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- ☢️ A Potential Catalyst for Nuclear Stocks
☢️ A Potential Catalyst for Nuclear Stocks
Plus, is OpenAI in trouble?
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Happy Saturday, and welcome back to our super skimmable Street Tweets newsletter.
Earlier this month, Bill Ackman’s Pershing Square started a roadshow for an initial public offering with plans to raise roughly $25 billion.
Things have since changed…
Ackman is now postponing listing Pershing Square’s US closed-end fund (PSUS). According to a regulatory filing, Pershing Square has significantly retreated from its lofty $25 billion goal and is now looking to raise between $2.5 billion and $4 billion for the fund.
This cutback may not necessarily be a bad thing. Instead, it could be tactical. Bloomberg’s Matt Levine believes that selling just $2.5 billion of Pershing Square stock may generate a sense of scarcity, enticing retail investors to buy PSUS after IPO and “bid up the price.”
Whether this strategy will create the desired buzz remains to be seen, but we can be sure that all eyes will be on Bill Ackman’s Pershing Square as it moves toward its IPO.
Plus, today’s partner has a financial wake-up call for all Americans…
MARKET REVIEW
TL;DR: This week, U.S. markets experienced significant volatility, with the S&P 500 and Nasdaq Composite marking their worst days since 2022, only to partially recover by the end of the week due to positive inflation data.
The June PCE index indicated cooling inflation, boosting confidence in a potential Fed rate cut. U.S. GDP exceeded expectations, but the labor market showed signs of softening. Housing prices hit record highs despite slumping sales.
Tech stocks had mixed results, with Nvidia rising and Alphabet falling. Airline stocks saw gains despite Delta's massive flight cancellations. The auto sector struggled, with Tesla and Ford experiencing declines. Other notable company performances included Verizon's slide and AT&T's gain, as well as Disney's decline due to labor disputes.
MARKET PREVIEW
TL;DR: As July comes to an end and we head into August, the market’s attention will be on the Federal Reserve's rate decision on July 31, with current expectations showing no immediate rate cut but predicting at least one by September.
Recent data indicates strong U.S. GDP growth and stable inflation, which bolsters this forecast. Key events include major earnings reports from companies like Microsoft, Apple, and Amazon, as well as updates on manufacturing activity and the nonfarm payroll report. Additionally, economic indicators such as the Dallas Fed’s manufacturing activity and the ISM Manufacturing PMI will be closely watched.
SCOOP: OpenAI may lose $5B this year & may run out of cash in 12 months, unless they raise more $, per analysis @theinformation.
Investors should ask: What is their moat? Unique tech? What is their route in profitability when Meta is giving away similar tech for free? Do they… x.com/i/web/status/1…
— Gary Marcus (@GaryMarcus)
2:19 PM • Jul 24, 2024
Is OpenAI in trouble? Maybe not.
Losing $5 billion a year is nothing to scoff at.
The Information’s report estimates that OpenAI’s training and inference costs could reach $7 billion this year and staffing costs could reach $1.5 billion.
Another factor to consider is that ChatGPT has 77.2 million users in the US, but only 3.9 million of them are paying subscribers. Plus, the ChatGPT large language model costs some serious dough to operate, with some estimates seeing costs as high as $700,000 a day.
But, but but… OpenAI’s close partnership with Microsoft cannot be underestimated.
Microsoft has pumped billions into OpenAI, and there’s no reason to suspect that the money will stop flowing, considering that Microsoft is effectively outsourcing all of its AI research and development to OpenAI.
So, while Alphabet, Meta, and xAI all race to develop viable large language model competitors, Microsoft took a different path.
Microsoft wants the leading AI tech, and OpenAI needs funding, resulting in a symbiotic relationship that neither can easily get out of.
Are you bullish or bearish on Microsoft + OpenAI? |
It's been a busy newsweek, but let's not miss this story:
China has demonstrated the first commercial-scale passive cooling of a high temperature nuclear reactor with a pebble bed module.
They intentionally turned off the cooling and the reactor cooled itself down, no problem.
— Crémieux (@cremieuxrecueil)
10:54 PM • Jul 22, 2024
If true, this could revolutionize nuclear energy production.
What’s held back nuclear energy production more than anything else is fear. That’s not to say that the fear of nuclear catastrophic meltdowns is without basis… let’s not forget Fukushima, Three Mile Island, and Chernobyl.
But China’s new nuclear facility may legitimately ameliorate those fears.
Nuclear fission generates extreme heat, and water has historically been used in cooling systems. This new plant instead uses helium gas. Helium can handle extremely high temperatures and is already used similarly as a cooling agent in MRI machines and particle accelerators.
The plant also utilizes a pebble-bed module, meaning it generates energy from small graphite balls infused with uranium particles rather than large fuel rods.
In summary, this new nuclear facility is an absolute game changer, especially considering it was able to cool itself in a recent two-day test while disconnected from external power.
Hopefully, US producers be able to implement this innovation, and nuclear stocks, such as NextEra and Constellation, could see a significant boost.
However, there could be a potential play right now. German company SGL Carbon (SGLFF) supplies the uranium-infused graphite balls used in the new Chinese plant’s pebble-bed module.
TOGETHER WITH INVESTORPLACE
Can you feel it? The growing unrest in communities across America? There are strikes over basic needs and rising feelings of despair and confusion about money. The nation is facing significant challenges.
And it’s not just the everyday mom and pops that are facing challenges. Even wealthy Americans may be unprepared for sudden financial upheaval.
Concern for the future is widespread, and proactive measures are essential to safeguard financial well-being. This is uncharted territory, and action is needed before it's too late.
"Buy now, pay later" came out of nowhere and is now a giant industry …
For a lot of consumers "pay later" sounds a lot like "pay never" and financial institutions are only too happy to let them rack up more debt.
The result: a huge, evergrowing pool of "shadow debt" that… x.com/i/web/status/1…
— The Parabolic (@ParabolicCharts)
2:24 AM • Jul 8, 2024
A 12-figure industry emerges from economic desperation.
Money is tight for Americans — 29% of households have jobs but still struggle to cover basic needs.
As such, it’s no wonder that 39% of US consumers have used a buy now, pay later (BNPL) service.
But what sounds like a sweet deal is really a poison pill for consumers without strict control of their finances: 56% of BNPL users report experiencing overspending, missing payments, and regretting purchases.
BNPL services are morally dubious, to say the least, and that’s actually a solid reason not to invest (seriously). When a business model negatively impacts vast swaths of its consumers, it creates chum in the water for regulatory bodies.
The Consumer Financial Protection Bureau already took action against BNPL lenders in May, classifying them as credit card providers who must offer users the same legal protections that apply to credit card users.
Affirm leads the US BNPL sector, reporting 18 million users and $20.2 billion in annual GMV in 2023. If we look at Affirm as a bellwether for the BNPL sector, it’s not looking too hot; its stock is down 42% year to date.
Are you bullish or bearish on BNPL lenders? |
Used to be together...
Europe and US stocks used to walk a very similar path, that all changed after the financial crisis (Europe dealt with debt crisis and stagnation, while ZIRP helped accelerate the rise and rise of Big Tech)
Charts chartstorm.info/p/weekly-s-and…
— Callum Thomas (@Callum_Thomas)
7:30 PM • Jul 22, 2024
A tale of two markets.
Our story begins in 2008 with the US Subprime Mortgage Crisis.
While the crisis started in the US, it resulted in the Global Financial Crisis (GFC) as foreign banks, particularly in Europe, had heavily invested in US mortgage-backed securities. Despite a shared financial crisis, the US and European countries experienced vastly different recoveries.
The US benefited from the dollar’s reserve currency status, allowing the nation to borrow large sums at low rates and implement monetary policies like the zero interest rate policy (ZIRP) and quantitative easing (QE). In contrast, European countries without this privilege faced severe debt crises, particularly Ireland, Greece, Portugal, and Spain.
Sector composition is another reason for Europe's stagnation post-GFC compared to the US. The US stock market is heavily weighted towards high-growth sectors like technology and healthcare, whereas European markets have a larger share of traditional sectors like financials and industrials.
In summary, the US outpaced Europe due to the dollar’s supremacy and America’s booming tech sector.
With that in mind… it should concern Americans that the IMF believes the US dollar’s dominance in the world economy is dissipating.
TOGETHER WITH INVESTORPLACE
Can you feel it? The growing unrest in communities across America? There are strikes over basic needs and rising feelings of despair and confusion about money. The nation is facing significant challenges.
And it’s not just the everyday mom and pops that are facing challenges. Even wealthy Americans may be unprepared for sudden financial upheaval.
Concern for the future is widespread, and proactive measures are essential to safeguard financial well-being. This is uncharted territory, and action is needed before it's too late.
State of the market after yesterday’s earnings 😬 $ENPH $GOOG $TSLA
— Stocktwits (@Stocktwits)
3:05 PM • Jul 24, 2024
First, an earnings run down — the good, the bad, and the ugly:
Enphase Energy: Its earnings and revenue fell short of expectations, but it gave a rosy outlook with a plan to find a balance between sell-in and sell-out.
Alphabet/Google: Its second-quarter earnings and revenue were in line with estimates, but it missed on YouTube advertising revenue and reported higher-than-expected capital spending on AI and cloud computing.
Tesla: The EV maker’s Q2 profits fell 45% to $1.48 billion as sales dropped despite price cuts and low-interest loans.
For the week, Enphase is up 10%, and Alphabet and Tesla are down 5% and 10%, respectively.
The market was volatile this past week with a flurry of big-name companies reporting earnings results, both good and bad, and Enphase, Alphabet, and Tesla’s stocks embody that recent trend quite a bit.
TRIVIA
Last week, we asked: which 1987 market event is known for its sudden and severe drop, with the Dow Jones Industrial Average falling by over 22% in a single day?
The correct answer was Black Monday.
This week’s question…
Which technology company's stock was the first to be included in the Dow Jones Industrial Average? |
What did you think of today's edition? |
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