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Monday, December 4, 2023

Nvidia -- Three Big Stories -- One Bad, Two Good -- For Nvidia -- December 4, 2023

Locator: 46236NVIDIA.

Ticker: trading at $455 today, the company has a market value of $1.12 trillion. If the stock price drops to $406, the company's market cap will drop below $1 trillion. Shares were trading for $403 less than two months ago, October 26, 2023. It currently sports a P/E of 60.

On thin ice: Nvidia continues to push the envelope on "re-designing" chips for China. Biden's team not happy. 

Japan: so much is packed in this story, I will just post the link. For now. Tag: Nvidia, Japan, ka-ching.

AI: similarly -- so much is packed in this story, I will just post the link. Not behind a paywall. Remember the name: Mistral.

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For Williston, North Dakota, Folks

The longer I'm "away from Williston, ND" and specifically Williston High School the more I realize how great that high school was.  Wow, I have some fond memories of the teachers.

Bundling Telecom Carrier With Streaming -- Interesting Gimmick -- Or "A Thing"? December 4, 2023

Locator: 46235B. 

Link here

This may not be enough to get folks to switch carriers "mid-stream" but it does set an interesting precedent (?) and an interesting "bundling." Is it a gimmick that has legs? I don't know. But it seems it might put pressure on carriers. I really don't know; time will tell. Reminder: Max = HBO Max, so this is quite a powerhouse: Netflix + HBO Max.

The Daily Activity Report -- Not Posted As Of 5:30 P.M. CT -- December 4, 2023

Locator: 46234B. 

Nvidia: if one wants to keep up with Nvidia news, Tom's Hardware is one of many sites to check out.

Soft landing definition: if the Fed can reach its inflation target (2%) without causing a jump in joblessness. With that definition, we don't need to wait for six - twelve months for economists / historians to determine if the US was actually in a recession. Source.

Comment: I find the price of oil absolutely fascinating. 

For quite some time, there has been lots of talk of $150 oil. 

Last year, Saudi restricted production / exports and the price of oil continued to fall.

For the past year, if not longer, "we've" been hearing that the supply / demand imbalance is upwards of two million bopd. In other words, producers are supposedly producing less oil than supposedly required to the tune of two million bbls of oil per day. And this has been going on for quite some time. 

Today Saudi Arabia says they will maintain decreased production not only through March, 2024, as originally planned, but now, "as long as it takes." And what does the price of oil do? It continues to fall, now trending toward $70.

Is oil money "dead money"?

WTI: $73.04.

Intel -- Something Interesting Going On With Apple? December 4, 2023

Locator: 46233INTEL. 

December 4, 2023: 6G modem -- link here. See this post for background.

  • maybe things are not as dire as some might suggest regarding the relationship between QCOM an AAPL
  • the writer at the link questions Apple's assertion that it has ended its own R&D on a 5G modem (that needs to be parsed)
  • interesting, interesting article: note the speculation in Intel -- something to watch
  • think about this: maybe Apple is looking to encourage another manufacturer of modems to compete with QCOM

Transitory In The Big Scheme Of Things -- December 4, 2023

Locator: 46232TRANSITORY.

For the archives. This data does not affect my investment strategy one iota. 

Disclaimer: in a long note like this, there will be typographic and content errors. Facts and opinions will be interspersed. I have no formal education or training in macro- or micro-economics. Read at your own risk. Or best yet, don't read at all.

As an aside, a couple of years ago, a dozen eggs was costing me $5.29; today, I can find a dozen eggs < $1.29. 

Link here



So, year-over-year, the benchmark, BRK, has appreciated 15%. Meanwhile prices year-over-year for major purchases have declined and groceries have only increased 2.5%. Gasoline is also less expensive today than it was a year ago.

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Disinflation and Deflation

Mohamed A. El-Erian is perhaps the most credible guest Joe Kernen, CNBC Squawk Box, interviews on a regular basis. 

In the tweet above, Mohamed A. El-Erian makes this comment:

These two WSJ charts ffor US inflation serve as a reminder of the need for strong disinflation in services before deflation comes to an end in the goods sector.

I missed Joe Kernen's interview with El-Erian this morning and I do not know what he means by this. He posts his tweet as if this is well-known by all investors and / or it's a "law" just like the "law of gravity." So, forgive me if I tell you that I don't understand the relationshhip between disinflation in services and deflation in goods.

In the process of trying to find the answer, I found this gem from the White House blog, back in July 2023, just a few months ago. Link here. It didn't give me the answer to my question but I found the note very helpful.

So, if I were a freshman in college, taking "Econ 101," and the professor asked me to explain  how disinflation in services is / was related to deflation in the goods sector, I might ramble on in this vein of thought.

Currently, goods -- things one buys, like a refrigerator -- are selling at a lower price than they were selling for a year ago. Assuming that the refrigerator was bought and paid for awhile ago by the retailer, the retailer is making less money on a refrigerator sale today -- maybe even taking a loss.

That's exactly what happened to Hormel this past quarter. The price for a turkey sold by the retailer, let's say Walmart, dropped so fast that Hormel had to "eat" the loss -- pun intended. It had nothing to do with folks desiring less turkey this past Thanksgiving. I can guarantee you that Walmart was not taking the loss except possible as a "loss leader."

So, back to the refrigerator. This is where it gets mushy. 

One possibility. Let's assume wages are static or have been static over the past year for the average consumer or wages have not kept up with "core" inflation."

The average consumer has only so much money to spend. The price of that turkey at Walmart is a combination of the cost to produce that turkey plus the cost of getting that turkey from the farm to the Walmart cooler. Much of that cost is services (and some transportation costs, which by the way have come down, year-over-year). 

The consumer can't directly affect the cost of services to get that turkey from the farm to Walmart, but the consumer can directly affect the price of that turkey at the checkout lane at Walmart in at least two ways: a) buy less turkey; and / or b) go elsewhere, looking for a less expensive alternate (a different turkey retailer or a different protein).

Regardless, unless Walmart wants to take less profit or a bigger loss on the turkeys in the store, Walmart needs to lower the price of the goods (the turkey).

If the retailer can buy a less expensive turkey (goods) wholesale and it is less expensive to be delivered (services) then the overall price of the turkey will be lower. 

My understanding, then, at least one way, for M.A.E-E's argument is that we need to see a further drop in the cost of services (either the rate in the drop [disinflation] or an absolute cut in price of wages and energy [deflation] which is very unlikely to happen. 

With a drop in the rate of the increase in the cost of services (disinflation) then, all things being equal, we should see Walmart having the "ability" to increase the retail cost of the turkey it is selling.

And that's exactly what M.A.E-E said:

These two WSJ charts ffor US inflation serve as a reminder of the need for strong disinflation in services before deflation comes to an end in the goods sector.

Having said that, if Walmart is making a profit on the turkey in the current economy, Walmart might even be able to decrease the price of a turkey further, though that's unlikely and leads to another discussion for another time.

Now, back to what M.A.E-E said.

The next question: what is driving the price of services? Why is disinflation in services so stubborn? Why is disinflation in services not stronger? There are some easy answers there but I've rambled long enough. But the answers to this question -- what is driving the cost of services -- is so obvious it hardly needs discussing. The huge increases won by the UAW and workers elsewhere  is the easy answer but it's the wrong answer. Exhibit A: the price for "motor vehicles and parts" dropped almost 2% year-over-year despite wage increases.

Right, wrong, indifferent with regard my answer (an A, C, or F from my professor) matters not. At least for now, for me, I have a better understanding of the point M.A. E-E was trying to make.

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For Investors

Investors want to see a bit of inflation, let's say 2 percent. Inflation, to some extent, drives earnings. Disinflation can be good, slowing the rate of inflation but by definition, does not completely bring inflation to zero (or less --> deflation). 

Deflation is bad for the investor as investors in Hormel discovered a few weeks ago. Deflation, all else being equal, will drive earnings lower and share prices will follow.

Chat AI -- Overview

Locator: 46231CHAT.

Chat AI.

Screenshots today. Yet to be sorted out.

  • Microsoft: CoPilot.
  • Amazon:Q.





Foreign Exchange Reserves -- Saudi, Russia -- December 4, 2023

Locator: 46230SAUDI. 

X-axis has changed compared to graphics one month ago, for both charts below.

Link here

Link here.

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Texas In December

Kiri paddle boarding while Sophia and Josh were on sailboat (in the background) on Grapevine Lake, Dallas area, Texas, in December. Whoo-hoo!

Headlines — Monday, December 4, 2023

Locator: 46229B.

Spotify: announces more layoffs. Third round of layoffs this year. Best streaming service, 2023. Agrees. Except for Apple users. LOL. How MacRumors reported the story.


Virgin Galactic: done with space flights?

Nvidia, #1: AMD — #2 — Piper Sandler. Link here.

Narrowing to look at the valuations, the team rates Nvidia at Overweight with a $620 price target, based on it fetching a multiple of 29 times its expected 2025 earnings. 
For comparison, the team rates AMD at Overweight with a price target of $150, based on it fetching a multiple of 43 times its expected 2024 earnings. “We believe that AMD remains a premier player in the compute space with numerous tailwinds going its way,” 
Piper wrote. “When compared to NVDA however, we hold the view that NVDA offers a much more compelling multiple at these levels.”
Intel:


SpaceX: to launch Amazon satellites. Link here. Speaks volumes.

Personal investing: today — new money, % allotment today —
  • bought MSFT — 95%
  • boght NOG -- 5%
Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them. 

Again, all my posts are done quickly. There will be typographical and content errors in all my posts. If any of my posts are important to you, go to the source. 

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Back to the Bakken

WTI: $74.07.

Wednesday, December 6, 2023: 158 for the month; 158 for the quarter, 728 for the year
None.

Tuesday, December 5, 2023: 158 for the month; 158 for the quarter, 728 for the year
39309, conf, Hess, SC-JW Hamilton-153-99-1314H-8,
39148, conf, Enerplus, LK Bice 147-96-6-31-5H,
31769, conf, BR, Ivan 4-1-29MBH,

Monday, December 4, 2023: 155 for the month; 155 for the quarter, 725 for the year
None.

RBN Energy: Amidst a production revival, the offshore Gulf of Mexico faces new challenges.

Crude oil production in the offshore Gulf of Mexico (GOM) increased by more than 50% from 2013 to 2019, an extraordinary period of growth supported by new discoveries, new offshore platforms and new subsea tiebacks. Then, battered by Covid and major hurricanes, GOM output stumbled in 2020 and 2021, twice falling to less than 1.1 MMb/d, barely half the all-time mark of 2.04 MMb/d achieved in August 2019. More recently, production in the Gulf has been rebounding. But despite these gains — and a relatively mild 2023 hurricane season in the central and western Gulf — the region faces new challenges, including federal leasing delays, a significant oil spill, and an endangered species of sea giants known as Rice’s whales.