David Bear

🇨🇦ian 40 something, who loves the outdoors, traveling, and his family ... views expressed are my own (who’s else would they be?!)

[The Kobeissi Letter @KobeissiLetter]

Is this the worst "Fed pivot" in history?

Since the Fed "pivoted," CPI has RISEN to a 7-month high and PPI just hit its highest since Feb 2023.

In fact, rates paid by Americans are UP +100 bps since cuts began.

How HOT is inflation right now? Let us explain.

(a thread)

[Kirk Lubimov @KirkLubimov]

Chrystia Freeland is acting like she doing anyone a favour by introducing 30 year insured mortgages for first time home buyers.

Mortgage 1:
$500,000
IR 4.5%
Amortization 25 years.
Payments: $2,767/m
Balance at end of 5yr term: $438,981.93

Mortgage 2
$500,000
IR 4.5%
Amortization 30 years
Payments: $2,521/m
Balance at end of 5yr term:
$455,501.93

The minimal savings in monthly payments adds much more in interest costs paid by the borrower - another $70k over the mortgage lifetime in this example.
This makes the banks more money, more risk for tax payers and more debt to pay for home buyers.

Canadians don't need more debt. We need a government that's focused on wealth and value creation.

This is another thing that isn't needed. Just stop mass immigration.

[Tablesalt 🇨🇦🇺🇸 @Tablesalt13]

KIDS

At 5% rates....your first payments on a 30-year, 5% down mortgage are 77% interest.

You dont start paying 50/50 principal to interest until month 195.

Be careful with this stuff!

[The Kobeissi Letter @KobeissiLetter]

How big the Magnificent 7 has become?

The Magnificent 7's market cap is higher than any non-US stock market in the world.

The group is worth now ~$15.7 trillion, almost double China’s stock market value of $8.7 trillion.

It is also worth nearly as much as the German, Canadian, UK, French, and Indian stock markets COMBINED.

Apple, Nvidia, and Microsoft each are worth more than the German and Canadian markets.

To put this into another perspective, the total US stock market is worth $50 trillion, just 3 times more than the Magnificent 7.

Big tech is MASSIVE.

[David Knight Legg @KnightLegg]

Canada is in trouble. This is the ninth budget in a row that depends heavily on excessive borrowed money managed by an obesely bloated federal bureaucracy that is now 40% larger and 68% more costly than when the Liberals took power in 2015.

Unwilling to live within the tax revenues produced by the national economy, this government has borrowed more money in 8 years than all other Canadian governments combined since the nation was founded in 1867. This recklessness has doubled the national debt and created interest payments that are breaking all records – last year over $46 billion dollars and this coming year over $54 billion dollars. That is more than the federal government spends on the military, or healthcare. All of it taken from taxpayers to pay bondholders instead of being spent on public services.

Now, the centrepiece of their new budget is a capital gains tax targeting the few Canadian individuals and firms who invest in Canadian ventures or assets. This investment is what creates the new businesses and jobs and productivity the nation so badly needs.

It is bizarre to watch a morbidly obese and fiscally incompetent government propose - in the name of ‘fairness’ - to justify taking productive capital away from Canada’s small but critical investor class and hand it to the same bureaucracy that has for almost a decade shown they will only waste it. The track record is anything but ‘fair’: inflationary reckless borrowing, uncompetitive taxes, an obesely expanded bureaucracy and debt, underperforming public services, runaway interest payments and a regulatory state that kills industrial expansion and economic momentum.

The world is noticing. The OECD now measures Canada dead last of the world’s 38 advanced economies for per capita GDP productivity modeled to 2030 - and 2060. Since that 2021 analysis, the nation has lost ground on GDP productivity for another 6 of the last 8 quarters. On a purchasing power basis, Canadian GDP per capita is down to 76% of the USA. That’s with outlier Alberta raising the national GDP numbers significantly. On a provincial basis, 46 of the 50 US states are now wealthier than Ontario, and if Quebec was a US state it would be the 49th poorest, only marginally ahead of Mississippi.

The government needs to ask itself how fair it is to add another $39.8 billion in debt this coming year as they lose over $54 billion dollars in interest payments to bondholders instead of spending it on public services?

The real social injustice in this budget is the borrowed money that is killing the opportunity society Canada is supposed to be - and that the next generation deserves. By avoiding hard decisions - and taxing investors instead of cutting their own reckless spending - this govt is creating a future of forced austerity for our kids. You can call that a lot of things, but it isn’t ‘fairness’.

[Otavio (Tavi) Costa @TaviCosta]

Inflation, higher for longer.

[Jim Bianco @biancoresearch]

Worth mentioning that 24 years later, Cisco is still below its 2000 high.

[The Kobeissi Letter @KobeissiLetter]

AI hype has hit a whole new level:

Super Micro Computer is now the 161st largest public company in the United States.

One year ago, Super Micro Computer stock, $SMCI, was worth less than $5 billion.

Today, it is worth $55 billion and up over 1000% from its 2023 low.

Since January 1st, the stock is up a massive 230% adding ~$30 billion in market cap.

How long can this last?

[David Bear @dabearinvan]

This is insane

[Charlie Bilello @charliebilello]

Nvidia's market cap is now over $200 billion higher than all of the companies in the S&P 500 Energy sector ... combined. Meanwhile, the total net income of the Energy sector is $147 billion vs. $19 billion for Nvidia.

Video: https://t.co/QUIx0MG3nm

[Genevieve Roch-Decter, CFA @GRDecter]

🍾S&P 500 closes over 5,000 for the first time in HISTORY!

What a week!

Let’s recap:

- NVIDIA now worth as much as the entire Chinese stock market (represented by the H shares of the Hong Kong stock market)

- ARM beats on earnings and stock jumps +62%

- Alibaba beats earnings & announces +$25 billion buy-back

- Ford beats earnings and stock jumps +5.5%

- Eli Lilly stock hits record high

- SnapChat beats earnings but stock tanks -35% this week

- PayPal beats earnings but stock drops -5%

- Magnificent Seven tech stocks accounted for 45% of January's S&P 500 return

- Layoff announcements: Cisco to cut up to 14% of workforce, DocuSign to cut 6%, Snap to cut 10%, Estee Lauder to cut 3-5%, Warner Music to cut 10% of workforce and BCE (Canada’s largest telco) to cut 9% and Worldline (Europe’s largest payment processor) to cut 9%

- Job postings are down 15% over the past year, plummeting 31% in finance and 44% in software development roles

- Over +34,000 tech employees have lost jobs so far in 2024, according to https://t.co/dyND4Co9bo

- Bitcoin jumps +12% this week and hit $48k

- BlackRock & Fidelity now hold 151,950 BTC worth +$7.16 billion for their spot Bitcoin ETF

- Deutsche Bank provisions for losses in US commercial real estate more than FOUR TIMES bigger in the last quarter, as it warned that refinancing poses the greatest risk to the struggling sector

- Janet Yellen warns of potential failure of non-bank mortgage lenders

- Moody’s downgrades New York Community Bankcorp (NYCB) to junk status

- Vladimir Putin says the US Government is killing the dollar with their own hands, many countries including major oil producers, are accepting payments for oil in Chinese yuan.

- Jim Cramer says Tesla has bottomed at $180/share

- Gold demand hit a record last year and is expected to rise again in 2024

- Chinese indices rebound on more stimulus efforts

- Record amount of Chinese money is flowing into overseas equities as investors seek a haven away from domestic stocks

- Hedge fund billionaire Bill Ackman to launch a NYSE-listed fund for regular investors

- Corporate bond sales hit $176 billion in the US in January, setting a record for the month

- U.S credit card delinquencies surged +50% in 2023 as total consumer debt swelled to $17.5 trillion

- OpenAI CEO Sam Altman seeks $7 trillion for new AI chip project

- JPMorgan is embarking on one of its most aggressive bank branch expansions in recent years, adding 500 new U.S. locations by 2027

- Adam Neumann tries to buy back WeWork

- Mark Zuckerberg sold $134 million in META shares this week, marking his largest individual sale since 2018. Since November, he has sold $765 million in shares.

- Nancy Pelosi has made +$1.2 MILLION on her $NVDA trade. She has added now six times her Congressional salary in 79 days on one trade (according to Unusual Whales)

Have a spectacular weekend – you deserve it!

[Otavio (Tavi) Costa @TaviCosta]

Puzzling.

With a $3 trillion market cap, Microsoft is twice the size of the entire energy sector in the S&P 500, which generates double Microsoft’s annual free cash flow.

[Otavio (Tavi) Costa @TaviCosta]

Just when everyone was fixated on NVDA, here comes cocoa prices.

These inflationary moves across diverse commodity markets make today's cycle unique, reinforcing the likelihood of another inflationary era.

Deglobalization, excessive fiscal spending, wage hikes, and chronic underinvestment in natural resources are the primary forces at play.

H/t @jaytradeschi

[zerohedge @zerohedge]

probably nothing

[David Bear @dabearinvan]

@MPelletierCIO So you are being paid to do a job and you pay someone else to do that job?!

[Martin Pelletier @MPelletierCIO]

My God. 😳

Management fees paid to consultants have skyrocketed to $17.7 billion in 2022, and McKinsey & Company virtually runs immigration.

“The cost of McKinsey’s contracts has spiked 30-fold since the Harper years,” posted Radio-Canada in January. “

The consulting firm McKinsey & Company has seen the amount of money it earns from federal contracts explode since Prime Minister Justin Trudeau came to power — to the point where some suggest it may have a central role in shaping Canada’s immigration policies.”

https://t.co/3GLFhn78Qt

[The Kobeissi Letter @KobeissiLetter]

According to the Fed itself, the current proxy Fed funds rate is ~7%.

In other words, it would take 3 more 50 basis points rate hikes to hit this proxy rate.

What is the proxy Fed funds rate?

It's the Fed funds rate that would typically be associated with current market conditions.

Even in 2008, the proxy Fed funds rate did not top 6% and now we are above 7%.

Markets continue to suggest that higher for longer is the new normal for interest rates.

Inflation is still a major issue.

[Rob Anderson @_rob_anderson]

Mega-cap tech has drawn comparisons to the internet stocks of the late 1990s. The key difference is the group today is very profitable. However, their market-cap relative to earnings weight has gotten extremely extended and could be nearing a breaking point. @NDR_Research

[David Bear @dabearinvan]

Just happened to me and my family of 4. 4+ years living there. Promised they would never evict us (even two weeks before serving notice). Apparently a 93 year old mother from London England is moving in despite 12 stairs to front door and 12 stair to only bathtub.

[Mortimer @mortimer_1]

Hearing lots of stories from people about landlords in Vancouver using the landlord or family occupancy reason to end tenancy… especially with long standing tenants, where their rent is below current market rents…

[Compounding Quality @QCompounding]

15 Investing visuals everyone should know.

1. Percentage gains needed to recover from a loss

[Otavio (Tavi) Costa @TaviCosta]

It is intriguing how the recent rise in tech megacap stocks has not been accompanied by a corresponding growth in projected earnings, despite the enthusiasm surrounding AI.

In reality:

We have seen the complete opposite of that in some cases.

With the exception of $NVDA, tech megacap companies have either experienced stagnant growth in expected 2024 EPS or a substantial decline.

Then, add:

- Narrow market leadership
- Historically expensive multiples
- Higher overall cost of capital

Considering the ongoing major Treasury issuances as the Fed shrinks its balance sheet, these stocks are clearly priced for perfection.