Hamilton to Ferrari, Big Tech Earnings, and The Cultural Impact of Apple’s Vision Pro

Listen in podcast app and follow below for the podcast topic arc.

* Sports business update (Netflix $5B Deal with WWE)

* Inflation news and jobs data

* Market update

* META earnings

* AMZN earnings

* Vision Pro impacting culture

* Recommendations and Links

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Market Update📈📉

Welcome back.

We had a very exciting week in markets. There was some important US data that was released. QRA & RRP, FOMC and Big Tech earnings.

QRA - There was a net funding for US treasury and bills, which was a surprise and would be considered a headwind for equities.

FOMC - Many forecasters assumed that Quantitative Tightening (QT) would end in June, however, after this months meeting it’s quite clear that QT ending is no longer a certainty. There will be no rate cut in march.

In order to see a cut, Jerome Powell will need to see a few CPI prints that negate the benign inflation that we have seen over the last few quarters.

This is all to say, that its clear we are in a fairly precarious place with regards to equity pricing. We are priced for a perfect “no landing'“ situation.

AI and Big Tech:

Big Tech AI driven Earnings Season Momentum continues: Meta took the investor crown with its quarterly results, with the stock up almost 20%, with Amazon also seeing a double digit positive reaction. Microsoft, logged some gains initially post announcement gains, but gave them up later in the week. Apple and Google had modestly muted reactions, Apple for weakness in China, and Google for continued concerns on AI impact on its Search business. Lots in the weeds to parse for each of the ‘Magnificent 7’, but overall, the AI sentiment tailwinds continue.

How to think about the evolution of culturally important technology: Vision Pro

If one looks back at Apple’s ‘platform’ record over the decades, the company is generally never the first in a hot new tech area. But when it does make its move, it’s typically a committed, focused, and multi-year bet on making it a vertically integrated ‘Best’. With an almost religious ‘attention to detail’, fusing both the hardware and software elements. With the North Star of the eventual user experience.

Let’s look at the broad strokes through tech history. Apple typically relabels the tech to whatever it wants. (This time it’s ‘Spatial Computing’ instead of ‘VR, AR or MR’).

Let’s look at this ‘late’ but eventually ‘best’ trend through Apple’s history:

* GUI (Graphical User Interface) pioneering Macs in the 1980s, bringing the world from the ‘Command Line’ of Microsoft’s MS-DOS to their eventual success with Windows 95 and beyond,

* to its Internet ‘built-in’ iMacs in 1997 when Steve Jobs ‘came back’ to Apple,

* to the iPod that revamped the Music industry from albums to buying music tracks individually, changing the habits of billions in how they consumed music,

* to of course the mobile phone with the iPhone in 2007 after Blackberry and many others had already ‘taken the lead’, redefining the ‘Smart Phone’, and establishing the ‘App Store’ and App Economy that now sees over a trillion in business activity per year,

* to the Airpods in the ‘Wearables’ space, overtaking prior wired and wireless efforts,

* to the Apple Watch, which continued the ‘Wearables’ progression from others, painstakingly iterating over many years,

* to now the Vision Pro in headsets that have seen billions in expenditures by everyone from Meta/Facebook with Oculus/Quest headsets to Microsoft, Sony, and so many others.

Twitter links from the pod:

* AMZN earnings recap

* META earnings recap

* Oil stocks to own forever

* Real estate development story that will blow your mind

* Bill Gross talks about QT and QE

Podcast & YouTube Recommendations🎙

* How to think about New All Time HIGHS - from the Compound

* How to think about product pricing - Invest Like The Best

Best Links of The Week🔮

* "After decades in the shadows of record-shattering Wall Street stocks, a transformation of the euro-area’s index of blue-chip companies looks to have finally set the benchmark on course toward a new high. Europe may lack a “Magnificent Seven” tech cohort of its own, but a pared-down version of that phenomenon has emerged. The Euro Stoxx 50 has just hit its highest since 2001, with the latest leg of the surge powered by blowout earnings from the region’s two biggest tech stocks, ASML and SAP." Source: Bloomberg

* "Reddit is weighing feedback from early meetings with potential investors in its initial public offering that it should consider a valuation of at least $5 billion... even as it is estimated below that figure in the volatile market for shares of private companies. The San Francisco-based social media company and its advisers are targeting a valuation in the mid-single-digit billions... The ultimate figure will depend on the IPO market’s nascent recovery... Reddit is considering a possible listing as soon as March." Source: Bloomberg

* "Meta Platforms is hoping Apple’s launch of the Vision Pro can reinvigorate its $50 billion metaverse effort, which consumers have yet to widely embrace. The social-media company wagered its reputation on the technology in 2021... Three years later, Meta’s Reality Labs division accounts for less than 1% of overall revenue, and the company has struggled to expand the cache of its Quest devices beyond a niche market... On the eve of the arrival of Apple’s Vision Pro, which will hit U.S. stores Friday, executives at Meta are optimistic, believing the iPhone maker’s entry into the market will validate Chief Executive Mark Zuckerberg’s gamble and draw more consumers." Source: WSJ

* "China has moved to officially limit short selling after informal efforts failed to stop a worsening stock market sell-off. Investors who buy shares will not be allowed to lend them out for short selling within an agreed lock-up period, the Shenzhen and Shanghai bourses said on Sunday... Regulators are coming under increasing pressure to halt the stock sell-off, which has been fuelled by uncertainty over the country’s economic growth prospects." - Source: FT

* "Big pharmaceutical companies like Bristol Myers Squibb, Merck and Johnson & Johnson face so-called patent cliffs that will put tens of billions of dollars in sales at risk between now and 2030. That refers to when patents expire for one or more leading branded products for a company, which opens up the door for competitors to sell copycats of those drugs, often at a lower price. Some companies appear to be well-prepared to offset some of the losses from upcoming patent expirations." - Source: CNBC

* "The Biden administration, eager to highlight a signature economic initiative as elections approach, is expected to award billions of dollars in subsidies to Intel, Taiwan Semiconductor Manufacturing, or TSMC, and other top semiconductor companies in coming weeks to help build new factories. The grants are part of the $53 billion Chips Act, intended to reshore production of advanced microchips and fend off China, which is fast developing its own chip industry." - Source: WSJ

* "Cathie Wood has said her tech-focused Ark stock market fund “paid its dues” with two years of steep declines, before roaring back last year with one of the industry’s best performances. Wood’s $8bn Ark Innovation exchange traded fund recorded a 68 per cent gain last year, putting it within the top one per cent of its peers, according to data from Morningstar. That rebound came after a 50 per cent annualised loss across 2021 and 2022, when sentiment soured against the high-growth companies it had backed." - Source: FT

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