduce rates, unless there’s an uptick in inflation. Escalating inflation generally nudges the Fed towards a tighter monetary policy.
Monthly data roll-out
Data concerning the U.S. labour market presented to the Fed and markets may create that ‘pivotal’ moment – it often does – markets move of Fed comments and ‘awaited’ news. Reports detailing job openings, private sector job creation, and the Bureau of Labour Statistics’ nonfarm payrolls will shed light on the economy’s condition.
If job growth remains within the ‘Goldilocks range’ (neither too strong nor too weak), it may preserve the fragile equilibrium where unfavourable economic news has paradoxically favoured stock prices, while preventing excessive gloom.
Conclusion
To summarize, although adverse economic news has lately been advantageous for stock markets, monitoring this precarious balance is crucial. Excessive pessimism could be a harbinger of impending difficulties, despite its current benefits.
Note about Citigroup Economic Surprise Index
The Citigroup Economic Surprise Index is the sum of the difference between the actual value of various economic data and their consensus forecast. If the index is greater than zero, it means that the overall economic performance is generally better than expected, and the S&P 500 has a high probability of strengthening, and vice versa.
Bitcoin miners rotate millions into AI – but why?
Bitcoin miners have been diversifying operations into artificial intelligence (AI) due to several key factors.
Since Bitcoin halving, miners have been searching for more lucrative income streams as AI and crypto industries collide.
Revenue shift
The revenue from crypto mining, especially Bitcoin, has significantly decreased in recent months. After the ‘Bitcoin halving’ event in April 2024, rewards earned by Bitcoin miners were cut by 50%. As a result, miners have been seeking alternative revenue streams.
AI boom
Following the unveiling of ChatGPT by OpenAI in November 2022, there has been a significant increase in the demand for AI computation and infrastructure. This surge has led to a flurry of investments in AI models and startups, presenting miners with new opportunities to transition into the AI sector.
Energy access
Bitcoin miners are progressively turning to ‘stranded energy site’s – these are locations with surplus or untapped energy for mining operations. At the same time, they are channelling investments into AI at more stable sites. This strategic move enables them to leverage the potentially higher returns from AI.
Core Scientific
Core Scientific, a Bitcoin mining company, has recently entered into a 12-year agreement with cloud provider CoreWeave to supply infrastructure for AI applications. This partnership is anticipated to generate in excess of $3.5 billion in revenue over the duration of the contract. CoreWeave, supported by Nvidia, offers rental of graphics processing units (GPUs) essential for AI model training.
In conclusion, Bitcoin miners are increasingly adopting AI to adjust to the evolving market dynamics and to uncover new revenue streams beyond conventional mining. The merging of AI and the cryptocurrency industry offers promising prospects for both fields.