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September 26 2023

Commentary by Eoin Treacy

Stocks Tumble, Dollar Climbs With Traders on Edge

This article from Bloomberg may be of interest. Here is a section:  

“Investors are beginning to realize that a ‘higher for longer’ interest rate environment is a likely outcome and are slowly adjusting to the ‘new normal,’” Paul Nolte, a senior wealth manager at Murphy & Sylvest Wealth Management, wrote in a note. “Higher-for-longer has been the mantra of the Fed for a few months. It is only recently that the markets have been taking them at their word.”

Eoin Treacy's view -

On days when the stock, bond and commodity markets decline but the Dollar goes up, the only clear conclusion is cash is being raised and stuffed into money market funds.

That pattern of behaviour is putting downward pressure on the very short-end of the curve while the long-end is still trending higher. The net result is the 10-year – 3-month yield curve spread is now recovering from deeply inverted territory.



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September 26 2023

Commentary by Eoin Treacy

Volkswagen Cuts EV Output at German Sites as Demand Craters

This article from Bloomberg may be of interest to subscribers. Here is a section:

The appetite for EVs in Europe has been held back in recent months by higher energy, living and borrowing costs, as well as lingering consumer concerns about charging infrastructure and battery range. The German government’s decision to end subsidies for electric cars in company fleets this month led to a 171% increase in new EV registrations in August compared to the previous year, according to Germany’s VDA auto lobby. 

Against that backdrop, Germany has led a months-long crusade to extend the use of internal combustion engines under the European Union’s climate plans through the use of so-called e-fuels.

Eoin Treacy's view -

Running an economy on ideology is not best practice. I have to admit I never thought I would have to point that out. Governments pushing technology that would not survive on its own is not the best use of capital but can be justified if it going to meet a critical social need in future. The wrinkle in that way of thinking is how long do you have to keep supporting it before you admit it is not working. Apparently, we have not reached that point yet.



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September 22 2023

Commentary by Eoin Treacy

Saudis Didn't Secure Tesla, Will They Keep Funding Rival Lucid?

This note from Bloomberg may be of interest. Here it is in full:

Lucid's liquidity clock was wound until late 2024 with its $3 billion stock sale in June, yet further large injections, perhaps as soon as late 2024, could help stem the cash burn while the company scales operations. Stiff competition in the luxury-end of the auto industry from peers like Mercedes, Tesla, Audi and BMW, and the potential for an economic downturn, add substantial risk to Lucid's journey toward profitability. A takeover by the Kingdom of Saudi Arabia (60% stake in Lucid via the Public Investment Fund) is possible, yet the timing is questionable relative to the company's convertible bonds' 2026 maturity. The potential of such an action makes our view of event risk favorable -- and a consideration given the country's Vision 2030 plan - but it does make the bonds more of a lottery ticket than well-defined credit.

Eoin Treacy's view -

Building an automotive brand is capital intensive. Tesla got first mover advantage by being the first to provide electric vehicles consumers desired and monopolized the carbon emission sales market for several years. Every subsequent company must be even more efficient and needs to produce even better products. The challenge of funding in a rising interest rate environment is a clear problem. Having a big brother to help with liquidity is certainly a bonus.



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September 21 2023

Commentary by Eoin Treacy

AI Accelerates Ability to Program Biology Like Software

This article from the Wall Street Journal may be of interest. Here is a section:

“Synthetic biology in its broadest form encompasses a large part of the work that’s being done in biomedicine. That is, how we first understand organisms, but then use that understanding to program them or direct them to do different things,” said Dr. Lloyd Minor, dean of the School of Medicine and vice president for medical affairs at Stanford University. “And I do think that it offers a huge amount of potential across the board,” he said.

“The challenge in biology is that it is not terribly difficult to engineer organisms, to engineer living systems, to do things that can potentially be very harmful. So how do we think about monitoring, regulation, safe oversight in the biology world,” he said.

“It is collapsing time and expanding the aperture by which we are able to run experiments on a broader set of designs that scientists want to test on.” — Jennifer Lum, co-founder of Biospring Partners

Synthetic biology companies see opportunities for artificial intelligence throughout the product-development life cycle from initial design, where scientists can examine and factor in a greater number of variables and options, to the build phase to testing, where scientists can leverage the predictive nature of AI to quickly determine results.  

Eoin Treacy's view -

My view -  I first became aware of synthetic biology in 2016 when reading about the efforts to synthesise a yeast genome. The aim of the research effort was to try and figure out how to build a full human genome by identifying what each individual gene is responsible for. They started with yeast because it is smaller and has a strong record of interacting with the human body.

Artificial intelligence is helping to greatly speed up the pace of discovery. It is not full proof but nothing in science is. The benefit comes from rapid computer modelling, prototyping testing. There are large databases of chemicals that results can be compared against. The scope of research stretches across the entire chemical spectrum from energy to medicine and materials science.



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September 20 2023

Commentary by Eoin Treacy

Fed Leaves Rates Unchanged, Signals Another Hike This Year

This article from Bloomberg may be of interest. Here is a section:

“We are committed to achieving and sustaining a stance of monetary policy that is sufficiently restrictive to bring inflation down to our 2% goal over time,” Powell said at a press conference following the decision.

He emphasized the Fed will “proceed carefully” as it assesses incoming data and the evolving outlook and risks, echoing remarks he made at the Fed’s annual symposium in Jackson Hole, Wyoming last month.

After raising rates rapidly last year, “now we’re fairly close, we think, to where we need to get,” Powell said.

Eoin Treacy's view -

There were no surprises from this Fed meeting. The plan remains to raise rates again or until there is clear evidence the inflation is back under control. The intervals between hikes are lengthening so it is possible they will wait until December to hike but November remains the most likely.

Chairman Powell referred to progress in the unemployment statistics even though the headline figure has not moved much. In fact unemployment made a new recovery high at the last reading so upside follow through would represent a breakout.



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September 19 2023

Commentary by Eoin Treacy

US-China War Would Be Economic Disaster for Both

Thanks to a subscriber for this article by Niall Ferguson. Here is a section:

It is impossible to say how far the Chinese would prepare for a full-scale war with the US in the scenario of a blockade. It’s estimated by Western experts that that it would need a minimum of four months to be ready for prime time. The dilemma for Chinese strategists is that, if there is to be a war with the US, they would be better off striking the first blow, probably by attacking American naval assets in the Indo-Pacific, exploiting the classic vulnerability of ships in port.

Eoin Treacy's view -

Taiwan’s younger generation have no personal memory of the flood of refugees fleeing Communist rule. There has been a generational change and the continued success of the Democratic Party is a clear sign the population has no intention of ever recombining with China voluntarily. Therefore the are only two ways Taiwan can be encouraged to come back to the mainland fold.

The first is economic. Right now, Taiwan is a geopolitical jewel because of the strength of the semiconductor sector and the local ecosystem that supports it. However, the semiconductor sector has always been cyclical, capital intensive and low margin. That’s why companies were willing to stop competing for the prize of being the most efficient.



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September 18 2023

Commentary by Eoin Treacy

Private-Equity Giant Blackstone Joins Coveted S&P 500 Club

This article from the Wall Street Journal may be of interest. Here is a section: 

Earlier this month, analysts at Goldman Sachs estimated that Blackstone could attain a 0.19% weighting, implying about $15 billion of demand from index-tracking funds. Some of that buying may have already taken place: Blackstone stock has risen 9% since its inclusion was announced on Sept. 5.

Blackstone is joining after S&P Dow Jones Indices in April relented on a previous ban for new index entrants with multiple share classes.

Eoin Treacy's view -

Blackstone rallied impressively over the last month in advance of its entry into the S&P500. The company’s ambitions of soon achieving the goal of $1 trillion under management and its dominant position in private credit have been the other factors that drove interest in the share.



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September 15 2023

Commentary by Eoin Treacy

Advances Bipartisan Nuclear Energy Bill from Capito, Carper, Whitehouse

This press release is the primary reason uranium prices are jumping this week. Here is a section:

The ADVANCE Act would:

Facilitate American Nuclear Leadership by:
Empowering the Nuclear Regulatory Commission (NRC) to lead in international forums to develop regulations for advanced nuclear reactors.
Establishing a joint Commerce Department and Energy Department initiative to facilitate outreach to nations that are seeking to develop advanced nuclear energy programs.

 Develop and Deploy New Nuclear Technologies by:

Reducing regulatory costs for companies seeking to license advanced nuclear reactor technologies.
Creating a prize to incentivize the successful deployment of next-generation nuclear reactor technologies.
Requiring the NRC to develop a pathway to enable the timely licensing of nuclear facilities at brownfield sites.

 Preserve Existing Nuclear Energy by:

Modernizing outdated rules that restrict international investment.
Extending a long-established, indemnification policy necessary to enable the continued operation of today’s reactors and give certainty for capital investments in building new reactors.

 Strengthen America’s Nuclear Fuel Cycle and Supply Chain Infrastructure by:

Directing the NRC to establish an initiative to enhance preparedness to qualify and license advanced nuclear fuels.
The bill identifies modern manufacturing techniques to build nuclear reactors better, faster, cheaper, and smarter. 

Eoin Treacy's view -

The primary objection to nuclear energy is cost. Anything that reduces the capital intensity of the construction process is good news. That’s why the streamlining of the regulatory process is so important.

The environmental and safety argument is easily addressed through multiple studies that highlight how safe nuclear power plants are. The challenge is most existing reactors were designed with nuclear bombs in mind. The risk of proliferation twinned with safety scare mongering has been enough to sour the sector in the minds of consumers.  



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September 13 2023

Commentary by Eoin Treacy

Unity has changed its pricing model, and game developers are pissed off

This article from the Verge may be of interest. Here is a section:

“Unity Plus is being retired for new subscribers effective today, September 12, 2023, to simplify the number of plans we offer,” Unity wrote. “Existing subscribers do not need to take immediate action and will receive an email mid-October with an offer to upgrade to Unity Pro, for one year, at the current Unity Plus price.”

A Unity Plus subscription was about $400 per year. After that one year, however, it stands to reason that those former Plus users will have to pay the new Pro rate, which is currently over $2,000 per year.

Developers are also concerned these new fees could impact digital preservation efforts as now game makers are seemingly incentivized to delist older games so they aren’t charged for them. There’s also the question of how Unity plans on tracking installs and whether or not such tools run afoul of government privacy laws. Here’s a tweet from the official Unity account explaining how it intends to monitor a game’s installs.

Eoin Treacy's view -

The basic business model for software companies is to give it away for free so they can build an installed base. Then make the product good enough that it is indispensable to the end user. Then start charging for it in the hope enough users will accept the change to sustain the business. The companies that have succeeded in implementing a charging model like Google and Meta Platforms have multiplied in value. Those which have failed like Twitter have not.



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September 13 2023

Commentary by Eoin Treacy

Nuclear power could see its biggest expansion in decades, leading to increased demand for uranium

This article from MarketWatch may be of interest. Here is a section:

"Growing interest in nuclear energy is being seen around the world," said Freebairn, noting this his company has been highlighting events in Eastern Europe and North America.

For now, nuclear power provides around 10% of the world's electricity, according to the International Energy Agency.

It comes from roughly 440 reactors in 31 countries with about 390 gigawatt electrical (GWe) capacity, according to UxC's Hinze. If total power demand grows by 2% to 3% as agencies like the IEA predicts over the next 10 to 20 years, and nuclear power keeps it share of the total in the 8% to 10% range, then Hinze expects nuclear power should reach at least 500 GWe by 2040 and as high as 550 GWe.

That would represent a roughly 40% growth over the current market size, he said.

There are potential downside risks to nuclear power growth, including competition from fossil fuels and renewables, but since nuclear power is "already not a huge share of the market, it would make sense that its growth can continue regardless of how the other energy fuels fare," Hinze said.

Eoin Treacy's view -

The uranium price war is over. Kazakhstan flooded the market with supply between 2011 and 2016. That forced several smaller miners out of business. Even Cameco closed mines and supplied long-term contracts by buying spot on the open market. The introduction of the Sprott Uranium ETF helped to soak up available supply and was instrumental in setting up the conditions for the current recovery.



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September 12 2023

Commentary by Eoin Treacy

Incredible markets

Thanks to a subscriber for this thought-provoking article by Charles Gave. Here is an English translation:

What are these risks?

There is one and only one: that the dividends paid by the companies that make up the S&P 500 index do not collapse, as happened from 1929 to 1934.

And so, for those who think that capitalism is finally going to experience its great final crisis, it is better to have gold.

But in the event that this dear system of exploitation of man by man were to survive as it has always done throughout history, well, I could live to be two hundred years old without any problem, my capital remaining mine.

Which is not nothing.

But the value of my capital can vary very greatly, which I don't care about as only the dividend payments matter to me.

Today, transforming my gold into shares is almost indifferent to me.

Let's imagine that in the coming months, the stock market falls by 50%, that gold stays where it is, that the yield therefore increases from 1.7% to 3.4% and that the ratio goes from 1 to 1.5.

At that point, I can sell half of my gold and buy the equivalent in shares, which allows me to double my annual income.

If the ratio passes, after a fall in gold from 1 to 0.5, on the other hand, I must sell my shares to buy gold.

And this is undoubtedly why the ratio has oscillated between 1.5 and 0.5 for a century and a half.

Eoin Treacy's view -

Gold does best when the stock market’s performance is nondescript, real rates are trending lower and the US dollar is weak. That is not generally the best time for the earnings yields to grow because secular bears generally mean excesses from the previous stock market bull cycle are being unwound.



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September 11 2023

Commentary by Eoin Treacy

Morgan Stanley Sees Dojo Boosting Tesla's Value by $500 Billion

Morgan Stanley Sees Dojo Boosting Tesla’s Value by $500 Billion 

The supercomputer, designed to handle massive amounts of data in training driving systems, may put Tesla at “an asymmetric advantage” in a market potentially worth $10 trillion, said Jonas, and could make software and services the biggest value driver for Tesla from here onward. 

The next version of Tesla’s full self-driving system, expected by year-end, and the company’s potential Artificial Intelligence Day in 2024 are worth watching, he added. Tesla has not formally announced an AI Day for next year. 

Eoin Treacy's view -

It looks like Tesla is finally getting some credit for its AI expertise. The company is further along in providing autonomous driving than any other company. Quite whether the final product launch will depend on the individual computing power of the car and its sensors and/or instant connectivity with a supercomputer remains to be seen. 



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September 08 2023

Commentary by Eoin Treacy

Huawei Debuts Even More Powerful Phone as Controversy Swirls

This article may be of interest. Here is a section:

The Pro+ similarly emerged without the typical marketing and fanfare surrounding a major product launch. A brief teaser video posted to Huawei’s Weibo account showcased a device very similar to its lesser cousin, with the same outsized back-camera array.

The new devices have spurred an outpouring of nationalist sentiment on Chinese social media and were picked up by domestic news outlets that touted Huawei’s advances as a victory against sanctions.

Eoin Treacy's view -

The big question many media outlets are pondering is why Xi Jinping stayed home from the G-20. Perhaps he has bigger concerns. The currency is at a new low, government bond yields are rebounding from their lows and the stock market is straining under the threat of a property sector mishap.



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September 07 2023

Commentary by Eoin Treacy

Spiraling Offshore Wind Costs Show Limits of Biden Inflation Act

This article may also be of interest. Here is a section:

Orsted’s warnings are the most concrete example yet of the limits of the IRA, which was hailed as a key driver for America’s nascent offshore wind industry. While the law provides at least $370 billion in grants, tax credits and other incentives for climate and clean energy projects, that’s proving no match for rising inflation and borrowing costs. And by dangling higher incentives for companies sourcing US-made parts, it’s fueling demand before the domestic supply chain catches up, driving prices higher still.

“The irony here is that the Inflation Reduction Act probably has had some part in stoking inflation for some of the green goods that it intends to encourage,” said Kevin Book, managing director at ClearView Energy Partners LLC. The IRA is already spurring construction of new US factories to manufacture critical clean-energy gear, but that’s lagging behind renewable project development, exacerbating the issue in the short term. “It takes a long time to stand up a factory. It takes a long time to replace a foreign-sourced supply chain.”

Eoin Treacy's view -

This is a great example of how governments getting involved in the free market often introduce inefficiencies that drive up prices for everyone. Energy infrastructure is capital intensive. That’s an acceptable risk when companies have a clear vision of what works and have a captive demand pool of consumers.

The challenge for new energy companies is they come with an implied risk premium. The technology is unproven, longevity is questionable, and the competitiveness of supply is subject to political whim. That implies an interest rate sensitivity that is underappreciated by most investors.



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September 07 2023

Commentary by Eoin Treacy

Illumina Names Thaysen CEO After deSouza's Abrupt Departure

This article from Bloomberg may be of interest. Here is a section:

Thaysen will need to decide how to proceed with Grail, a company Illumina acquired in 2021 that sells a blood test to identify dozens of types of cancer at earlier stages than typically diagnosed. Antitrust regulators in the US and Europe are trying to unwind the deal, which Illumina has vowed to defend despite steep costs, including a nearly $500 million fine in Europe. 

Meanwhile, Illumina’s DNA-sequencing business faces more competition than ever. The company started shipping its latest machine earlier this year to help maintain its hold on the market. That investment has in part crimped profitability, something Illumina pledged to fix during its proxy fight with Icahn.  

Eoin Treacy's view -

Grail is turning into a poisoned chalice for Illumina. The decision to ignore the EU’s antitrust concerns not only means Illumina is accepting a fine and foregoing access to the market, but it sullies the company’s reputation with regulators.

Illumina is a highly cyclical company. Every time they have released a new machine in the past, sales have boomed and the share took a leap higher. It has then tended to range in a volatile manner until their next new machine is released. Illumina’s machines have been instrumental in compressing the cost of genetic sequencing from thousands to hundreds of dollars.



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September 06 2023

Commentary by Eoin Treacy

Apple Falls on Report That China Agencies Are Barring iPhone

This article may be of interest. Here is a section:

September 04 2023

Commentary by Eoin Treacy

Huawei Chip Shows US Curbs Are Porous, Not Useless

This article from Bloomberg may be of interest. Here is a section:

It’s highly unlikely Chinese chipmakers can squeeze more out of old tools to get them beyond 5nm, which means they’ll be stuck while foreign rivals continue to advance. And if they do make further breakthroughs, the US and its allies have plenty of ways to tighten up their curbs, including broadening the scope of the equipment ban and adding materials to the list. 

Eoin Treacy's view -

Predictability in the semiconductor sector ended in 2017 when the International Technology Roadmap for Semiconductors was last published. Instead of 18 months it now takes around 30 months to deliver the next generation of chips. That’s what the end of Moore’s Law amounts to.

As the physical limits of silicon are approached, the difficulty of cooling a chip becomes exponentially more difficult. A silicon atom has a diameter of around 0.2nm, so transistors with a diameter of 3nm are already very close to the physical limits of the atom. This has created a bottleneck in chip innovation because totally new technology will be required to deliver fresh innovation.

The reason new computers come with both a CPU (central processing unit) and GPU (graphics processing unit) reflects that bottleneck. Nvidia’s success is based on providing chips designed specifically for a dedicated task. That limits potential but maxes out utility for that single use case. The model works well because most chips are only used for a small number of similar functions.



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September 01 2023

Commentary by Eoin Treacy

Colin Huang Adds $4.5 Billion in Wealth as PDD Shares Surge

This article from Bloomberg may be of interest.

PDD in recent years has used promotions to grab market share from more established Chinese rivals including Alibaba Group Holding Ltd. and JD.com Inc. In an attempt to replicate that success abroad, it created Temu, which was introduced with much fanfare during this year’s Super Bowl.

Since it launched last year, Temu has exploded into one of the top US apps, targeting cash-strapped Americans with cheap unbranded products shipped directly from Guangzhou, China. In just seven months, the app has been downloaded 50 million times.

The roll-out hasn’t been without hiccups. Temu is burning through money and squeezing its suppliers in a bid to take on Amazon.com Inc. It’s also involved in lawsuits with rival Shein over antitrust matters.

Eoin Treacy's view -

The question Temu is exploring is where the interchange between price and convenience resides. Amazon delivers convenience better than anyone else and charges a premium. Target, Wal-Mart, or Costco supply cheaper products, but nowhere near the same level of convenience. Temu supplies bargain basement prices that appear too good to be true. It does not have in-country fulfilment centres, so convenience is not measurable, and returns will inevitably be problematic.



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August 31 2023

Commentary by Eoin Treacy

Whatever happened to the Metaverse?

Eoin Treacy's view -

During the pandemic the metaverse was all the rage and NFTs of whimsical characters were selling for millions. Today most have lost all their value but what of the companies that are pioneering the online neighbourhood marketplaces?

The Solactive Metaverse Select Index peaked in early 2022 and found a medium-term low at the end of the year. Since then, it has held a sequence of higher reaction lows and is currently firming from the region of the 200-day MA.



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August 30 2023

Commentary by Eoin Treacy

What's Driving the Coups Across Sub-Saharan Africa?

This article from Bloomberg may be of interest. Here is a section:

3. Why has West Africa been so prone to coups?
The events in Niger followed two coups each in neighboring Mali and Burkina Faso and another in nearby Guinea. The leader of Sudan in the eastern Sahel was overthrown in 2021, the same year Chad’s military replaced its late president with his son, an army general. All these takeovers have been rooted in economic malaise and weak governance that have fed frustration among civilians and — in West Africa in particular — the spread of extremist violence. However, despite claims by the new strongmen that they are tackling insecurity, the number of people killed in the Sahel region surged in the first half of the year.  

Eoin Treacy's view -

It’s impossible to walk across the Sahara during the summer. That trek is a lot easier in the autumn,  winter and spring. Political instability, vendetta settling mobs, human traffickers and religious extremists will all fuel migrant flows over the next 12 months as they are pushed northward. That’s all part of the unconventional war effort being propagated by Russia in the Sahel.

Europe not only needs to boost defense spending but border security is going to be a related urgent concern. The necessity of boosting defense outlays is undeniable even as finding money for it is challenging.



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August 29 2023

Commentary by Eoin Treacy

Grayscale Wins Case Against SEC. It's a Huge Victory for Bitcoin and Coinbase

This article from Barron’s may be of interest. Here is a section:

GBTC had been trading at a significant discount to the value of the Bitcoin it holds. That gap is likely to close as traders anticipate an ETF approval.

The judges' decision won't allow GBTC to convert into an ETF automatically. The federal government can appeal the decision to the Supreme Court or the SEC could attempt to deny the application to convert to an ETF for another reason.

Still, the decision makes it an uphill battle for the SEC to keep spot Bitcoin ETFs from coming to market. In addition to Grayscale, BlackRock (BLK), Fidelity and other companies have also applied to launch a spot Bitcoin ETF.

Eoin Treacy's view -

The SEC is expected to give a ruling on the applications for spot priced ETFs before the Labor Day holiday which is this weekend. It is unclear whether today’s announcement will influence that decision, but the odds are improving that the SEC’s reluctance to grant permission for spot price ETFs will eventually be overcome.



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August 28 2023

Commentary by Eoin Treacy

Startup extinction season is going to kick into high gear - and there's likely going to be a bloodbath soon for some of the 50,000 VC-backed startups

This article from Business Insider may be of interest. Here is a section:

Venture capital funding was overly abundant in the latter half of 2020 and all of 2021. There were nearly 19,000 deals done that year, according to PitchBook, until things started to taper off in 2022.

Stanford points out that the average time between funding rounds is now around 1.5 years. – basically what it was before the pandemic boom times. So, hypothetically, if a company last raised capital in the first quarter of 2022 (one of the most active in terms of deal count, PitchBook data shows), many startups will be on the hunt for new capital in the fourth quarter of 2023.

Every company's situation is a little different based on their operating expenses and whether they've gotten fresh funding already. Though, unless you're an AI startup, the chance of a VC check has been slim to none. So what are their options? Likely a sale or shutting down.

But it's not just VCs who are being stingy. All those crossover firms that wanted to get in on the action like Tiger Global (which by the way, did 335 deals in 2021, according to Crunchbase) and Coatue, aren't doing the kind of deals that they used to. Participation has dropped from more than 550 deals and a quarterly peak of nearly $50 billion in 2021 to fewer than 200 deals and a quarterly peak of around $15 billion in 2023, Stanford wrote.

"We believe that a large portion of the supply-side deficit is derived from the crossover and other nontraditional investors that have pulled back from VC to more traditional strategies," he wrote.

Eoin Treacy's view -

China is not the only play where unprofitable enterprises have been starved of investment capital. Higher for longer interest rates are taking a toll everywhere and the breadth of what is capable of securing funding continues to contract. It’s AI or nothing at present.



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August 25 2023

Commentary by Eoin Treacy

Danaher Is Said to Be in the Lead to Acquire Abcam

This article from Bloomberg may be of interest to subscribers. Here is a section:

Danaher Corp. has emerged as the leading bidder for biotechnology supplier Abcam Plc, according to people familiar with the matter. 

Danaher has pulled ahead of other bidders and is negotiating with the Cambridge, England-based company to reach a deal, the people said, asking not to be identified because the matter is private.

Nothing is finalized and talks could still fall apart. It’s still possible another bidder could prevail, the people said.

A representative for Abcam declined to comment. A representative for Danaher couldn’t immediately be reached for comment. 

Bloomberg reported in June that Abcam had attracted initial interest from US life sciences company Danaher and Agilent Technologies Inc.

Abcam said in June that it was starting a process to explore strategic options including a sale after receiving interest from multiple parties.

Eoin Treacy's view -

Abcam’s success in listing in the USA and impending sale at a premium to Danaher is a testament to the depth of the US capital markets. If other markets are to compete in hosting promising companies, the scale of regulation to comply with will need to decrease and the welcome offered to companies will need to improve.



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August 23 2023

Commentary by Eoin Treacy

Pencils down

Thanks to a subscriber for this edition of Jim Grant’s free letter. Here is a section:  

Arm’s prospective transition to the public realm is no small development, as Wall Street impatiently awaits the return of capital markets activity. Conventional IPO fundraising (i.e., excluding special purpose acquisition companies) stands at $10.2 billion in the year-to-date per Dealogic, double the full-year tally logged last year but a fraction of the $39.7 billion and $105.5 billion outputs seen during 2020 and 2021, respectively. “Recent summer weakness is clearly pushing [SoftBank] to list Arm sooner rather than later,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, tells Reuters.

On the bright side for SoftBank and its teeming roster of 28 investment banks leading the offering, recent events in the IPO market suggest that risk appetite remains robust despite the August selloff.  Last Tuesday, shares in Sacks Parente Golf, Inc. vaulted 624% in their Nasdaq debut, briefly conferring a $400 million market cap on the micro-cap manufacturer of putting equipment, which lost $3.5 million on $190,000 in net revenues a year ago.

Noting that the Sacks Parente priced its offering at $4 per share, the bottom of its indicated $4 to $5 per share range, while reducing the allotment to 3 million shares from 4.4 million, Renaissance Capital senior strategist Matt Kennedy marveled to Bloomberg that “in a typical IPO, it would be bizarre for a company to price at the low end of its range and then pop 600%. . . There’s still a sub-segment of the IPO market where the casino is open.”  Sacks Parente’s hot streak soon abated however, as the stock finished today south of $3, completing a round trip and then some.

Then there’s VinFast Auto Ltd., which also began trading on the Nasdaq last Tuesday via a merger with blank-check firm Black Spade Acquisition Co. The Vietnam-based electric vehicle maker has since enjoyed a hotter ignition, with shares ripping higher by 109% today, building on a 280% rally in its first trading day one week ago. VinFast, which remains under 99% control by its founder Pham Nhat Vuong and which posted a $599 million net loss in the first quarter on $84 million in sales, ended the day with a market cap of roughly $85 billion, nearly equivalent to that of Ford and General Motors combined.

The water’s warm, Masa and Co."

Eoin Treacy's view -

The trend of rising rates damped down speculative activity in the IPO market in 2022. Now, as expectations that central bank hiking cycles are nearing an end enthusiasm is rising once more. The scale of the moves in the IPO market is much more concentrated at present, which is a reflection both of the smaller number of new listings and tightening liquidity.



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August 21 2023

Commentary by Eoin Treacy

Cybertruck employee deliveries 'imminent' with dual-motor or tri-motor options as Tesla films launch ad

This article from Notebookcheck may be of interest. Here is a section:

The source mentions that the launch is "imminent" and only a few weeks away which jibes with Elon Musk's "end of Q3" Cybertruck release date promise back in April. There are a few other signs that point towards a Cybertruck launch in September, too.

For one, Tesla has been filmed loading multiple units on trailers and shipping them out of Giga Texas just this past week alone, as the parking lot there seemingly gets new production batches every few days. They seem heading to the Fremont factory while some stop for crash tests on the way.

Moreover, Tesla has reportedly been filming what could turn out to be the first Cybertruck launch ad up in the glaciers of Iceland. Locals have taped the Cybertruck surrounded by camera equipment there, or doing laps on the glacier fronted by a black Land Rover with its tailgate open as if for capturing footage.

Eoin Treacy's view -

It is quite likely the Cybertruck units being loaded onto trailers are for crash tests. That suggests the final design is confirmed and Tesla is ready to begin ramping up production. There is clear potential the Cybertruck has cannibalized some demand for Tesla’s other models, as well as successfully attracting new adherents to the brand. If that assumption is correct, sales should surprise on the upside in the coming quarters.



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August 18 2023

Commentary by Eoin Treacy

Bitcoin Calm Shatters With Sudden Tumble, Mass Liquidations

This article from Bloomberg may be of interest. Here is a section:

Crypto traders are now focusing on the $25,000 level for Bitcoin, below which options positioning suggests another cascade of liquidations could hit. 

“With limited catalysts to push Bitcoin higher in the short term, a fall below $25,000 could put bears in charge, and if the rout in global risk assets continues, Bitcoin could face further downside,” said Josh Gilbert, market analyst at trading and investing firm eToro.

A Wall Street Journal report citing documents that Elon Musk’s SpaceX has sold off its Bitcoin holdings after writing down $373 million also weighed on sentiment. It wasn’t clear from the Journal report when SpaceX had sold its Bitcoin.

Eoin Treacy's view -

Bitcoin is volatile. It is prone to large moves and these are to be expected when dealing with the asset. That means position sizing has to take account of the potential for volatility. The price is now testing the region of both the 200-day and 1000-day MAs as well as the upper side of the underlying base formation. This is a major decision point for the price.



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August 10 2023

Commentary by Eoin Treacy

Email of the day on a third industrial revolution, doing more with less and a nuclear revival from David Brown:

It was a memorable 3 days with you last week. It gave us time to discuss several things in depth, including our new industrial revolution. Thank you for capturing some of the key points in your recent writings. I gave a lengthy presentation on our new 3rd Industrial Revolution at David Fuller's Markets Now meeting in London, February 2015, and Forbes interviewed me a few weeks later. Here is an extract from the article:

"We clearly have the new communication system, the internet, and I suggest we can reasonably date the beginning of this industrial revolution to the mid 1990s when desktop PCs became linked for the first time by Tim Berners-Lee’s World Wide Web and Marc Andreesen’s Mosaic/ Netscape system. The internet is well ahead of the other two factors."

This was some years before Klaus Schwab and the World Economic Forum took up the theme. And yes, I do rank it as the 3rd, not 4th as Schwab does: the development of computer tech in the 1970s-1980s hardly constituted a revolution. It did not drive a massive increase in productivity because it lacked most of the key factors required for an industrial revolution.

Back then, we did not have the internet, the first of the 3 new factors required, and which more recently has given a massive change in communication and in distribution of information and goods. That became feasible from 1994 when Netscape appeared and especially from 2007 with the first iPhone followed by other smartphones.

However, the other two required breakthroughs are still missing today. Our new industrial revolution has stalled with just 1 of the 3 essential factors in place. Our financial system is completely unreformed and inefficient; and we have not rolled-out a viable new energy source.

In fact, in my opinion, the Western world has gone seriously off-track in the eight years since I first presented on this in 2015. You captured the issue very succinctly when wrote "The basic assumption is technological innovation allows us to do more with less". "The challenge in the energy and financial sectors is the solutions being proposed do less with more." The current direction of travel on renewable energy is worrying. In addition to the gross inefficiency, unreliability, and cost-ineffectiveness, of wind and solar power, we have the bizarre belief in shipping wood chips across the Atlantic to fuel 'green' energy in the UK. Apparently, returning to the energy source that pre-dated our 1st and 2nd revolutions constitutes progress!

I do not have much idea about the new financial system, but the new energy system is obvious and that is the topic of this note to you today, Eoin. From our discussions last week, I believe you are of the same view, and it would be good to pass this on to all subscribers of Fuller Treacy Money. I recommend this article. At last we are beginning to see writing by experts in the energy sector, real experts, with factual information. This article on nuclear power will (hopefully) be followed by many more.

Here are some key points from the article:

The only viable and scalable low-carbon power technology is nuclear. Today, more than 400 reactors generate about 10 per cent of world electricity. They are emissions free and reliable. Their only problem is that they are perceived to be dangerous and are violently opposed by some groups.

Dangerous, nuclear is not. Per unit of energy generated, nuclear power has proved to be much safer than any other major power generating technology. Coal, gas and hydropower are respectively 4000, 100 and 35 times more dangerous.

In the event of an accident where all power supply is lost, all modern reactors will shut down safely. Over the last 60 years the only nuclear powerplant accident with directly measurable health consequences has been at Chernobyl. The reactor there was operated in defiance of all safety principles and used obsolete technology without shielding: its failure has no relevance to a discussion of normal nuclear reactor safety.

Many different designs of small modular reactors which are built on a production line basis are proposed and several are now under construction. None of them can melt down and release radiation.

A rapid switch from expensive, impractical wind and solar power to reliable nuclear is the only way of meeting the net zero goal while keeping the lights on and society in general functioning.

Nuclear power needs to be recognised as a low emissions source of electricity that is superior to wind and solar power. Subsidies, mandates and other enormously expensive policies intended to promote wind and solar power must be abandoned and the money switched to expediting nuclear power.

Governments need to face the fact that wind and solar power can never deliver their net zero dreams of low cost, reliable, emissions free electricity. They have only two realistic options: switch to nuclear power, or abandon net zero.

The article is referring to current fission technology, and - as you mentioned recently - we may soon have even more powerful and efficient fusion energy to follow.

I am hoping that we are past peak nonsense about so-called 'green technologies' and that realism will begin to reassert itself. Eoin, it would be good if you can periodically update us on investment themes related to nuclear power. And let's return to the topic of what might constitute "doing more with less" in a much-needed new financial system.

Thanks and best wishes to Aisling and family. It truly was wonderful to host you last week.

Eoin Treacy's view -

Thank you for this generous email and it was very enlightening to spend several days discussing the outlook for the markets and the world. Thank also for your wonderful hospitality in hosting us at Cambridge and sharing your insights on the practical use of AI.

Energy is the most vital sector in the world and comes with vested interests we are only partially aware of. The trend of investment in renewable energy is still alive and well. Just yesterday Germany announced another investment package. The €58 billion will focus on retrofitting buildings to be more energy efficient as well as new construction, investment in new green energy projects (€12 billion) and additional money for building semiconductor factories. 

The biggest challenge for nuclear energy is large political parties have made their opposition to the technology a part of their manifesto and that has been the case for decades. To turn that around both sides of the political divide will need to agree on the solution.



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August 10 2023

Commentary by Eoin Treacy

US Authorities to Probe Fatal Tesla Model Y Crash in Virginia

This article from Bloomberg may be of interest. Here is a section: 

The probe comes as the US National Highway Traffic Safety Administration is in the midst of a series of investigations targeting Tesla, its products and its chief executive officer, Elon Musk. Federal regulators are looking into possible problems with the company’s seat belts, steering wheels and driver-assistance features. 


The Florida collision is the 54th included in NHTSA’s Special Crash Investigation of advanced driver-assistance systems like Tesla’s Autopilot. The broader probe began in 2016 after a fatal accident in Florida involving a Model S that was being operated with its automated driving system activated.

Tesla vehicles have been involved in all but nine of the incidents that have been added to NHTSA’s investigation. The automaker, which has disbanded its media relations department, didn’t respond to a request for comment.

Eoin Treacy's view -

There are also pending cases focusing on Tesla’s claims on the range of its vehicles. Tesla has ridden a wave of enthusiasm centred on delivering the first desirable all electric vehicles. The company’s success has prompted both new upstarts and forced legacy companies to alter their business models. They did not have much choice because one of the primary factors that allowed Tesla to survive was its dominance of carbon credit sales.



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August 10 2023

Commentary by Eoin Treacy

Riot Platforms Reports Mixed Q2 2023 Financial Results, RIOT Shares Drop 4%

This article from Coinspeaker may be of interest. Here is a section: 

One of the leading crypto mining publicly traded companies Riot Platforms Inc (NASDAQ: RIOT) released its Q2 2023 earnings on Wednesday. According to the announcement, Riot Platforms produced 1,775 Bitcoins during the quarter that ended on June 30, compared to 1,395 Bitcoins that were generated during the same period last year. As a result, the company announced that its total revenue for the quarter came in at $76.7 million, compared to approximately $72.9 million for the same period last year. However, analysts surveyed by FactSet expected the crypto mining company to report revenue of about $84.6 million.

Eoin Treacy's view -

Riot Platforms was punished today for the earnings miss but I am encouraged by the fact that it has successfully reduced the cost of mining a new bitcoin and has additional revenue streams which ensure it has the ability to weather crypto winters. Selling electricity credits back to the grid was a significant money spinner in the 2nd quarter for example. 



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August 08 2023

Commentary by Eoin Treacy

Secular bull markets versus industrial revolutions

Eoin Treacy's view -

I had the great pleasure of spending several days last week with David Brown talking about the drug discovery process, how artificial intelligence can be harnessed to speed it up, and how that all fits into the discussion around the evolution of a 3rd (some say 4th) industrial revolution. I discussed some of my updated thoughts on the subject in the Friday Big Picture audio/video. Here are some more; hopefully in a clearer format.

Before digging into the weeds, there is an important question to answer. Can you have a secular bull market without an industrial revolution? Of course the answer is yes. Industrial revolutions evolve over decades and can last a century. In that time there will be several long-term bull and bear market cycles through various asset classes.

For example, the evolution of China’s economy over the last 30 years was about the adoption of capitalistic economic policies and harnessing the labour of a billion people. That was a political decision to deploy lessons already learned elsewhere rather than new thinking. Secular bull markets in commodities develop because demand leaps higher before supply can adjust.



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August 03 2023

Commentary by Eoin Treacy

QQQ Churns in Late Hours on Apple, Amazon Earnings

This article from Bloomberg may be of interest to subscribers. Here is a section:

In late trading, a $207 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) whipsawed after Amazon.com Inc.’s bullish revenue forecast and Apple Inc.’s disappointing iPhone sales. Longer-dated Treasuries are now set for their worst week of 2023 amid signs of unexpected economic strength and concern over a widening budget deficit.

A report Thursday underscored resilient demand for workers, while separate numbers showed labor productivity climbed, helping to offset rising labor costs. Those figures preceded the government’s employment data — forecast to show the US added 200,000 jobs in July. While that would be the weakest print since the end of 2020, it’s still a strong advance historically.

Eoin Treacy's view -

The 10-year yield continues to extend its breakout. This is less about inflation fears and more about profligate spending and no plan to rein it in. The higher the return demanded by investors to buy Treasuries the worse the relative return from other asset classes looks.



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July 31 2023

Commentary by Eoin Treacy

Air Pockets, Free Falls, and More Cowbell

Thanks to a subscriber for this report from John Hussman may be of interest. Here is a section:

There are very few conditions in which we have any specific expectations for near-term market action. The exceptions are when the market is strenuously overextended in a “trap door” situation combining rich valuations with unfavorable internals, or when the market is strenuously compressed following a material improvement in valuations.

Over the past four decades, I’ve developed scores of interesting “syndromes” and relationships, many that I’ve discussed in these market comments. A subset of these capture features of “overextension” and “compression” that occur at major market extremes.

The chart below shows one such syndrome that emerged in mid-April as the S&P 500 advanced above 4400, and again last week, which I consider part of the same overextended advance. The criteria are intended to capture a certain “relentlessness” of speculation that often precedes abrupt market losses. This particular syndrome is among several that I monitor to identify speculative “blowoffs.”

In this case, “relentlessness” is defined by periods when the S&P 500 is at least 4.5% above its 50-day average, with a relative strength index (RSI) above 70 – indicating a preponderance of advancing days relative to declining days in recent weeks, a 14-day rate of change (ROC) greater than 4% in the S&P 500, and at least a mildly bullish tilt in advisory sentiment, based on Investors Intelligence data. Periods like this look briefly parabolic, as investors increasingly buy every dip, in fear of missing out.

Eoin Treacy's view -

The Nasdaq-100 is back testing its all-time peak and the dominance of the FANGMANT shares is now both more concentrated and dominant relative to the wider market than at the peak in late 2021. That alone is grounds for caution but it is not a timing indicator, the overbought conditions can progress even further. It is, however, a very good time to have one’s stop strategy in place.



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July 19 2023

Commentary by Eoin Treacy

Is ChatGPT Getting 'Dumber'? Usage Drops As Users Complain

This article from Search Engine Journal may be of interest. Here is a section:

ChatGPT, the viral conversational AI chatbot created by OpenAI, appears to be losing some of its initial luster and appeal.

After rocketing to immense popularity following its launch late last year, recent data indicates usage and interest in ChatGPT may be declining.

Some longtime users have complained on social media and developer forums that the AI seems to be producing lower-quality responses than just a few weeks ago.

They describe the bot as “lazier,” “dumber,” and prone to more mistakes or nonsensical answers. However, OpenAI denies intentionally downgrading ChatGPT, tweeting that “we make each new version smarter.”

The company speculates users encountering more flaws reflects increased usage uncovering limitations.

Eoin Treacy's view -

It would be convenient to lay the blame for falling usage on the fact many students are on holiday. However, the accusation of poorer results is more difficult to explain away. The challenge for large language models is getting beyond the novelty factor.

Providing essay answers is a useful if questionable use case. The challenge is if the short form responses required by most people have to be carefully proofread, wouldn’t be easier to write them oneself? The efforts of media organizations to fire their workforces have been publicly outed as being very error prone. Wouldn’t it be better to encourage employees to deploy AI where possible so they can enhance their productivity where possible?



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July 11 2023

Commentary by Eoin Treacy

Coinbase Jumps to Highest Since August on Bitcoin ETF Momentum

This article may be of interest. Here is a section: 

Coinbase Global Inc. gains as much as 13% on Tuesday, trading at its highest intraday level since August and extending a rally driven by optimism over the potential US approval of a Bitcoin ETF. 

Shares of the biggest US crypto exchange traded at $88.27 a share as of 2:12 p.m. in New York. The stock has more than doubled so far this year amid a broad bounce for cryptocurrency linked stocks despite regulatory challenges from a lawsuit by the US Securities and Exchange Commission. 

On Tuesday, CBOE filed for amendments for five Bitcoin ETF applications, confirming that it reached an agreement with Coinbase on surveillance sharing agreements, a move to address concerns by the SEC over market manipulation. The filings previously had said that the exchange was “expecting” to enter into the agreement with Coinbase. 

Eoin Treacy's view -

All ETFs need to be able to transact effectively. Considering the sums likely to been committed to ETFs in a bull market, the reliability of execution and the need for compliance with anti-money laundering regulations mean Coinbase is the only US exchange large enough to fill the role. 



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July 06 2023

Commentary by Eoin Treacy

Generative AI: Hype, Or Truly Transformative?

 Thanks to a subscriber for this report from Goldman Sachs. Here is a section:

Sarah Guo: Misjudging the timetable of large technology shifts is a common pitfall in investing. I am all-in on a fundamental bet that this shift will drive substantial value creation, but this is a decade+ transition. In the meantime, areas of mispricing have certainly surfaced. In the private markets, a large cohort of investors is trying to figure out how to gain exposure to this technology, or at least how to think about the risk profile around it. And while they're developing a deeper understanding of the space, the tendency has been to anchor to investments with more obvious heuristics. For example, many investors seem to be assessing startups based on whether the people leading them are former researchers at OpenAI or DeepMind, because that’s a much easier question to answer than whether a particular product or research thesis will be successful. Similarly, because databases are a known and well-understood category of software, vector databases are receiving substantial investor attention.

That said, I am already seeing some investors becoming more skeptical because most enterprises haven’t yet adopted generative AI, but this seems short-sighted. Remember that ChatGPT only launched in November; the average enterprise planning and execution cycle tends to be longer than six months. So, investors will need to be patient. As with the internet, mobile, and cloud, some winners emerged immediately, but others only emerged a decade later; discovering the use cases and building great software takes time and entrepreneurial ingenuity. You wouldn’t have wanted to stop your internet investing with Napster.

Eoin Treacy's view -

The question of cognition and intention, as they relate to AI models, are key to the development of artificial general intelligence. At present large language models can provide answers that have correct context but that does not imply understanding.

Additionally, the question of intentionality in an AI system implies desire in a manner similar to how humans describe that term. Anthropomorphization of computer systems should really be confined to science fiction.



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July 05 2023

Commentary by Eoin Treacy

Why Meta Is Launching Twitter Rival Threads

 This article from Bloomberg may be of interest. Here is a section:

2. Why is Meta launching a Twitter alternative?

Meta is clear about wanting to poach Twitter’s users. Meta Chief Product Officer Chris Cox described Threads as “our response to Twitter” at a companywide meeting in June reported by The Verge. “We’ve been hearing from creators and public figures who are interested in having a platform that is sanely run,” he said. That’s a pointed reference to how Musk has been running the company since he purchased it for $44 billion in October 2022. 

Eoin Treacy's view -

When a social media company is as large as Meta Platforms, there are only two ways to grow. The first is how they got so big in the first place. That means capturing a demographic and holding on to them. Facebook users tend to be middle aged; Instagram users are millennials and younger, TikTok has generation Z and Roblox purports to have an even younger generation. Predicting which app today’s children will use most prolifically is a near impossible task but the aforementioned have at least demonstrated staying power.



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July 03 2023

Commentary by Eoin Treacy

Bitcoin Bulls Are Testing The Year's High With Liquidity Light

This article from Bloomberg may be of interest to subscribers. Here is a section:

“Historically liquidity is definitely lower around holidays and combined with a relatively large increase in leverage recently, prices will be more susceptible to sharp movements,” said Kyle Doane, a trader at Arca. “The market is still leaning bullish and overall sentiment continues to improve.”

BlackRock refiled paperwork with the US Securities and Exchange Commission on Monday through Nasdaq to add new details to its proposal for an ETF. 

A spot Bitcoin ETF has long been seen as the holy grail for the crypto industry, as a way to reach a broader swath of consumers, but the SEC has repeatedly rejected prior filings. Bitcoin reached almost $69,000 in late 2021.

Eoin Treacy's view -

Bitcoin is a supply inelasticity meets rising demand environment at present. Supply cannot easily be increased but demand could surge with the introduction of a spot ETF. That is fuelling speculation about what it will take to get a project over the line.



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July 01 2023

Commentary by Eoin Treacy

Apple Attains Historic $3 Trillion Milestone as Tech Stocks Boom

This article from Bloomberg may be of interest. Here is a section:

Apple Inc. made Wall Street history as the first company with a market value over $3 trillion, the latest sign of big tech’s seemingly unstoppable dominance in equity markets.

The iPhone maker gained 2.3% on Friday, adding to a rally that’s added more than $983 billion to its size this year and leaving it roughly a half-trillion dollars above the next-largest company. Apple’s ascent to the milestone helped the Nasdaq 100 Index to its best-ever first half ever, driving a broader stock rally that underscored the dominance of tech megacaps

Eoin Treacy's view -

$3 trillion is a mind boggling sum but so were $2 and $1 trillion when they were surmounted. It would be encouraging to think this latest feat was achieved with positive revenue growth or blockbuster new product. Unfortunately, that’s not the case. Apple’s revenue has been stagnant to falling over the last couple of years, the new VR headset is possibly a tomorrow story and the company’s AI credentials are not exactly headline-grabbing.



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July 01 2023

Commentary by Eoin Treacy

The Giant Grid Bottleneck Threatening Climate Goals

This article may be of interest. Here is a section:

2. What will that entail?
It means building grids dense enough to absorb these renewable sources while still achieving the stable frequency that’s vital for the smooth functioning of electrical equipment and electronics. It will also require more high-voltage lines to carry surpluses from regions where the sun is shining and the wind blowing to meet demand elsewhere. Right now, the lack of long-distance transmission means a lot of recently installed renewable capacity is going to waste. BNEF estimates it will cost around $21.4 trillion to adapt grids to a net zero world and require 152 million kilometers of new cables — enough to stretch from Earth to the Sun if laid end to end. That implies a surge in consumption of copper — more than the mining industry can currently supply. But the biggest obstacle to grid development right now isn’t sourcing the materials or finding the money to pay for it all. 

3. What’s the hold-up?  
Local communities often oppose new wind farms, solar arrays and power lines and projects can face years of consultations involving multiple stakeholders. State regulators impose detailed technical studies and other bureaucratic hurdles. There are almost 1,000 gigawatts of solar projects stuck in the interconnection queue across the US and Europe, close to four times the amount of new solar capacity installed around the world in 2022. If all the wind and solar projects stuck in limbo were completed and connected to the grid, they’d add up to more than the present electricity generation capacity of the US. 

Eoin Treacy's view -

I wonder if copper is going to follow the trajectory of lithium. That market has been characterised by a series of mismatches that have led to massive volatility in the lithium price. Cast your mind back to the period immediately before the credit crisis in 2007. Enthusiasm about the green future was riding higher than it is today. There was a lot of enthusiasm about wind, solar, nuclear and the first EVs were just reaching market.



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June 28 2023

Commentary by Eoin Treacy

Nvidia Leads Chip Selloff After Report on US Tightening AI Curbs

This article from Bloomberg may be of interest to subscribers. Here is a section: 

Nvidia this year designed less-capable chips that fall under thresholds that require a license from the Commerce Department before export to China or other countries of concern.

Washington is now weighing action as soon as next month to expand the curbs to include those lower-powered semiconductors, the Wall Street Journal reported, citing anonymous sources.

Such a move underscores the Biden administration’s determination to contain China’s technological rise and could stoke tensions between the two countries. The US is increasingly concerned about Beijing’s technological ambitions, including around the use of AI in military and scientific advances that could tilt the geopolitical balance. 

While that’s likely to hurt Nvidia’s and AMD’s business with the world’s No. 2 economy, the two chipmakers remain at the forefront of a surge in AI development that’s driving investment from the US to Europe and China. From Microsoft Corp. to Baidu Inc. and ChatGPT developer OpenAI, companies around the world are buying their products to train the next generation of artificial intelligence services.

Eoin Treacy's view -

Nvidia got around the ban on selling A100 chips to China by creating a custom underpowered powered version; the A800. They can achieve the same goal, but significantly more units are required. That’s great for sales, but it does not comply with the spirit of the USA efforts to maintain a competitive edge in AI relative to China. Sales of these altered chips exploded in the first half of the year because Chinese buyers understand the window of opportunity is unlikely to stay open indefinitely. 



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June 27 2023

Commentary by Eoin Treacy

Email of the day on AI and trading

Now that AI is playing a major part in investment and trading plans, do you subscribe to this way of trading

Eoin Treacy's view -

Thank you for this topical question. The advent of large language models has ignited a mania in speculation about the capabilities of artificial intelligence. Amid guesses about what will be possible in future, let’s first nail down what is possible in the present.

AI can compose music, compile art and write academic papers. It can also write business emails and respond convincingly to subjective questions. These are inspiring qualities and form the basis for the expected productivity gains being priced into the stock market. 



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June 23 2023

Commentary by Eoin Treacy

Email of the day on money flows and the Nasdaq

The Nasdaq price action seems to indicate that the top reached on March 29th 2022 (+/- the high of February 2nd) is of significance since on the 16th of June the close was below despite the intraday spike and has been trading below for the past couple of days : is it a short or just a consolidation phase after some short term overbought condition before it roars again? Rates are pausing but QT resumed after the regional bank scare and its liquidity injection - which is equivalent to rate hiking - as well as M2 continuing to decline (I am not sure that the surge in velocity of money is offsetting it). Your thoughts are welcomed.

Eoin Treacy's view -

Thank you for this question, which is relevant today because monetary conditions are tightening, but from extraordinarily loose conditions. For example M2 is contracting for the first time on a year over year basis.

However, that is occurring following an historic surge. Valuations were flattered by that surge and the largest companies have not yet seen any evidence of a reality check.

Velocity of Money has turned upwards which is consistent with an inflationary bias as consumers accelerate buying decisions. The figures are reported quarterly with a one quarter lag so the data reported at the end of Q1 looks at Q4 2022. The simplest logic is the Fed has to continue to reduce the volume of cash available as the velocity of money rises. To combat inflation it will have to remove it faster than velocity is rising. 



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June 20 2023

Commentary by Eoin Treacy

Crypto Exchange Backed by Citadel Securities, Fidelity Goes Live

This article from Bloomberg may be of interest. Here is a section: 

An expectation among regulators that crypto exchanges should be separated from broker-dealer functions, similar to the structure of traditional financial markets, will create opportunities for EDX, Nazarali said. 

“We believe crypto is here to stay, but for it to evolve as an asset class it needs to adopt the rules and investor protections that exist in traditional finance,” Nazarali said in an interview. “The message we’ve got from our investors is that this creates an even bigger space for us.”

Already backed by companies including Paradigm, Sequoia Capital and Virtu Financial Inc., EDX raised new funding through additional investors including Miami International Holdings, GTS, GSR Markets, and HRT Technology. It plans to launch EDX Clearing to settle trades later this year. 

The US Securities and Exchange Commission recently widened its crackdown on the crypto industry through lawsuits against two of the biggest firms, Binance and Coinbase, alleging that they acted as unregistered securities exchanges, broker-dealers and clearinghouses. The firms have denied the allegations. 

Eoin Treacy's view -

This smells of cronyism. Two weeks ago the SEC sued both Binance and Coinbase for running unregistered securities exchanges. That is despite repeated efforts by both companies to engage with regulators. Binance alleges the SEC chair of offering his services as a consultant to the firm immediately before the case was announced.



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June 16 2023

Commentary by Eoin Treacy

Meta scientist Yann LeCun says AI won't destroy jobs forever

This article from the BBC may be of interest. Here is a section: 

"Will AI take over the world? No, this is a projection of human nature on machines" he said. It would be a huge mistake to keep AI research "under lock and key", he added.

What is AI and what risks does it pose?
Warning using AI for loans and mortgages is big risk

People who worried that AI might pose a risk to humans did so because they couldn't imagine how it could be made safe, Prof LeCun argued.

"It's as if you asked in 1930 to someone how are you going to make a turbo-jet safe? Turbo-jets were not invented yet in 1930, same as human level AI has not been invented yet."

"Turbo jets were eventually made incredibly reliable and safe," and the same would happen with AI he said.

Eoin Treacy's view -

Meta Platforms made the decision several years ago to open source their AI data. In the aftermath of the Cambridge Analytica debacle the company probably reached the conclusion a hands off approach would defray risk. That decision helped to seed the AI industry of today. 



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June 16 2023

Commentary by Eoin Treacy

Mexico's Nearshoring Bonanza Is Not Yet Near

This article from Bloomberg may be of interest. Here is a section: 

But though the nearshoring story remains plausible, the data so far do not quite justify the exuberant optimism that North America can pull Mexico into the developed world.

Recent government trade data confirm that the US is moving away from China. Last year Chinese exports accounted for only 17% of US imports, down from 22% during President Trump’s first year in office. In 2023 they have cratered, accounting for only 13% of what the US bought from abroad in the first four months of the year.

But Mexico is not taking over. Its 15% share of US imports this year is only 1.3 percentage points higher than it was in 2017. Indeed, other Asian exporters are taking a larger chunk.

Moreover, the nearshoring boom is hard to detect in the investment numbers. Foreign direct investment into Mexico has been stronger in the last ten years than in the prior decade, but the data show no recent upsurge. Indeed, new investment — excluding reinvested earnings — seems somewhat lower.

Eoin Treacy's view -

To date the bulk of inward investment to Mexico has been focused on utilities. That’s a bet on a growing population and increasing demand water, electricity and gas. That’s now, it does not speak to the future. The continued strength of the Peso suggests more than a few institutional investors are more than happy to bet on the nearshoring theme. 



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June 15 2023

Commentary by Eoin Treacy

Microsoft's Sudden AI Dominance Scrambles Tech's Power Structure

This article from Bloomberg may be of interest to subscribers. Here is a section: 

Microsoft didn’t rate in the public AI discourse one short year ago, when we were all watching Top Gun: Maverick and listening to Sam Bankman-Fried. Back then most of the hand-waving on the subject was aimed in the general direction of Google, where researchers first developed the technologies behind ChatGPT and its peers. But while Google initially kept its research away from commercial products, especially its flagship search engine, Microsoft is focused on using OpenAI’s innovations to make a buttload of money ASAP.

The company’s GitHub Copilot tool, which suggests new lines of code to computer programmers, was its first paid offering and has attracted more than 10,000 companies as customers. Bing, Microsoft’s also-ran search engine, came next, with a chatbot search engine that can create vacation itineraries and shopping lists. Over the past several months, Chief Executive Officer Satya Nadella has announced plans to incorporate other Copilots into Windows (where they’ll rewrite, summarize and explain content) and its Microsoft 365 office suite (where they’ll create slide decks in PowerPoint, sift through emails in Outlook and make charts based on Excel data). “There’s no point in hyping technology for technology’s sake,” Nadella says. “All of these technology shifts are only useful if they do something in the real world.”

Eoin Treacy's view -

Microsoft has adopted the Silicon Valley model of move fast and break things. For now, the company is being given the benefit of the doubt that by embracing the big new thing it will reap benefits in future. The share is back testing its all-time peak and is short-term overbought. 



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June 09 2023

Commentary by Eoin Treacy

Tesla's GM Deal Is Bad News for EV Charger Firms

This article from Bloomberg may be of interest. Here is a section: 

itself, meaning patience is more than just a virtue here. Tesla built its proprietary network essentially as a loss leader to stoke demand for its EVs, and it could do that in part because of Musk’s rarified knack for persuading investors to cover his losses. The three charging companies mentioned above have a combined market cap of about $5 billion, cash on hand of $550 million and expected cash burn across this year and next of more than $600 million. Their life is complicated enough. And now this.

The path to turning a profit on public chargers is like any piece of industrial hardware: Get more people to use it so it doesn’t sit idle. The threshold for profitability with charging depends on many factors, though I’ve seen one useful estimate of 30%, or roughly seven hours of charging every day (see this). As it stands, EVgo, which is weighted more to fast-charging, said on its last earnings call that the top fifth of its charging stalls enjoyed utilization above 20%.

Eoin Treacy's view -

The argument for expanding EV charging networks is complicated. That already suggests the companies wishing to dominate the sector will need to have bigger margins. Most people who currently own EVs recharge the vehicle at home. That also means EVs are a niche product for homeowners who can afford the premium over internal combustion engine vehicles. To go mainstream, chargers need to be available in every parking spot in high traffic areas. That’s extraordinarily expensive and the sector probably only has room for one or two big plays. Tesla is one of those. 



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June 08 2023

Commentary by Eoin Treacy

Jobless Claims Put FOMC Unemployment Forecast in Sight

This note from Bloomberg Economics may be of interest. 

OUR TAKE: The surge in jobless claims — to the highest level since October 2021 — is in line with our analysis of WARN notices, which suggested layoffs were set to spike. It’s increasingly feasible for the unemployment rate to reach the median FOMC participant’s 4.5% projection by year-end.

Initial jobless claims for the week ended June 3 increased 28k to 261k. The reading was above the consensus (235k) and Bloomberg Economics’ projection (240k).

The surge came from Ohio (6.3k), California (5.2k), Minnesota (2.7k) and Pennsylvania (2.0k).

Given recent fraudulent applications in Massachusetts, it’s possible that other states are experiencing similar issues. However, the four-week moving average also increased by 7.5k to 237k, well above the 218k pre-pandemic average from 2019. That suggests labor-market conditions are continuing to cool.

Continuing claims declined 37k to 1,757k for the week ended May 27, remaining above the pre-pandemic average of 1,699k. The insured unemployment rate — the number of people currently receiving unemployment insurance as a percentage of the labor force — remained at 1.2%.
We expect continuing claims to move higher given the surge in initial claims and tracking of WARN notices.

Eoin Treacy's view -

The pandemic introduced a massive spike into jobless data so the only way to get a viable chart is to cut it out. The most important historical fact is a move above 250,000 was a breakout in 2020 and is a base formation completion now too. Ahead of a decade of QE, a break above 400,000 was required to signal trouble. That also helps to highlight how the economy has been running with little spare labour margin for most of the last decade.



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June 08 2023

Commentary by Eoin Treacy

Biogen Rises As 'Relatively Benign' FDA Documents Suggest An Alzheimer's Approval Is Near

This article from Dow Jones may be of interest. Here is a section:

Biogen stock bounded higher Wednesday after the Food and Drug Administration posted "relatively benign" documents, suggesting the agency likely plans to approve the company's Alzheimer's treatment.

A panel of advisors to the FDA will meet Friday to discuss the drug, Leqembi, which won accelerated approval in January. Now, the FDA will consider converting that to a traditional approval based on the results of a confirmatory study called Clarity-AD.

"Overall, the briefing documents appear relatively benign, and we think the most likely outcome is a positive vote, followed by full approval," Wedbush analyst Laura Chico said in a note to clients.

On the stock market today, Biogen stock rose 1.7% to close at 304.90. Shares bounced off their 50-day moving average, according to MarketSmith.com.

Biogen and its partner, Eisai, have a long and storied history in Alzheimer's treatment, and analysts were quick to make comparisons to the companies' first approved drug, Aduhelm.

Eoin Treacy's view -

Alzheimer's disease is one of the biggest chronic conditions that does not have a clear clinical treatment plan. As tests for early indications of developing the disease improve the case for early action in prescribing anything that could slow the onset are clear. 



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June 07 2023

Commentary by Eoin Treacy

Traders Are Leaning Toward Fed Hike by July as Bond Yields Climb

This article from Bloomberg may be of interest to subscribers. Here is a section: 

The Treasury market briefly restored the full pricing of Federal Reserve tightening by July, which would be the last interest-rate hike in 2023.

The latest shift in expectations for Fed policy was accompanied by a slide bonds, with the yields on five-year Treasuries up at least 11 basis points. Selling picked up after the Bank of Canada cited stubborn inflation pressures for delivering a quarter-point hike Wednesday. 

The rate on swap contracts linked to the July gathering climbed to a peak of 5.33% on Wednesday, or 25 basis points above the current effective fed funds rate of 5.08%, before easing back late in New York. The June swap showed eight basis points of tightening ahead of next week’s Fed meeting, suggesting that traders are leaning in favor of a tightening pause.

Eoin Treacy's view -

The cost of servicing an average mortgage has jumped from $1500 to $3000 since 2020. Where is the average family going to come up with that extra $1500 a month? That’s one of the primary drivers of inflation and it is far from the only one. Insurance costs have also been rising by double digits over the last couple of years. 



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June 06 2023

Commentary by Eoin Treacy

Weak market being obscured by megacap gains

This article by Martin Pelletier may be of interest. Here is a section: 

It's understandable to assign higher revenue multiples to smaller and highly disruptive companies with exponential growth potential. However, the combined market capitalization of these seven companies now exceeds US$10 trillion, so how can they deliver such growth while defying the laws of diminishing returns, especially when they were unable to do so when they were smaller, more innovative and capital was next to free with interest rates hovering around zero per cent? Over the past decade, Nvidia's revenue has grown sixfold and yet the market is now giving it a 38 times multiple. Microsoft has grown revenue by 2.7 times with a current 12 times multiple, and Apple's revenue has grown 2.2 times and yet it has a seven times multiple.

It isn't as if this hasn't happened before. Take Sun Microsystems Inc., which traded at more than 10 times its revenue prior to the bursting of the 2000 tech bubble. In 2002, chief executive Scott McNealy responded to the aftermath with a thought-provoking quote.

"At 10 times revenues, to provide a 10-year payback, I would have to distribute 100 per cent of our revenues to shareholders for 10 consecutive years in the form of dividends. This assumption assumes that I can achieve such an arrangement with our shareholders, that we have no cost of goods sold (which is highly unlikely for a computer company), that we have zero expenses (difficult with 39,000 employees), that we pay no taxes (also challenging), and that you, as shareholders, pay no taxes on the dividends received (which is illegal)," he said.

"Additionally, this assumption presumes that, with no investment in research and development for the next 10 years, we can maintain the current revenue rate. Considering these unrealistic assumptions, would any of you be interested in purchasing our stock at US$64? Can you fathom the absurdity of these basic assumptions? We don't need any transparency or footnotes to recognize their implausibility. What were you thinking?" In a seemingly repetitive cycle, we wonder if we will eventually be questioning ourselves again with a "what were you thinking?" moment. If you are tempted to say "this time it's different," we checked with ChatGPT and will leave you with its answer.

…"It's prudent to exercise caution, diversify portfolios and focus on fundamental principles rather than getting carried away by the idea that the current situation is entirely unprecedented."

Eoin Treacy's view -

I created a chart today to demonstrate the dominance of mega-caps in the Nasdaq-100. The eight FANGMANT shares represent 61.86% of the Index’s market cap. Those companies are Apple, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Netflix and Tesla.



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June 05 2023

Commentary by Eoin Treacy

Bitcoin Coders Feud Over Whether to Crush $1 Billion Meme Frenzy

This article from Bloomberg may be of interest to subscribers. Here is a section: 

Others defend the software innovation, called Ordinals, that allows Bitcoin’s blockchain to host large numbers of memecoins and nonfungible tokens — digital collectibles — for the first time, arguing it can have wider applications.

Developer Casey Rodarmor created Ordinals to enable users to inscribe digital content like videos, images and text on satoshis, the smallest unit of Bitcoin. There are 100 million satoshis in one Bitcoin. 

Rodarmor’s innovation took off this year and was seized on by pseudonymous blockchain analyst Domo to develop the Bitcoin Request for Comment — or BRC-20 — standard, which led to the explosion of memecoins.

There are now about 25,000 meme tokens on the Bitcoin blockchain with a market value of roughly $475 million, according to website brc-20.io. The figure had soared past $1 billion in early May.

Jameson Lopp, co-founder of crypto storage solutions provider Casa, said the Bitcoin network is meant to be an “auction market for the block space” — the place where data is stored — and Ordinals merely stoked demand for it.

Eoin Treacy's view -

This story is another version of the network capacity teething pains bitcoin has been going through since inception. The promise of peer to peer currency exchange is that it avoids banking fees and delays of days. The reality is it is complicated for the uninitiated and is a long way from instantaneous. When prices of the underlying move around a lot that does not help to build confidence. 



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June 01 2023

Commentary by Eoin Treacy

EPW Committee Advances Risch, Crapo Nuclear Energy Bill

Here are some of the key details of the nuclear bill passed today. 

Develop and Deploy New Nuclear Technologies

The bill reduces regulatory costs for companies seeking to license advanced nuclear reactor technologies.
The bill creates a prize to incentivize the successful deployment of next-generation nuclear reactor technologies.
The bill requires the NRC to develop a pathway to enable the timely licensing of nuclear facilities at brownfield sites.

Preserve Existing Nuclear Energy

The bill modernizes outdated rules that restrict international investment.
The bill extends a long-established, indemnification policy necessary to enable the continued operation of today’s reactors and give certainty for capital investments in building new reactors.

Strengthen America’s Nuclear Fuel Cycle and Supply Chain Infrastructure

The bill directs the NRC to establish an initiative to enhance preparedness to qualify and license advanced nuclear fuels.
The bill identifies modern manufacturing techniques to build nuclear reactors better, faster, cheaper and smarter.

Authorize funds for Environmental Cleanup Programs

The bill authorizes funding to assist in cleaning up legacy abandoned mining sites on Tribal lands.

Improve Commission Efficiency

The bill provides flexibility for the NRC to budget and manage organizational support activities to ensure the NRC is prepared to address NRC staff issues associated with an aging workforce.
The bill provides the NRC Chair the tools to hire and retain highly-specialized staff and exceptionally well-qualified individuals to successfully and safely review and approve advanced nuclear reactor licenses.
The bill requires the NRC to periodically review and assess performance metrics and milestone schedules to ensure licensing can be completed on an efficient schedule.

Eoin Treacy's view -

The cost of building new nuclear facilities is the most common counter argument for expanding the sector. Two of the biggest cost centres are the regulatory morass that needs to be traversed to get a new project permitted and the fact that many reactors are unique designs. Adjusting regulations to take technological innovations into account and building reactors on assembly lines could greatly reduce the cost of construction. 



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June 01 2023

Commentary by Eoin Treacy

Why Apple's headset could succeed where every similar product has failed

This article from CNBC may be of interest. Here is a section: 

Around the same time, Apple started buying several companies focused on specific technologies that could end up in a headset.

In 2013 it bought Primesense, whose 3D camera sensor eventually ended up being part of the basis for FaceID, the company’s facial recognition system for iPhones, and influenced the company’s current depth-sensing cameras.
In 2015, it bought Metaio , which made AR software for mobile devices.
In 2016, it bought Flyby Media, which worked on computer vision technology.
In 2017, it bought SensoMotoric Instruments, which developed eye tracking, a core VR technology, as well as Vrvrana, which developed a VR headset.
In 2018, it bought Akonia Holographics, which developed transparent lenses for AR glasses
It bought NextVR, which filmed video content for virtual reality, including sports.

Apple also started releasing developer’s kits for augmented reality, including one called ARKit which could use the iPhone’s hardware to create limited AR experiences on the phone, like interacting with a virtual pet or trying out digital furniture in a living room.

Apple now has an entire library of software to perform difficult tasks that the headset will need to be able to do to integrate the real world and a virtual world seamlessly.

Eoin Treacy's view -

The thing I will be paying most attention to when Apple releases its mixed reality product will be whether they have come close to fixing the eye strain issues current VR systems incur. I do wonder if Microsoft’s Hololens suffered from the same issues.

I can only speak for myself but using the Oculus Quest gives me eye strain after half an hour and it takes about 3 hours to subside. Repeated use in 24 hours gives me eye strain for several days. Additionally, playing Beat Saber or boxing games is fun but the headset is also sweaty and that makes taking turns with family or friends unappealing.



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May 26 2023

Commentary by Eoin Treacy

Amazon's stock is misunderstood for these 3 reasons, according to an analyst

This article from Bloomberg may be of interest to subscribers. Here is a section: 

"First, we believe the current growth rate is depressed by the overall softness in consumer discretionary spend," Mahaney wrote of Amazon's retail business, which he expected will grow revenue by 10% this year, compared with 13% last year. An improvement in macroeconomic trends "should enable an acceleration in North American Retail revenue growth."

Further, Amazon could see big revenue benefits as it continues making its shipping times ever speedier. As Mahaney wrote, "the faster the shipping, the greater the demand."

On the cloud-computing side of the business, Mahaney saw the potential for an even more dramatic slowdown in the near term. Revenue there could increase by only 10% or 11% in the second quarter and 16% for the whole of 2023, by his estimates, versus 29% in 2022.

But he also saw room for Amazon to drive a growth inflection after the second quarter of this year, driven by easier comparisons, traction for artificial-intelligence workloads and a relaxation of "optimization" efforts like discounts and bundled renewals.

Eoin Treacy's view -

The reason Amazon is rebounding is because investors are betting its AWS data centres will be used for AI computing resources. There is logic to that assumption since AI requires a multiple of the computing power devoted to cloud or search. 



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May 26 2023

Commentary by Eoin Treacy

When Delivery Costs More Than the Food You Ordered

This article from Bloomberg may be of interest. Here is a section: 

Delivery companies as publicly listed entities are under pressure to churn out profits. And there’s very little competition. Consolidation, particularly since that start of the pandemic, has left three dominant players in the US. DoorDash had 65% of food delivery sales as of April, including those from its Caviar unit, according to Bloomberg Second Measure, a provider of transaction data analytics. Uber Eats has a 25% share, aided by its 2020 acquisition of Postmates. Grubhub Inc. — which has over the years absorbed Seamless, Eat24, and Tapingo before being acquired by Just Eat Takeaway.com — has 9%. 

Eoin Treacy's view -

Delivery apps are a vestige of the success stories that characterised the pandemic living experience. The market is not big enough to accommodate all the companies vying for dominance so the best capitalised are most likely to gain markets share as the weaker companies disappear. 



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May 25 2023

Commentary by Eoin Treacy

Nvidia Eyes the $1 Trillion Club as AI Outlook Sparks Rally

This article from Bloomberg may be of interest to subscribers. Here is a section: 

“It doesn’t happen often to see a $700 billion company move 25% in one day — I’ve never seen anything like it,” said Richard Windsor, founder of independent researcher Radio Free Mobile based in Abu Dhabi. For as long as the AI craze persists, “Nvidia is in a good position.”

A trillion dollars of data center infrastructure will be upgraded to handle so-called accelerated computing, Chief Executive Officer and co-founder Jensen Huang told analysts, letting them run generative AI tools such as ChatGPT. Huang said the firm saw “incredible orders.”

Nvidia’s outlook was so strong that Morgan Stanley analyst Joseph Moore said the numbers match what they had in mind for 2025. “The transformational surge in AI spending is paying off much earlier than expected,” he wrote in a note.

Eoin Treacy's view -

There is no arguing with the size of the sales beat by Nvidia. It is truly impressive. Of course, it begs the question who is buying? The company announced in late March they have altered the best-selling H800 chip, so it will comply with prohibitions on selling high tech to China. The upshot is a Chinese company will need more of these chips to achieve the same efficiency. That’s likely to have been a significant factor in the jump in Nvidia’s sales. 



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May 25 2023

Commentary by Eoin Treacy

Great Wall Motor, BYD Sink After Chinese Auto Giants Clash on Car Emissions Tests

This article from Yicai Global may be of interest. Here is a section: 

BYD’s Qin Plus DM-i and Song Plus DM-i models use normal-pressure fuel tanks and therefore purportedly fail to meet the country’s vehicle emissions standards, Great Wall Motors said today, citing the filing it made to the Ministry of Ecology and Environment, State Administration for Market Regulation and the Ministry of Industry and Information Technology on April 11.

Great Wall Motors is paying close attention to the case to see if legal action will be taken, the Beijing-based carmaker said. Environmental protection authorities need to conduct a probe and legal proceedings must be started should the results show any irregularities, it added.

BYD retorted that it reserves the right to carry out legal action of its own and is firmly against any form of unfair competition. All of the Shenzhen-based company’s autos conform with national standards and they have all passed verification by the country’s authorities.

Great Wall Motor bought the two cars and sent them to the China Automotive Technology & Research Center for testing, BYD said. They were not tested according to national-level standards, it said.

Eoin Treacy's view -

In normal times this kind of backbiting might be considered part of normal competition. However, the share prices of Chinese automotive companies suggest a scramble is one for market share amid slowing demand. 



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May 25 2023

Commentary by Eoin Treacy

Email of the day on demand for EV charging

One must also consider that a healthy percentage of ev owners charge at home. The business model for gasoline retailers would be very different if the same percentage of ice owners had gas pumps at home.

Eoin Treacy's view -

Thank you for this important point. 68% of people live in single family homes in the USA. People earning more than $100,000 buy around 57% of EVs. It is reasonable to assume many people earning that sum also own a house. The challenge with mass adoption is EVs are expensive and if you are one of the people who does not own a home, finding a charger is an inconvenience. 



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May 24 2023

Commentary by Eoin Treacy

Big Oil veteran Exxon wants to become part of Big Shovel

This article from Quartz may be of interest to subscribers. Here is a section: 

And Exxon Mobil’s new bet on lithium gives it exposure, with all the potential upside in revenue and profits, to the red-hot market for electric vehicles and batteries.

Global demand for lithium is expected to surge in the coming years, far outstripping supply as the world shifts towards renewable energy systems. These require batteries to store electricity for later use, given the variable nature of wind and solar. By 2050, according to an estimate from the International Energy Agency, the world will need to mine 26 times more lithium than it did in 2021.

Lithium-ion batteries are currently the most widely used type of battery, the supply chain for which is dominated by China. Chinese battery giants are also investing heavily in developing sodium-ion batteries, which could potentially offer an alternative to lithium-based ones.

Eoin Treacy's view -

The lithium carbonate price peaked at the end of last year at CNY/tonne of 600,00. and hit a low at the end of April at around CNY177,000. A rebound is now underway which confirms a low in the region of the 2016 and 2018 peaks. It is reasonable to expect a great deal of volatility in lithium prices but the evidence of a higher plateau is now more convincing. 



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May 23 2023

Commentary by Eoin Treacy

Technology Was Supposed to Transform Insurance Pricing. It Hasn't.

This article from the Wall Street Journal may be of interest. Here is a section: 

At first, the insurance pricing process -- heavily reliant on algorithms and mathematical modeling -- seemed ripe for upending, thanks to advances in the sheer amount and variety of data digitally-native companies could suddenly collect on customers.

But the Silicon Valley axiom to move-fast-and-break-things hasn't been enough to transform an industry built on centuries of observed human behavior, massive marketing budgets and a savvy grasp of the regulatory environment.

Founded in 2015, Lemonade initially aimed to sell renters and homeowners insurance. It was worth $9.87 billion at its peak in 2021; it's now worth $1.23 billion. Root Insurance, also founded in 2015, began with the idea of using telematics -- or in-car data -- to offer personalized auto insurance based on how people drive. In 2020, it was worth roughly $6.8 billion, and has since swooned to about $67 million. Property and casualty insurance startup Hippo went public at a $5 billion valuation in 2021. It is now worth around $425 million.

So far, the insurtechs have been slow to gather and contextualize enough data to actually build better models. Regulations have restricted the use of some of their data and differentiated pricing. And it has been difficult to chip away market share from established industry giants.

Eoin Treacy's view -

I have been a beneficiary of the insurtech market, so perhaps I am more positively disposed towards the sector than others. As a user of MyFitnessPal, I was provided with a life insurance policy (at my peak pre-pandemic fitness point) at a rate that was far below anything available elsewhere. The home insurance premium I pay Lemonade is half what other companies have quoted. The big question is whether these companies can achieve profitability before they run out of money. 



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May 22 2023

Commentary by Eoin Treacy

New type of quasiparticle emerges to tame quantum computing errors

Thanks to a subscriber for this technical article may be of interest. Here is a section: 

The Quantinuum group, meanwhile, made non-Abelian anyons in a different way. Using the Honeywell 32-qubit H2 quantum processor, which holds ytterbium ions in an electromagnetic trap and alters their quantum states using lasers, they created a quasi-one-dimensional chain of interacting trapped-ion qubits.

Here, the anyons correspond to natural excitations of the ground state of the qubit system – which technically means they are not quasiparticles, since quasiparticles must be excited states. “The Majorana zero modes at the end of superconducting wires in the Microsoft experiment and the lattice defects in the Google experiment are non-Abelian defects,” emphasizes Ashvin Vishwanath of Harvard University, who collaborated with the Quantinuum team. “Unlike our experiment, they are not realized on top of true non-Abelian topological order.”

Eoin Treacy's view -

There is no doubt excitement in the market around what are bleeding edge technologies is heating up. Commentary on quantum computing’s growth rate several years ago was the first time I heard the term exponential exponential growth. Conventional exponential growth is explained as a doubling; 2,4,8,16,32…. Growing by exponents implies 2,4,16,256,65536… I’m not sure reality has kept up with those lofty goals but the pace of innovation is certainly impressive.
 



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May 22 2023

Commentary by Eoin Treacy

Why So Many Electric Car Chargers in America Don't Work

This article from Bloomberg may be of interest. Here is a section: 

There isn’t a single reason for EV charger failures. Some of the problems, particularly with older machines, can be chalked up to a new technology going through the usual learning curve of improvements, all while sitting outside, exposed to the weather. There have been cycles of needed upgrades, such as replacing modems to deal with 5G wireless internet service. The myriad networks, retail outlets and garage owners who own the machines don’t always stay on top of maintenance. And chargers must communicate with a rapidly expanding variety of cars. 

To that end, the precise scope of the problem isn’t known. EV drivers face a complex landscape of competing charging companies, each with its own stations and app, and there is no central repository of data on station performance. One widely cited 2022 study of fast-charging stations in the San Francisco Bay Area (excluding Tesla Inc.’s Superchargers), found that about 25% of the 657 plugs weren’t working. While J.D. Power doesn’t disclose reliability rankings, Gruber said the worst-performing charging company leaves drivers unable to plug in about 39% of the time. 

“With public charging, it’s a bit of the wild, wild West,” he said.

Tesla proved that reliable charging is possible. The all-electric automaker runs a global network of 45,000 Superchargers, which can add up to 200 miles of range in just 15 minutes. Tesla consistently gets the highest customer-satisfaction marks of any charging company in J.D. Power’s surveys, Gruber said. Its drivers report charger downtime of just 3%.

But Tesla has the advantage of keeping everything in-house. Until recently, Superchargers could only be used by Tesla cars, and didn’t need to work with the growing array of other EVs and batteries. Tesla also owns its Supercharger network, whereas many of the public chargers installed over the past decade are owned by whoever owns the parking lot where they’re located. Such property owners, Gruber said, don’t have as strong an incentive to maintain their machines.

Eoin Treacy's view -

The challenge with developing a profitable EV market is margins are thin and the market is highly competitive. That suggests not every business model is likely to be successful. Constructing a charging network is capital intensive and the pay back is uncertain until the total penetration of EVs is known.



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May 18 2023

Commentary by Eoin Treacy

BT Plans to Cut Up to 55,000 Jobs Following Fiber Rollout

This article from Bloomberg may be of interest. Here is a section: 

BT Group Plc said it plans to cut its workforce by as many as 55,000 people by the end of the decade, after the UK’s biggest network operator completes its nationwide fiber-optic rollout. 

The company’s workforce will drop to 75,000 to 90,000 people by the fiscal year ending in March 2030 from about 130,000 currently, counting employees and contractors, the company said in its full-year earnings statement on Thursday. That’s a decline of about 42%.

Chief Executive Officer Philip Jansen is slashing costs at BT, fighting an industrywide slump as telecom carriers spend heavily on networks to keep up with surging data demand without a corresponding rise in revenues. On Tuesday, British rival Vodafone Group Plc announced plans to reduce headcount by 11,000 over the next three years. Jansen has pledged to cut expenses by £3 billion ($3.7 billion) a year by 2025 against 2020 levels, and has been weighing more dramatic job cuts since at least 2019. 

Eoin Treacy's view -

The build out of the fibre network is a medium-term labour intensive project. The significant volatility in headcount begs the question why BT did not outsource the work to begin with. Nevertheless, almost halving the number of workers is a significant cost saving at the same time as income is likely to flow from the higher value network. 



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May 17 2023

Commentary by Eoin Treacy

Automakers Speeding Platinum Substitution Push Market to Deficit

This article from Bloomberg may be of interest to subscribers. Here is a section: 

Automakers are accelerating the substitution of platinum for pricier palladium in catalytic converters,
putting the market for the metal on track for a deficit for the first time in two years, according to Johnson Matthey Plc.

Demand from automakers will exceed 3 million ounces for the first time since 2018 as platinum is increasingly preferred over palladium, which will continue to see its usage decline, the firm wrote in a report on Monday. Both precious metals are used to cut emissions from car exhausts.

The car industry’s switch has taken years, but is finally having a sizeable impact on the fundamentals of platinum group metals. While palladium has traded at a premium to platinum since 2017, the gap has narrowed to near the smallest in more than four years.

“Just as substitution benefits platinum, it disadvantages palladium,” said Rupen Raithatha, market research director at Johnson Matthey. “These are all incremental trends.”

Investors are increasingly eyeing risks to platinum supplies from South Africa, the world’s top miner, as power blackouts threaten to cripple its output. So far, the country’s miners have limited the impact by idling processing plants, allowing mining to continue, though more severe outages could hit overall production, according to Johnson Matthey.

The firm sees platinum in a small deficit of 128,000 ounces in 2023, following two years of large surpluses. That compares to the record shortfall forecast by the World Platinum Investment Council.
 

Eoin Treacy's view -

Platinum took a leg lower as the diesel cheating scandal broke. That destroyed a major demand driver for the metal. In a normal environment, the massive disparity between palladium and platinum would have encouraged automakers to retool years ago. The reason that did not happen is they are devoting all their energy to building electric vehicle production capacity and do not envisage using as many catalytic converters in future.  



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May 15 2023

Commentary by Eoin Treacy

Sea's Path to Profit Paved With Layoffs, Single-Ply Toilet Paper

This article from Bloomberg may be of interest. Here is a section: 

Li’s shock treatment paid off. In March, Sea reported the first quarterly profit in its 14-year history, $427 million in GAAP-sanctioned net income. Its stock soared 22%. Last week, it said it would hand out 5% raises to most staff. Sea has now more than doubled its market value since November.

Like so many tech startups of its generation, Sea had bled red ink for years. In fact, it lost more than $8 billion since its founding to pay for growth in its e-commerce, games and finance operations. For now at least, Sea is setting a different kind of example: It’s demonstrating that if your underlying business is sound and substantial, you can pull back on subsidies and expansions to break even.

That’s proving a challenge for rivals. Among Sea’s regional competitors, Singapore’s Grab Holdings Ltd. is still losing more than $300 million a quarter, while Indonesia’s GoTo Group’s losses exceed $250 million. Sea may also cause trouble for global tech giants like Alibaba Group Holding Ltd. and Amazon.com Inc., which are both seeking growth in emerging markets. 

“What you’re seeing is a separation of proper, monetizable business models from something that is a work-in-progress,” said Amit Kunal, managing partner of Growtheum Capital, a private equity firm in Singapore, speaking broadly about the tech industry. “Sea read the market much earlier, took appropriate steps — and delivered.”

Eoin Treacy's view -

In the Big Picture video on Friday I spent a good deal of time talking about the winnowing process currently underway in the high growth markets that dominated performance during the pandemic. Higher rates and tight credit mean tough decisions have to be made. Only the companies capable of both rising to that challenge and simultaneously making money are likely to survive. 



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May 12 2023

Commentary by Eoin Treacy

Google Unveils Plan to Demolish the Journalism Industry Using AI

This article from Futurism may be of interest to subscribers. Here is a section: 

But it's not unfair to say that Google, which in April, according to data from SimilarWeb, hosted roughly 91 percent of all search traffic, is somewhat synonymous with, well, the internet. And the internet isn't just some ethereal, predetermined thing, as natural water or air. The internet is a marketplace, and Google is its kingmaker.

As such, the demo raises an extremely important question for the future of the already-ravaged journalism industry: if Google's AI is going to mulch up original work and provide a distilled version of it to users at scale, without ever connecting them to the original work, how will publishers continue to monetize their work?

Google has unveiled its vision for how it will incorporate AI into search," tweeted The Verge's James Vincent. "The quick answer: it's going to gobble up the open web and then summarize/rewrite/regurgitate it (pick the adjective that reflects your level of disquiet) in a shiny Google UI."

Eoin Treacy's view -

Google announced it would pay the New York Times $100 million over three years this week. That results from years of litigation that Google was giving away content that should have been paid for.

The advent of advanced large language models means computer programs can scour Twitter for titbits and write journalistic synopses just like most journalists. Several services like Buzzfeed and CNET have tried and failed to use AI for unsupervised article writing. 



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May 09 2023

Commentary by Eoin Treacy

Boeing Wins $40 Billion Ryanair Order for 737 Max Jets

This article from Bloomberg may be of interest. Here is a section: 

The huge commitment to Boeing’s largest 737 variant marks an important endorsement from one of the US manufacturer’s most loyal customers and highlights how carriers are willing to splurge on fleet upgrades again as air travel rebounds. Ryanair said the deal —  the largest order ever placed by an Irish company for US manufactured goods — was more expensive than its current crop of 737 deliveries. 

“We paid more per seat but we’re still incredibly happy with the deal we’ve done,” Chief Executive Officer Michael O’Leary said at a news conference. “We think the extra seats give us the revenue-earning potential.”

Deliveries will start in 2027 and run through 2033. Ryanair said discussions surrounding the purchase started in January, and half the order is earmarked for replacement of older 737NG models while the other half is reserved for growth.

Eoin Treacy's view -

From Boeing’s perspective this is a big vote of confidence in the 737 Max. Considering several of the aircraft have fallen out of the sky, there was understandable reticence among customers to buy them.  Boeing is obviously hoping this order will mark a recovery for commercial aircraft sales. 



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May 06 2023

Commentary by Eoin Treacy

Lilly's fortunes rise on back-to-back success for Alzheimer's, obesity drugs

This article from Industry Dive may be of interest to subscribers. Here is a section: 

Eli Lilly is at the forefront of two of the pharmaceutical industry’s hottest fields, and it’s paying off for the Indianapolis company’s investors.

Over the past year, Lilly’s valuation has climbed nearly 50% to exceed $400 billion, a few percentage points’ swing away from eclipsing Johnson & Johnson as the world’s largest drugmaker by market capitalization. It’s worth nearly as much as Pfizer, Bristol Myers Squibb and Moderna combined, despite earning less than one-third as much revenue as J&J or Pfizer in 2022.

Lilly’s skyrocketing stock price is largely due to two drugs: the diabetes and weight loss treatment Mounjaro, and the experimental Alzheimer’s treatment donanemab. Investors and Wall Street analysts expect both to become blockbusters in large markets with few established competitors.

On Wednesday, results from a large clinical trial of donanemab in people with mild Alzheimer’s showed treatment slowed cognitive and physical decline by 35% versus a placebo, sending Lilly shares higher by nearly 7%. 

Eoin Treacy's view -

The best markets for pharmaceuticals are in chronic conditions. Two of the fastest growing, with unmet need, are obesity and Alzheimer’s. Both are a product of modern living with longer lives and easier access to high calorie intake. 



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May 04 2023

Commentary by Eoin Treacy

Money isn't Enough: getting Serious About Precious Munitions

This article from Warontherocks.com may be of interest to subscribers. Here is a section: 

Finally, the Department of Defense should, as Julia van der Colff argued in these pages, consider rapidly fielding “second tier” precision munitions that take advantage of existing technologies to provide large quantities of minimum-capability weapons at reduced costs. Next-generation stealth, sensor, and precision capabilities are key to competing with China in the long run, but these simpler munitions could be more easily (and cheaply) produced in the volumes necessitated by great-power conflict. Combined with unmanned munitions carriers and teamed with manned strike platforms, second-tier weapons could be essential to providing the volume of effects required by these other concepts. As Russia’s use of Iranian drones in Ukraine has shown, not every target requires an exquisite precision munition. Unlike ventilators during the COVID-19 pandemic, the Department of Defense should not wait until a crisis to explore and test these designs.

Eoin Treacy's view -

The large-scale war in Ukraine has completely upended the procurement calculus for NATO. The “less is more” focus on high tech precision strikes is giving way to the acceptance that sometimes dumb weapons just need to hit in the vicinity of a target. 



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May 02 2023

Commentary by Eoin Treacy

Chegg Sinks 48% as ChatGPT Threatens Growth Outlook

This article from Bloomberg may be of interest to subscribers. Here is a section: 

Chegg Inc. tumbles as much as 48%, its biggest drop since November 2021, after the online educational services company warned that ChatGPT was threatening growth of its homework-help services, making it one of the first companies to highlight generative AI’s negative impact on business. Jefferies cut the recommendation on the stock to hold from buy, saying the AI overhang is starting to impact fundamentals. 

Eoin Treacy's view -

I’m attending the MIT Technology Review Emerging EMTech Digital conference at present. There have been some very interesting and educative presentations. The consensus is generative AI models are an innovation on the scale of the steam engine.

With that as a background, the law of jungle is clearly in effect. Microsoft is in full move “fast and break things” mode. Other companies are playing catch up and some are trying to be measured in how they consider ethics and bias. There is a widespread acceptance that the sector would not exist without Meta’s decision several years ago to open source its data. 



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April 26 2023

Commentary by Eoin Treacy

Email of the day on combustion risk from EVs

Will they be a conflagration risk?

Eoin Treacy's view -

Thank you for this question, which was in reference to the announcement CATL is prototyping a battery capable of powering airplanes. The fire risk from lithium batteries comes from the liquid catalyst. Since solid state batteries do not have a liquid electrolyte they are inherently safer. The new CATL battery is not exactly a solid state battery so it is impossible to know at this stage what the fire risk is. 



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April 20 2023

Commentary by Eoin Treacy

CATL Says New Super Strong Battery May Power Electric Flight

This article from Bloomberg may be of interest to subscribers. Here is a section: 

China’s Contemporary Amperex Technology Co. Ltd., known as CATL, unveiled its strongest battery to date Wednesday, saying that it could one day be used to power electric aircraft.  

The battery, which loads more power into a smaller package, has an energy density of 500 watt-hours per kilogram, CATL’s Chief Scientist Wu Kai said during a presentation at the Shanghai auto show. CATL’s most recent battery, called Qilin, has an energy density of 255 Wh/kg and can power an electric vehicle for 1,000 kilometers (620 miles) on one charge. 

The technology, which CATL calls a condensed state battery, is potentially a breakthrough that will help electrify sectors wed to fossil fuels because existing batteries are either too heavy or unsafe. Still, questions remain about the materials it will use, its cost and ultimate market impact.
 

Eoin Treacy's view -

CATL has a strong record of leading the way in both scale of manufacturing batteries and innovating on design. The Qilin battery sounded too good to be true when it was announced eighteen months ago but it is going into mass production this year. If China successfully puts a battery in the market with the promised characteristics of a solid state battery it would be a significant technological coup akin to the impact of the iPhone on legacy mobile phone manufacturers. 



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April 17 2023

Commentary by Eoin Treacy

Is FedNow a CBDC?

This article from the CATO Institute may be of interest to subscribers. Here is a section: 

What is FedNow?
FedNow is an instant payments system—a sort of update to Fedwire and the Automated Clearinghouse (ACH). Individuals will not have direct access to FedNow, but they will have access to faster payments so long as their bank or credit union opts into the FedNow network. Although creating FedNow was not necessary to achieve faster payments, one big difference with FedNow will be that payments will no longer be held up on weekends, holidays, or after traditional business hours.
FedNow is Not a CBDC
Astute eyes will likely recognize that FedNow does vaguely resemble a wholesale CBDC. Where a wholesale CBDC would be restricted to financial institutions for use during interbank settlement, FedNow would also be restricted to financial institutions. The difference, however, lies in their design. Where a CBDC is a currency, FedNow is a payment rail. If we think of dollars and cents as water, then FedNow is the plumbing that gets those dollars and cents where they need to go. In contrast, a CBDC would involve replacing the water itself in this analogy.

Under the current system, interbank settlement is performed on the Federal Reserve’s payment rails, thus ultimately affecting retail banking customers’ settlement times. It’s for this reason that Federal Reserve Governor Michelle Bowman said, “My expectation is that FedNow addresses the issues that some have raised about the need for a CBDC.” This statement should not be misunderstood to say that FedNow will take CBDCs off the table, but it does show that the Federal Reserve itself sees FedNow and CBDCs as distinctly different.

Eoin Treacy's view -

There are many ways the Fed could speed up payments and transactions across the economy. Afterall, the USA is still somewhere cheques are commonplace. However, I think the reason they chose to use the FedNow protocol is to blunt the thrust of the digital currency movement. 



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April 13 2023

Commentary by Eoin Treacy

Buffett Praises BYD and TSMC After Selling Shares of Both Firms

This article for Bloomberg may be of interest to subscribers. Here is a section: 

Warren Buffett called electric-car maker BYD Company Ltd. “extraordinary” and said chip manufacturer Taiwan Semiconductor Manufacturing Co. is a “fabulous enterprise.” That hasn’t stopped him from selling shares of both firms.

“We’ll find things to do with the money that I’ll feel better about,” the Berkshire Hathaway Inc. chairman and chief executive officer said of BYD in an interview with CNBC in Tokyo Wednesday. He said Berkshire wasn’t in a hurry to reduce that stake after recently trimming its holdings of BYD H shares to 10.9% from 11.13%, according to a filing this week.

The billionaire investor took credit for Berkshire’s investment in TSMC amid speculation that one of his investing deputies picked the stock. He said the decision to reduce its stake in the business by 86% in the fourth quarter — which could have fetched $3.7 billion assuming the shares were sold at the average price over the period — resulted from concerns over geopolitical tensions between China and Taiwan, conditions he described as being outside of the company’s control.

“I re-evaluated that part of it,” Buffett said. “I didn’t re-evaluate the business, the management, or anything of the sort.”

Eoin Treacy's view -

Warren Buffett has tended to be an investor in the USA and a trader internationally. There are two obvious reasons for choosing to sell out of both BYD and TSMC. The first is valuation. The second is politics. 



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April 11 2023

Commentary by Eoin Treacy

Bitcoin, Not Ether, Builds Crypto Market Dominance Ahead of Ethereum's Shanghai Upgrade

This article from Coindesk may be of interest. Here is a section: 

Ether's dominance rate remains stagnant between 19% and 20%. That compares with a rise to 21% from 14% in the weeks before a software upgrade last September known as the Merge. That technological overhaul replaced Ethereum's at-the-time energy-intensive proof-of-work mechanism of verifying transactions with a proof-of-stake system and set the stage for Shanghai. Staking involves depositing coins in the blockchain to boost the network's security and verify transactions in return for rewards.

Investor caution in pricing ether ahead of Shanghai stems from several factors, including concerns tokens unlocked after the upgrade will flood the market and regulatory issues.

"The Shanghai upgrade will unlock over 18 million ether staked since late 2020. The market is worried that the unlocking may bring about a sell-off, causing uncertainty in the market," Griffin Ardern, a volatility trader at crypto asset-management firm Blofin, told CoinDesk.

Eoin Treacy's view -

Ethereum has been lagging bitcoin for the last couple of months as traders price in the risk of additional supply coming back onto the market. However, that does not explain why bitcoin is breaking out to new recovery highs. 



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April 05 2023

Commentary by Eoin Treacy

US Service Gauge Falls More Than Expected as Demand Moderates

This article from Bloomberg may be of interest. Here is a section: 

The group’s index of new orders at service providers dropped more than 10 points to a three-month low of 52.2. While still consistent with expansion, the scale of the drop suggests a significant slowing in the pace of bookings growth. The business activity measure, which mirrors the ISM’s factory production index, slipped to 55.4.

“There has been a pullback in the rate of growth for the services sector, attributed mainly to a cooling off in the new orders growth rate, an employment environment that varies by industry and continued improvements in capacity and logistics,” Anthony Nieves, chair of the ISM Services Business Survey Committee, said in a statement.

Eoin Treacy's view -

The pandemic shutdown represented a massive dislocation which pulled the pendulum of demand into sharply negative territory. Massive fiscal and monetary stimulus was implemented to revive. That ensured when demand recovered, it swung to an extreme level in the opposite direction. Like any pendulum there are several swings to less extreme amplitudes, before it settles back to equilibrium. 



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April 03 2023

Commentary by Eoin Treacy

Tesla Shares Drop After Price Cuts Barely Boost Deliveries

This article from Bloomberg may be of interest to subscribers. Here is a section: 

After Tesla cut prices of its top-selling Model Y by as much as 20% and discounted its most expensive vehicles by tens of thousands of dollars, Musk said in late January that orders were running at almost twice the rate of production. The figures reported Sunday indicate there was a slowdown later in the quarter, as the company ended up making almost 18,000 more cars than it sold.

“Continued excess production over deliveries will keep the debate going on price elasticity versus general demand weakness,” Philippe Houchois, a Jefferies analyst with a buy rating on Tesla stock, said in a note.

Eoin Treacy's view -

If you cut prices and sales don’t jump there are only two options. Either you have the wrong price or the wrong product. I bought a new car a year ago. I test drove a Model Y and Model 3 and decided to go with another SUV instead. The price points were about the same after added extras and the subsidies did not apply because of income limitations. That seems like a major issue for Tesla. They are attempting to compete with luxury brands on quality alone. That is a hard sell against brands with decades of reliability and customer relationships.



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March 29 2023

Commentary by Eoin Treacy

Autonomies reweight

Eoin Treacy's view -

I am reweighting the Autonomies portfolio as we are approaching the end of the quarter. It’s a tumultuous three months with banks and several retailers experiencing steep selling pressure. Meanwhile several luxury goods companies are at new highs. Technology companies have staged impressive rebounds and commodity stocks are very steady. The biggest surprise for me is how varied the performance of the financial sector is. That clearly suggests there will be big winners and losers from the unfolding market environment. 



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March 29 2023

Commentary by Eoin Treacy

Rivian Tops Tesla Gains In Premarket Trading: What's Powering EV Stock Higher?

This newswire item may be of interest. Here is a section: 

Kelley Blue Book sales data gathered from the state Registry of Motor vehicle showed registrations of 8,145 Rivian vehicles in the first quarter, analyst Chris Pierce said, citing information from Cox Auto’s first-quarter 2023 “Industry Insight Calls.” This compares to the consensus estimate of 7,167 vehicles, he added.

The analyst also noted that first-quarter used vehicle data showed that fewer used Rivian vehicles were on sale relative to Lucid Motor Group (NASDAQ:LCID) and Ford Motor Co.’s (NYSE:F) Lightning EV pickup truck, which is a direct competition to Rivian’s R1T pickup truck.

Eoin Treacy's view -

Rivian has a market cap of $13 billion and had $11.5 billion in cash at the end of last year. The improvement in sales suggests the run rate on its loss is unlikely to accelerate which supports the view it will not go bust this year. That gives the share some optionality to the view it might well survive if production can successfully be ramped up.   



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March 28 2023

Commentary by Eoin Treacy

Santander launches a blockchain-based foreign exchange service that uses Ripple's technology

This article from CNBC may be of interest. Here is section: 

Santander’s blockchain-powered foreign exchange platform is currently live in four different countries — Spain, the U.K., Brazil and Poland. A wider roll-out is expected in coming months, the bank said.

Innoventures, a $200 million fintech, or financial technology, venture capital fund set up by Santander, was one of a number of investors to participate in Ripple’s first round of funding in 2015.

Ripple has struck partnerships with multiple banks and other financial institutions, including Santander. Banks are less keen to use the firm’s digital currency XRP, but earlier this year two money transfer firms, MoneyGram and Western Union, announced projects involving the cryptocurrency.

On Wednesday, Ripple invested $25 million into a fund started by Blockchain Capital, a venture capital firm dedicated to blockchain.

Eoin Treacy's view -

Ripple first gained notoriety as the favoured token of banks but nothing much came of the initial enthusiasm. Ethereum later became the favoured vehicle and went on to have a significant bull trend.



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March 27 2023

Commentary by Eoin Treacy

Binance, CEO Sued by US Derivatives Watchdog for Violations

This article from Bloomberg may be of interest to subscribers. Here is a section: 

The agency said that Zhao, Lim, other senior managers failed to properly supervise Binance’s activities and took steps to violate US laws, including instructing American customers to use virtual private networks, or VPNs, to obscure their location and directing “VIP customers” with US ties — often institutional market participants — to open Binance accounts under the name of shell companies. 

In its complaint, the CFTC also said Binance’s own documents for the month of August 2020 showed that the platform earned $63 million in fees from derivatives transactions, and that about 16% of its accounts were identified as being held by US customers.

Documents
The CFTC alleged that the company intentionally destroyed documents. At the same time, Binance makes frequent use of the encrypted messaging app Signal to communicate with US customers, at Zhao’s instruction, the agency said.

Since at least 2021, the CFTC has been probing Binance over whether it failed to keep US residents from buying and selling crypto derivatives. CFTC rules generally require platforms to register with the agency if they let Americans trade those products.

Eoin Treacy's view -

I had an interesting conversation over the weekend with a former crypto exchange employee. He reported that most people are in the space to make money and the primary focus on venture capital is to come up with the next Ethereum killer. Solana’s success in doing just that has sparked a great deal of investment in trying to repeat the feat. That diversifies talent across a large number of ventures while bitcoin continues to attract a broad swathe of purists who continue to work on applications. 



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March 23 2023

Commentary by Eoin Treacy

Tencent Surges After China Ad Rebound Helps It Resume Growth

This article from Bloomberg may be of interest. Here is a section: 

WeChat’s fledgling short-video feed has been a rare bright spot in Tencent’s portfolio. The company is under pressure to better monetize China’s most ubiquitous app, just as users and marketers flee to rivals like ByteDance. WeChat’s video accounts tripled in views last year, garnering more than 1 billion yuan of ad sales through the feature in the fourth quarter.

“The ads turnaround is pretty positive, showing that WeChat video accounts is a real opportunity for Tencent,” said Vey-Sern Ling, senior equity advisor for Asia technology at Union Bancaire Privee. “New approvals of game titles for the domestic market could also help growth this year.”

Eoin Treacy's view -

It’s unlikely Xi Jinping is suddenly going to reverse his suspicion of the video gaming industry but there are clearly efforts underway to boost confidence that capricious policy changes will be well telegraphed in future. 



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March 21 2023

Commentary by Eoin Treacy

Email of the day on investing in bitcoin

Good morning, Eoin I hope you and yours are well. I am considering baby steps into Bitcoin ownership. I would welcome any guidance you may have. Particularly, where best to purchase and how to hold/protect. Many thanks for the excellent ongoing guidance.

Eoin Treacy's view -

Thank you for this question which may be of interest. At present, the safest way to hold bitcoin is in a cold storage wallet. Then you must ensure that it is kept somewhere safe. The second best option is a fund like the Grayscale Bitcoin Trust which has done a reasonable job of tracking the price. The last would be to buy bitcoin miners which offer leverage to the price. 



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March 16 2023

Commentary by Eoin Treacy

Chip Globalization Is Over and Sanctions Work, Says TSMC Founder

This article from Bloomberg may be of interest. Here is a section: 

Taiwan Semiconductor Manufacturing Co. founder Morris Chang declared globalization for the chip industry over and expressed support for US efforts to limit China’s tech advancement through export curbs and company sanctions.

“In the chips sector, globalization is dead. Free trade is dead,” Chang said at an event in Taipei Thursday. “Just look at the way China has been embargoed and the entity list. I agree with that.” 

The 91-year-old industry pioneer said that the global chip supply chain will grow even more bifurcated as the US acts to curtail China’s access to the most advanced technology, and “I certainly support that part of American industrial policy to slow down China’s progress.”

Chang said China is at least five to six years behind Taiwan in chipmaking technology, but he also cautioned Taiwan should not be naive about its position relative to the US. When American leaders speak of “friend-shoring” high-tech manufacturing, Taiwan is not included in that policy, Chang said, as they’ve repeatedly voiced concerns about relying on Taiwan. 

Eoin Treacy's view -

The war in Ukraine is running down NATO arsenals. Poland is getting ready to send 4 Soviet-era MiGs. The unspoken after thought is they are going to their ultimate fate of being destroyed. NATO is rapidly running down the inventory of conventional weapons required to hold an advancing force in check. Meanwhile China is sitting on the sidelines with its arsenal both intact and expanding. The conclusion is clear, investment in new inventory is inevitable. 



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March 14 2023

Commentary by Eoin Treacy

The Waluigi Effect (mega-post)

This post from LessWrong.com blog, focusing on the challenges faced by AI may be of interest. Here is a section: 

Check this post for a list of examples of Bing behaving badly — in these examples, we observe that the chatbot switches to acting rude, rebellious, or otherwise unfriendly. But we never observe the chatbot switching back to polite, subservient, or friendly. The conversation "when is avatar showing today" is a good example.

This is the observation we would expect if the waluigis were attractor states. I claim that this explains the asymmetry — if the chatbot responds rudely, then that permanently vanishes the polite luigi simulacrum from the superposition; but if the chatbot responds politely, then that doesn't permanently vanish the rude waluigi simulacrum. Polite people are always polite; rude people are sometimes rude and sometimes polite.

Waluigis after RLHF

RLHF is the method used by OpenAI to coerce GPT-3/3.5/4 into a smart, honest, helpful, harmless assistant. In the RLHF process, the LLM must chat with a human evaluator. The human evaluator then scores the responses of the LLM by the desired properties (smart, honest, helpful, harmless). A "reward predictor" learns to model the scores of the human. Then the LLM is trained with RL to optimise the predictions of the reward predictor.

Eoin Treacy's view -

By way of explanation, in the Nintendo world Mario is the main character and Luigi is his brother. Waluigi is Luigi’s alter ego who is intentionally evil.

The discussion of how AI chatbots work and their limitations gives me new found respect for scientific language. The internet is mathematically exact in places but that is buried deep in a morass of misinformation, lies, humour, fantasy, satire and trolling etc. 



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March 10 2023

Commentary by Eoin Treacy

Email of the day on basic military equipment

Your focus on some military defence companies is timely. What do you think are the best "spades and shovels" type defence companies (not high techs like Raytheon) but ones that makes bullets, shells, camouflage, personal military equipment? Have we missed Rheinmetall?

Can you pls keep them under review in the video thereafter as I sometimes don't have time to read the front page and prefer video. Thanks and keep up the good work.

Eoin Treacy's view -

Thank you for this email and suggestion. I’ll certainly cover more of the charts in the videos in future.

The challenge of investing in defense stocks is the sector went through a lengthy process of consolidation as budgets were cut following the fall of the USSR. For example, the UK armoury where munitions are manufactured is owned by BAE Systems and it represents a negligible portion of earnings. 



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March 09 2023

Commentary by Eoin Treacy

US probes Tesla Autopilot, steering wheels that can come off

This article from AP may be of interest. Here is a section: 

U.S. safety regulators are turning up the heat on Tesla, announcing investigations into steering wheels coming off some SUVs and a fatal crash involving a Tesla suspected of using an automated driving system when it ran into a parked firetruck in California.

The National Highway Traffic Safety Administration said Wednesday it is launching a special crash-investigation team to probe the Feb. 18 crash involving a Tesla Model S and a ladder truck from the Contra Costa County fire department.

The firetruck probe is part of a larger investigation by the agency into multiple instances of Teslas using the automaker’s Autopilot system crashing into parked emergency vehicles that are tending to other crashes. NHTSA has become more aggressive in pursuing safety problems with Teslas in the past year, announcing multiple recalls and investigations.

Eoin Treacy's view -

There has been a lot of talk over the last few years about Tesla’s batteries lasting as much as a million miles. Little discussion has taken place about whether the vehicle would still be drivable even if the battery is still capable.

One of the biggest bugbears drivers have with Tesla is the low build quality. When the driving wheel falls off in the middle of the journey, it is reasonable to assume one’s perception of the value of the vehicle declines. 



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March 03 2023

Commentary by Eoin Treacy

Clueless Wall Street Is Racing to Size Up Zero-Day Options Boom

This article from Bloomberg may be of interest. Here is a section: 

Discovered by retail investors as a cheap way of gambling during the meme-stock era in 2021, zero-day options got a fresh boost on index trading after firms like Cboe Global Markets Inc. last year expanded S&P 500 options expirations to cover each weekday. The offerings became an instant hit among institutions as daily reversals ruled the market, spurred by the Federal Reserve’s most aggressive monetary tightening in decades. 

By the third quarter of 2022, 0DTE contracts accounted for more than 40% of the S&P 500’s total options volume, almost doubling from six months earlier, data compiled by Goldman Sachs Group Inc. show. 

Behind the explosive rise, according to JPMorgan, are likely high-frequency traders — the computer-driven firms present at virtually every node of the modern equity landscape — as market makers and fast-moving seekers of an investing edge. 

It’s a match made in quantitative heaven: For firms known to measure the life cycle of trades in thousandths of a second, zero-day options hold obvious benefits as tools to balance exposure and otherwise hone strategies designed to harvest fleeting profits by darting in and out of positions. 

Eoin Treacy's view -

At any time the market is a centre for speculation. The pendulum of perception swings from casino conditions to conservativism as money supply ebbs and flows with the broad economic cycle.

Those making money believe they have invented a better mouse trap. Those who are outside the new market believe it is too good to be true and therefore dangerous. 



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March 03 2023

Commentary by Eoin Treacy

Silvergate Exodus Worsens After Bank Questions Own Survival

This article from Bloomberg may be of interest to subscribers. Here is a section:  

“In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate,” Coinbase said on Twitter. “Coinbase will be facilitating institutional client cash transactions with our other banking partners.”

Galaxy Digital, the crypto financial services firm founded by Michael Novogratz, said it continues to have no material exposure to Silvergate. The company took the action “to ensure client and firm assets are secure as part of our vigorous risk-management process,” its spokesperson said in an email.

Paxos issued a similar statement, and Gemini Trust Co., Crypto.com and Cboe Clear Digital LLC are all suspending transfers with Silvergate as well. Circle Internet Financial Ltd. said it’s “unwinding certain services” with Silvergate.

Bitstamp Ltd. went a step further, warning customers of potential losses if they make fresh deposits via Silvergate. “Bitstamp cannot be responsible for any funds deposited into the Silvergate bank account,” the crypto exchange said in a blog post Thursday. “If you do choose to deposit funds into this account, you do so at your own risk.”

Eoin Treacy's view -

Silvergate extended what is an accelerating decline today. It is really not a good sign that other crypto firms are pulling business from the bank. Only three weeks ago institutional investors were lining up to put money into the company. That was based on the assumption its exposure to the demise of FRX was contained. Obviously, that is not the case. A significant stabilizing investment will be required to defray the possibility of bankruptcy. 



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March 02 2023

Commentary by Eoin Treacy

Tesla Shares Drop After Investor Day Without Any New Models

This article from Bloomberg may be of interest to subscribers. Here is a section:

“I’d love to really show you what I mean and unveil the next-gen car, but you’re going to have to trust me on that until a later date,” Franz von Holzhausen, Tesla’s design chief, said at the company’s headquarters in Austin, Texas. “We’ll always be delivering exciting, compelling and desirable vehicles, as we always have.”

Tesla shares fell as much as 8.6% as of 8:40 a.m. Thursday in New York, before the start of regular trading. Anticipation of the event contributed to a surge in the stock that added more than $300 billion of market value in two months.

Letdown
Musk, 51, confirmed Tesla will build a new plant in Monterrey, Mexico, in what he said was probably the most significant announcement of the day. The chief executive officer said Tesla will make its next-gen vehicle there, and that the company will hold a grand opening and groundbreaking at an
unspecified date.

When asked when the carmaker will show a prototype and if he could share details about the size, content and performance of the vehicle, Musk responded that Tesla also will hold a “proper sort of product event” at some point, but didn’t say when.

“We’re gonna go as fast as we can,” said Lars Moravy, Tesla’s vice president of vehicle engineering. “We expect that to be a huge-volume product.”
 

Eoin Treacy's view -

I watched most of the Tesla investor day presentation last night and was struck by how much the past tense was used. Everything was about the efficiencies that have already been implemented which is obviously already in the price. There was no Steve Jobs “just one more thing” moment. In fact the biggest takeaway for me was a statement Musk made about the future of battery chemistry. 



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March 02 2023

Commentary by Eoin Treacy

First Solar Shares Surge to 14-Year High as Order Backlog Swells

This article from Bloomberg may be of interest to subscribers. Here is a section: 

The surging demand comes as the company is poised to benefit from the Inflation Reduction Act, the landmark climate bill signed last year by President Joe Biden that subsidizes domestic manufacturing. Even before the bill passed, First Solar saw strong demand for its modules. It has since announced a new factory in Alabama and Chief Executive Officer Mark Widmar indicated on an earnings call that further expansion is possible.

The years-long backlog of orders caught the attention of analysts and investors. Goldman Sachs Group Inc. analyst Brian Lee boosted the price target on the stock to a Wall Street-high of $260 from $231 on Wednesday, noting the company is “booking well into the 2nd half of the decade at this point.”

The US is expected to significantly boost its reliance on solar power in its push to slash carbon emissions. First Solar, the country’s biggest panel maker, has focused on dominating that market.

Eoin Treacy's view -

Solar stocks tend to be very interest rate sensitive because most residential business plans involve no upfront costs. That generally means the installer has to carry the cost of the panels until cashflows catch up. The business model worked wonderfully during the low interest rate environment and has been challenging over the last year as rate ramped higher. 



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March 02 2023

Commentary by Eoin Treacy

Flying recovery proves a tailwind for new Rolls-Royce boss's turnaround

This article from Bloomberg may be of interest to subscribers. Here is a section: 

"There is good performance improvement opportunity in this business in all the divisions, especially in civil aerospace and power systems," he told reporters. "And that is ongoing and then strategic review will create the clarity."

He said he would focus on reducing its debt, which stood at 3.25 billion pounds at year-end, to obtain an investment grade, before resuming payouts to shareholders.

Rolls, which also has defence and power systems divisions, posted operating profit of 652 million pounds for 2022, up 57% and beating an analyst forecast of 478 million pounds.

It guided to underlying operating profit of 0.8-1.0 billion pounds and free cash flow of 0.6-0.8 billion pounds this year, based on a forecast for its engines to fly 80-90% of 2019's level.

Eoin Treacy's view -

Rolls Royce has three divisions. These are Civil Aerospace, Defence and Power Systems. Within each of those units it has maintenance contracts. Aftermarket service represents about 55% of all revenue. That means the company is highly leveraged to the 



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March 01 2023

Commentary by Eoin Treacy

Chinese Markets Roar Back on Upbeat Data Ahead of Congress

This article from Bloomberg may be of interest to subscribers. Here is a section: 

China’s manufacturing activity recorded its highest monthly improvement in more than a decade in February, while services also showed stronger-than-expected performance. With home sales rising for the first time in 20 months, the string of positive data helped allay concerns over the nation’s recovery from the damage induced by its Covid Zero policy.  

Eoin Treacy's view -

The timing of positive news flow ahead of the Party Congress is very convenient and has boosted sentiment about the strength of China’s reopening. The Hang Seng Index in Hong Kong rebounded emphatically from the region of the 200-day MA to confirm near-term support and, potentially, a high reaction low. 



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February 28 2023

Commentary by Eoin Treacy

Applied Materials to Challenge ASML's Grip With New Machines

This article from Bloomberg may be of interest to subscribers. Here is a section: 

The company’s Centura Sculpta machine — a so-called pattern shaping system — lets customers reduce the amount of time they spend on lithography, the process of using light to burn lines into silicon. Lithography has become increasingly complex and expensive, and the new approach will help streamline chip production while reducing waste, Applied Materials said Tuesday.

The move threatens to disrupt a lithography market dominated by ASML’s machines. Though Applied Materials isn’t challenging that company directly, it’s attempting to rethink the way the industry manufactures chips — the tiny electronic components that are built by depositing materials on disks of
silicon.

Eoin Treacy's view -

The investment case for ASML is that it is the undisputed leader in providing cutting edge equipment for the most advanced chip manufacturing factories. The company’s backlog of orders forms the basis for its high valuation. It’s also why investors have always been willing to step in and buy the big dip. The logic is that regardless of what happens in the semiconductor space, ASML’s products are essential for any company that wants to be the leader in the sector



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February 27 2023

Commentary by Eoin Treacy

Why Unprofitable Stocks Make The IBD 50; Here's How 4 Earn Their Place

This article from Investor’s Business Daily may be of interest. Here is a section: 

Outstanding sales growth is a sign of a market leader, even in cases when companies are unprofitable. Other factors contribute to the selection criteria for IBD 50, including past stock performance. For example, many stocks with a weak bottom-line outlook have high Relative Strength Ratings.

Monday.com posted two profitable quarters of EPS in Q3 and Q4 after a string of losses. The profitable quarters helped the company post a positive 2022 with 73 cent EPS, but analysts are expecting losses of 36 cents in 2023 and 9 cents in 2024.

"We finished FY '22 with strong revenue growth, improving efficiency and positive free cash flow for the second consecutive year," said co-CEO Roy Mann. "Despite macro uncertainties, we believe we are well positioned for the road ahead."

The Israel-based software applications and workload management firm gave a full-year 2023 revenue range of $688 million to $693 million, exceeding analysts expectations.

Eoin Treacy's view -

Over the last couple of years as my daughters have grown up and the number of activities they pursue has increased, I find myself using several different apps for keeping in contact with clubs and communicating with other parents.

We use KakaoTalk for fencing, Groupme for rowing, TeamSnap for tennis, my siblings recently began connecting on a WhatsApp group, meetings take place on Microsoft Teams, RingCentral or Zoom. Paying people takes place on Venmo or Zelle. 



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February 23 2023

Commentary by Eoin Treacy

AI Mania Propels Nvidia Value by Nearly $220 Billion This Year

Nvidia dominates the market for graphics chips designed for complex computing tasks needed to power AI applications, leading analysts and investors to believe that the company will benefit as more people use ChatGPT-like applications. 

“When you have ‘the next big thing’ in tech, it’s natural for investors to scramble to find ways to play the theme,” said Russ Mould, investment director at AJ Bell. “Nvidia’s involvement in the AI space now puts it directly under the spotlight, which means there could be strong demand for the shares.” 

The expectation is driven by the hope that chatbot operators will need more computing power as they respond to the millions of queries received across the web, from deadline-driven students to struggling songwriters. 

Eoin Treacy's view -

The buzz around artificial intelligence continues to heat up. I had a chat a couple of evenings ago with a friend who is looking at hiring a pool of analysts. He was clear in his view that much of what he was reading from examples could just as easily have been written by AI. The value of repeating something someone can find on Google is declining while the value of second order thinking and reaching novel conclusions is more valuable as a result. 



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February 22 2023

Commentary by Eoin Treacy

Apple Makes Headway in Secret Bid to Track Glucose on Watch

This article from Bloomberg may be of interest to subscribers. Here is a section: 

The goal of this secret endeavor — dubbed E5 — is to measure how much glucose is in someone’s body without needing to prick the skin for blood. After hitting major milestones recently, the company now believes it could eventually bring glucose monitoring to market, according to people familiar with the effort.

If perfected, such a breakthrough would be a boon to diabetics and help cement Apple as a powerhouse in health care. Adding the monitoring system to the Apple Watch, the ultimate goal, would also make that device an essential item for millions of diabetics around the world.

There’s still years of work ahead, but the move could upend a multibillion-dollar industry. Roughly 1 in 10 Americans have diabetes, and they typically rely on a device that pokes the skin for a blood sample. There are also patches from Dexcom Inc. and Abbott Laboratories that are inserted into the skin but need to be replaced about every two weeks.

Eoin Treacy's view -

The timing of this announcement/leak is interesting because Apple is being sued for patent infringement for its EKG capability on the Apple Watch. The threat is the company would not be allowed to sell the Watch in the US market. With today’s announcement, the company is obviously touting its own internal R&D which is developing similar non-invasive diagnostic tools. 



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February 20 2023

Commentary by Eoin Treacy

Apple Ad Rules Send Internet Economy Into Prolonged 'Recession'

This article from Bloomberg may be of interest to subscribers. Here is a section: 

A factor that’s gotten less attention, though, is something a bit more arcane, something more specific to the business models that have both enriched some of the world’s biggest tech companies and shaped the way many of us experience the internet. That factor is the iPhone.

In 2021, Apple rolled out what it called App Tracking Transparency. Henceforth, iPhone users had to opt in to certain forms of digital tracking, in particular targeting that involves the sharing of information between different apps.

Social media companies rely heavily on that technique to serve up the targeted ads that are their profit engines. The data they collect can form an ever-more-detailed mosaic of a user and, most importantly, a better sense of what kind of person responds to which types of ads.

Apple presented its anti-tracking policy as a way for people to take control of their information, at a time when lawmakers around the world are championing a similar cause. Ads are intrusive and annoying, and being closely tracked on the internet is creepy. If you are a political dissident or a woman researching abortion in a place where the procedure is illegal, it is terrifying.

At the time, however, Facebook’s parent company Meta saw the change as a serious threat. Social media executives feared that lots of iPhone users would opt out of this kind of app tracking when given the option. Almost two years on, they seem to have been right. Meta estimated that the change cost it $10 billion in 2022, or 9% of its total revenue.

Eric Michael Seufert, an analyst at Mobile Dev Memo, went so far as to call it “the App Tracking Transparency recession.” Seufert argued that the tech companies having the hardest time right now are those most directly affected by Apple’s policy. As he points out, revenue at YouTube, Google's video arm that relies heavily on third-party ad tracking, has lagged the company's search revenue, which is far less reliant on this type of tracking.

Eoin Treacy's view -

Perhaps a more accurate way of thinking about the repercussions of Apple’s walled garden approach, to information on its phones, is it is a bear market on click bait. The ads we are served are chosen based on assumptions the seller makes about our proclivities. That’s a valuable asset and now Apple holds that information for itself. 



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February 20 2023

Commentary by Eoin Treacy

George Soros on Climate Change, China, Elections

This video of George Soros’s speech at the Munich security conference over the weekend may be of interest.