We’ve been spending money like drunken sailors

GRIT
12 Sep

Good Morning!

Today we’re talking the much-anticipated iPhone 15 launch, Oracle's stock nosedive, and JPMorgan CEO telling we’ve been spending like drunken sailors!

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Let’s get into it!

APPLE DAY: MEET iPHONE 15!

Source: Forbes

Dubbed "Wonderlust", today’s event is nothing short of the Super Bowl for Apple's smartphone lineup as the tech giant unveils its iPhone 15 series, complete with new smartwatches and AirPods. This is a pivotal moment for Apple, as the reception of the new iPhone—accounting for 50% of the company's revenue—will set the course for the year ahead. The stakes are particularly high this year as Apple aims to reverse a recent dip in sales.

While the era of Steve Jobs-level groundbreaking innovations may be behind us, Apple is still pushing the envelope. The Pro models will now feature titanium sides instead of stainless steel, and the Pro Max will boast an enhanced camera. A notable shift is the transition from the Lightning port to USB-C. Under-the-hood improvements include a faster processor and extended battery life, changes that may not be visible but will certainly enhance user experience.

In a departure from last year, Apple is expected to hike the prices for certain models, with the Pro Max seeing a $200 increase. Additionally, Apple is set to announce that some iPhone production will shift to India, signalling the country's growing tech expertise, although the majority of manufacturing will remain in China.

The much-anticipated launch event kicks off at 1pm ET, promising to be a watershed moment in Apple's journey.

GRITS TAKE: There are three certainties in life: 1) Death, 2) Taxes and 3) Apple releasing exactly the same phone for US$1299 with a slightly better camera. Amid dwindling pandemic savings and inflation, will consumers hit iPhone upgrade fatigue? China's regulatory moves add another layer of uncertainty. Despite an 8% dip from its yearly high, Apple stock has still outperformed the S&P by 2.3x this year, trading just above its 5-year PE average. I remain long and strong on the stock.

ORACLE STOCK DROP MOST SINCE 2020

Source: Acceleration Economy

Oracle shares have plummeted 9%, marking the steepest decline since 2020, despite beating quarterly earnings and revenue estimates. The culprit? Lackluster forward guidance and a slowdown in cloud revenue growth, which came in at 30% this quarter compared to 54% in the prior one. Oracle projects a 5-7% revenue growth, falling short of the anticipated 8.2%.

CEO Larry Ellison expressed excitement over AI's burgeoning demand. "Is Generative AI the most transformative computing tech ever? Possibly!" Ellison exclaimed. "From self-driving cars to drug design, AI is attracting billions in investment. As of now, AI-focused firms have committed to over $4 billion in Oracle's Gen2 Cloud contracts—double what we had at the end of Q4."

GRITS TAKE: With the stock soaring 55% this year, even a whiff of slowdown or underperformance is making investors jittery, prompting them to unload tech shares. The adage "Don't catch a falling knife" holds true here. The prudent strategy is to hold off until the selling frenzy eases.

Stem Cell Sector Set to Reach New Heights

JPMORGAN: TODAY’S BOOM NO GUARANTEE FOR TOMORROW

Source: Yahoo

“We’ve been spending money like drunken sailors”

Jamie Dimon remarked at Barclay's financial conference in New York City yesterday. While acknowledging the economy's current robustness, he cautioned that this stability is not guaranteed to last. Dimon argued that the buoyancy of the housing and stock markets isn't sufficient to sustain consumer strength long-term.

Jamie Dimon said "To say the consumer is strong today, meaning you got to have a booming environment for years, is a huge mistake.". He warned that too many are fixated on present-day metrics, overlooking looming quantitative tightening. Signs of vulnerability, he noted, are already emerging in areas like real estate and subprime auto loans. Dimon anticipates a recession and foresees a downturn in the office real estate sector.

GRIT TAKE: Despite his bearish outlook, Dimon is bullish on his own stock, noting ongoing buybacks and capital requirement compliance through 2024. We concur with his perspective. While the present appears bright, signs suggest it won't last indefinitely. Good investors grasp today; great ones anticipate tomorrow. Always skate to where the puck is going, not where it's been.

Coming Up This Week…

Today: Don't miss Apple's most pivotal event of the year as they unveil the iPhone 15 lineup! Plus, tune in for the Senate's SEC Gensler hearing for insights into crypto's future.

Tomorrow: Attention shifts to the crucial CPI inflation data—stay tuned!

Headlines You Need To Know:

Treasury Bills yielding 5% are a big hit with retail investors
Elon Musk biography drops today
Steve Forbes says the Fed won’t cut rates soon.
FDA approves new covid shots
US, Iran on verge of a major deal to free prisoners,
Kim Jong Un arrives in Russia
Hedge Fund boss slams “hydrogen bets” as complete waste of time
Trump seeks to remove federal judge from Jan 6th case
IRS slows refund payments pandemic-era tax break
Draftkings apologizes for sports bet referencing 9/11 terrorist attacks
Disney, Charter reach deal that ends ESPN blackout

Just for fun…

This guy became a billionaire from gambling on horses

Source: Bloomberg

Bill Benter cracked the horse racing code. He was born in Pittsburg where he took his genius mathematical mind and started making money by counting cards. He dominated the casinos and eventually was banned for life. After his casino ban, he decided that he was going to create an algorithm that gambled on horses. Hong Kong has about 100,000 horse races a year so he used their data from the last 10 years to create his algorithm. The system would measure the quality of a horse and past results in order to come up with the chance the horse could win the race. However, in their first year of operation, they lost $150, 000. They eventually made adjustments that incorporated the public odds and their algorithm was a massive success. Benter ended up making $1 billion dollars before he was banned from gambling on horses in Hong Kong.

The Financial Ally You’ve Been Waiting For

3 Most Important Charts Right Now

Retail Investor Participation

Daily inflows by individuals have hit news high in 2023

Source: Public.com

US Fiscal Spending

US fiscal spending as a % of GDP is on the rise again

Source: Bloomberg, Tavi Costa

China’s Steel Production

China has produced more steel since 2020 than the US produced since 1993

Source: BCA Research

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