The Long Term Investor

I like this news as a NVDA owner. Bummer for Intel.

Nvidia to make Arm-based PC chips in major new challenge to Intel

https://finance.yahoo.com/news/exclusive-nvidia-arm-based-pc-185840418.html

(BOLD is my opinion OR what I consider important content)

"(Reuters) - Nvidia dominates the market for artificial intelligence computing chips. Now it is coming after Intel’s longtime stronghold of personal computers.

Nvidia has quietly begun designing central processing units (CPUs) that would run Microsoft’s Windows operating system and use technology from Arm Holdings, two people familiar with the matter told Reuters.

The AI chip giant's new pursuit is part of Microsoft's effort to help chip companies build Arm-based processors for Windows PCs. Microsoft's plans take aim at Apple, which has nearly doubled its market share in the three years since releasing its own Arm-based chips in-house for its Mac computers, according to preliminary third-quarter data from research firm IDC.

Advanced Micro Devices also plans to make chips for PCs with Arm technology, according to two people familiar with the matter.

Nvidia and AMD could sell PC chips as soon as 2025, one of the people familiar with the matter said. Nvidia and AMD would join Qualcomm, which has been making Arm-based chips for laptops since 2016. At an event on Tuesday that will be attended by Microsoft executives, including vice president of Windows and Devices Pavan Davuluri, Qualcomm plans to reveal more details about a flagship chip that a team of ex-Apple engineers designed, according to a person familiar with the matter.

Nvidia spokesperson Ken Brown, AMD spokesperson Brandi Marina, Arm spokesperson Kristen Ray and Microsoft spokesperson Pete Wootton all declined to comment.

Nvidia, AMD and Qualcomm's efforts could shake up a PC industry that Intel long dominated but which is under increasing pressure from Apple. Apple’s custom chips have given Mac computers better battery life and speedy performance that rivals chips that use more energy. Executives at Microsoft have observed how efficient Apple’s Arm-based chips are, including with AI processing, and desire to attain similar performance, one of the sources said.

In 2016, Microsoft tapped Qualcomm to spearhead the effort for moving the Windows operating system to Arm’s underlying processor architecture, which has long powered smartphones and their small batteries. Microsoft granted Qualcomm an exclusivity arrangement to develop Windows-compatible chips until 2024, according to two sources familiar with the matter.

Microsoft has encouraged others to enter the market once that exclusivity deal expires, the two sources told Reuters.

“Microsoft learned from the 90s that they don’t want to be dependent on Intel again, they don’t want to be dependent on a single vendor,” said Jay Goldberg, chief executive of D2D Advisory, a finance and strategy consulting firm. “If Arm really took off in PC (chips), they were never going to let Qualcomm be the sole supplier.”

Microsoft has been encouraging the involved chipmakers to build advanced AI features into the CPUs they are designing. The company envisions AI-enhanced software such as its Copilot to become an increasingly important part of using Windows. To make that a reality, forthcoming chips from Nvidia, AMD and others will need to devote the on-chip resources to do so.

There is no guarantee of success if Microsoft and the chip firms proceed with the plans. Software developers have spent decades and billions of dollars writing code for Windows that runs on what is known as the x86 computing architecture, which is owned by Intel but also licensed to AMD. Computer code built for x86 chips will not automatically run on Arm-based designs, and the transition could pose challenges.

Intel has also been packing AI features into its chips and recently showed a laptop running features similar to ChatGPT directly on the device.

Intel spokesperson Will Moss did not immediately respond to a request for comment. AMD's entry into the Arm-based PC market was earlier reported by chip-focused publication SemiAccurate."

MY COMMENT

This is bad news for Intel. A very good move by MSFT.

If anyone can pull this off with a dominant product it will be NVDA. Nice to see future income streams in the pipeline for NVDA.

 

The close today.

Nasdaq snaps four days of losses as 10-year Treasury yield retreats from 5%

https://www.cnbc.com/2023/10/22/stock-market-today-live-updates.html

(BOLD is my opinion OR what I consider important content)

"The Nasdaq Composite ticked higher on Monday as Treasury yields retreated from their highs and traders looked ahead to the release of corporate earnings from tech industry giants.

The Dow Jones Industrial Average slipped 190.87 points, or 0.58%, to close at 32,936.41, while the S&P 500 fell 0.17% to 4,217.04. The tech-heavy Nasdaq Composite added 0.27% to finish the session at 13,018.33.

The benchmark 10-year Treasury note yield briefly climbed back above the key 5% level before ticking down. It was last trading at about 4.85%.



CNBC
Interest rates have soared in recent weeks, with the 10-year Treasury yield’s break above 5% on Thursday marking the first such occurrence for the benchmark since July 2007. Comments from Federal Reserve Chair Jerome Powell on Thursday suggested that monetary policy could tighten further. This seemingly stoked investor concern and underpinned the rise in Treasury yields. Some analysts think the benchmark yield could still have further room to run.

The rapid rise in yields “should accelerate an already weakening economic picture that is masked by higher rates,” said Canaccord Genuity chief market strategist Tony Dwyer in a Monday note.

Wall Street is coming off a tough week. The S&P 500 ended the week 2.4% lower, notching its first losing week in three. The Dow shed 1.6%, while the Nasdaq slumped 3.2% to register its second losing week in a row.

Shares of oil major Chevron slipped 3.7% following news that the company would purchase peer Hess in an all-stock deal. Pharmacy giant Walgreens ticked up 3% following an upgrade from JPMorgan. Online security stock Okta
slid for a second day, following a data breach; shares shed 8%

Earnings season ramps up this week, with a slew of big tech titans set to report. Investors anticipate results from Alphabet, Amazon, Meta and Microsoft will provide key information for the stock market."

MY COMMENT

I am looking forward to the earnings this week. It will be nice to see some fundamental data on the big tech monster companies......even if the markets dont care. I do.

 

Speaking of NVDA.....they had a good day today.....+3.84%.

 

I had a nice day today.

I was strongly positive today thanks to my big tech emphasis. My non-tech companies.....COST, HON, and HD....were all in the red. I got in a really good beat on the SP500 by 1.41% today....that is a good help to my year versus the SP500.

Nice to start the week in style....after the brutal week the markets had last week.

 

In the face of the current negativity....I like this little article.

Warren Buffett Explains Why Some People Shouldn't Bother Investing In Stocks — 'If You're Gonna Do Dumb Things Because Your Stock Goes Down, You Shouldn't Own The Stock At All'

https://finance.yahoo.com/news/warren-buffett-explains-why-people-155726275.html

(BOLD is my opinion OR what I consider important content)

"World-famous investor and Berkshire Hathaway Inc. CEO Warren Buffett has earned a reputation for his immense success in the world of finance. He is known for his straightforward and practical approach to investing, which has made him a trusted source of financial wisdom for millions.

In a 2018 CNBC interview, Buffett shared insights on interest rates, stocks and investor behavior, and his advice remains relevant in today's challenging economic climate marked by inflation and rising interest rates.

Buffett began his investing career at a young age and dedicated himself to becoming proficient in the craft. This early commitment laid the foundation for his eventual ascension to the pinnacle of financial expertise. Among the various topics he covered in the interview was the delicate balance between interest rates and stock market returns. He cited an example from the early 1980s when long-term government bonds soared to an unprecedented 15% interest rate. Businesses that could generate a 15% return on equity suddenly became lucrative investment opportunities as they surpassed the high-yielding bonds.

But numbers are only part of the equation; Buffett also emphasizes the human element in investing. As he stated in his interview, "Some people should not own stocks at all because they just get too upset with price fluctuations. If you're gonna do dumb things because your stock goes down, you shouldn't own the stock at all."

This advice shows that emotional resilience is as crucial as financial acumen when it comes to successful investing. Buffett advises that potential investors should educate themselves and treat their investments as long-term business partnerships to better weather the market's ups and downs.

Buffett challenges the age-old belief that a balanced portfolio should include a fixed percentage of stocks and bonds. He contends that if someone is emotionally unable to deal with stock market fluctuations, perhaps they shouldn't be in stocks at all, no matter what conventional wisdom or financial advisers might suggest.

It's reasonable to explore alternative assets like art, which has a track record of consistently outpacing the S&P 500. Masterworks is a platform that enables people to broaden their investment portfolios by acquiring high-quality art pieces, democratizing an asset class that was once exclusive to the wealthy.

The art market typically doesn't suffer from the same drastic fluctuations that stocks do, providing a safer, yet profitable, investment option. Art also adds a tangible, aesthetic value to your portfolio, something stocks cannot offer.

For many, the stock market's ups and downs can be a source of emotional stress. Despite best intentions and logical reasoning, some people find it difficult to hold their ground when their stocks experience a downturn. Instead, they may act out of panic, selling off assets in a reactionary move that often results in long-term losses. No matter how much people may try to convince themselves to stay the course, they find that they're not cut out for the long-term commitment and emotional roller coaster that stock market investing entails.

Buffett's enduring principles resonate in any financial climate, teaching investors that long-term thinking, emotional stability and a comprehensive understanding of investment choices are key to financial success. Whether you're inclined toward traditional stocks or alternative investments like art, his insights are an invaluable resource for navigating today's complex financial landscape."

MY COMMENT

Very true.....disregarding the commentary about art. I dont care what anyone says....art is not an "investment".

BUT......emotion.....the return killer is the key component of RISK TOLERANCE. If you think you are a long term investor but find yourself leaving the markets out of concern or fear.....perhaps you need to revisit your RISK TOLERANCE analysis.

 

Thanks for the MSFT and GOOGL earnings above Smokie......I was AWOL today from the markets all day. I played hookie to go antiquing.

I ended the day in the green nicely. Only two stocks down today for me....COST and HD. I also beat the SP500 by 0.05% today.

 

Here are a couple more articles on those earnings today. I note that the futures are strongly positive .......not that it means anything.

Microsoft stock jumps on revenue, earnings beats

https://finance.yahoo.com/news/microsoft-stock-jumps-on-revenue-earnings-beats-200428196.html

and

Alphabet beats Q3 revenue and earnings, but cloud business falls short

https://finance.yahoo.com/news/alphabet-q3-earnings-123119768.html

 

DUH.......you think?

Weekly Market Pulse: An Ego Driven Fed

https://alhambrapartners.com/2023/10/22/weekly-market-pulse-an-ego-driven-fed/

(BOLD is my opinion OR what I consider important content)

"Well, I finally got it. I’ve been fighting COVID for the last week and while most of my symptoms have improved, I am not 100% yet. My goal from the beginning of COVID was to avoid it, if at all possible, until it became endemic and less lethal. It seemed logical to me, a layman, that it would follow this path because it is the one that allows the virus to survive. And so, my wife and I were very careful, especially during the first year of the virus, and took every precaution we thought reasonable. And we succeeded in that neither of us had contracted COVID until last week, when we both got the latest strain.

This version is, obviously, less lethal than the original so we feel like we succeeded in our goal. But it is still a nasty bug. I’m in pretty good physical condition – 3 to 4 days a week at the gym, weekly horseback rides, lots of walking – and it still laid me out for a week. I can only imagine how bad it was in 2020.

All of that is a long way of saying that this won’t be my usual weekly commentary. I still watched the market last week and I have some observations but this week I’m just going to list them in bullet point format. Doug Terry covered the weekly economic reports and there are links below to those reports. Here are my thoughts on last week:

• I don’t pay as much attention to Jerome Powell and other Fed speakers as most people in this business. I don’t really care what they say; I just pay attention to the market reaction, how economic expectations are changing. But…I watched Powell’s talk at the NY Economic Club last week and the minute-by-minute changes in the markets based solely on what was coming out of his mouth. And the things coming out of his mouth were….I’m going to be polite here….devoid of intellectual rigor. It should not have moved the market because he talked for nearly an hour and said next to nothing of value. This quote from John Maynard Keynes kept running through my head:

“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

• The Fed in general, and Powell more specifically, needs to shut up. They are creating volatility and disrupting markets for no reason other than to stroke their own egos. It is a disgusting display with potentially real economic consequences.
• Everything happening in markets right now is about interest rates. And the recent increase in volatility means, to me, that we are getting very close to the end of this rise in rates. You want to be a buyer of high volatility, not a seller.
• About half the move in nominal rates last week was due to a rise in inflation expectations. Real rates were up too but not as much. 10-year inflation breakevens are up about 30 basis points since June but it looks like normal volatility to me.
• The SOFR (short-term rate futures that replaced LIBOR) futures curve has shifted significantly over the last 7 weeks. Since 8/31/23 expectations for SOFR in June 26 have risen from 3.55% to 4.4%. 6 months or so ago, expectations were for rates to fall into the 2s. That is “higher for longer” and while the market has taken it as a negative in the short term, think about what it says about expectations for the economy. Short-term rates are now expected to be 4.75% at the end of 2024, falling to 4.4% in 2025 and staying there until at least 2026. There is no recession in that forecast.
• With the 10-year rate rising 30 basis points in a week, I would have expected the dollar to rise; instead it fell. Maybe it will play catch up this week but that was really surprising. And, again, might be a sign that rates are nearing a peak.
• Commodities were up again last week and are on a multi-year outperformance streak, nearly doubling the performance of the S&P 500 since the COVID market recovery started on 4/1/20. The GSCI outperformed in 2021 (38.8% vs 28.7%), 2022 (24.1% vs -18.1%) and while it lags the S&P 500 this year, it has risen during this stock market correction (+7.1% vs -3.8% since August 16th). The last big outperformance cycle for commodities lasted 10 years (1999 to 2008) and the ratio of GSCI to S&P 500 rose from 1.47 to 8.6. The low in 2020 was 0.41 and today it is 0.88. If this cycle is like the last one, it has a long, long way to go.
• Sentiment about stocks and other risk assets is very, very negative right now, even as market expectations about the economy continue to improve.
• Short-term interest rates rose only by a few basis points last week so the yield curve continued to steepen. The 10/2 curve is now inverted by just 14 basis points. Because long rates are rising, this steepening reflects the improved NGDP growth expectations (steeper curves are associated with higher future growth). And since inflation expectations have risen more modestly, the change is more about growth than inflation, although it reflects a rise in both. If it shifts to a bull steepener with rates falling instead of rising, then recession will likely be imminent. We aren’t there yet but this is our number one worry right now.
• We would also expect to see widening credit spreads if we are approaching recession and while they’ve risen some recently they are still below the long-term average. IG spreads are unchanged over the last month. Even low-rated credit spreads, CCC and lower, are still below the long-term average."

MY COMMENT

I could not agree more. In fact....market leaders and financial opinion makers should be uniform in telling Powell and the FED to......SHUT UP AND SIT DOWN.....STFU.

It is ridiculous how they are talking trash to the markets. it is simply insanity. If the big market opinion makers came together and publicly told the FED to CUT THE CRAP......it would either end or people would stand up and cheer and start to tune out the FED BS. BUT....they all play their little games.

This is the ultimate quote of the past two years....

"The Fed in general, and Powell more specifically, needs to shut up. They are creating volatility and disrupting markets for no reason other than to stroke their own egos. It is a disgusting display with potentially real economic consequences."

 

Here is the reality of the current earnings so far......another earnings season of good BEATS.

"Around 150 S&P 500 companies are slated to report this week. Thus far, the season is off to a solid start. Roughly 23% of S&P 500 companies have already reported earnings, and 77% of them have posted earnings surpassing analysts’ expectations, according to FactSet."

https://www.cnbc.com/2023/10/23/stock-market-today-live-updates.html

There continues to be little to nothing being said about earnings in the general financial media other than specific company reports. For some reason no one wants to point out the obvious.....we are in the middle of another round of earnings BEATS.

EVERYONE is simply too busy being.....negative, negative, negative. I call BS on the negativity. It is ridiculous.

 

YES......that big dip in GOOGL is more negativity driven short term insanity. It is a function of the micro-focus on a small part of earnings and IGNORING the big picture.....a nice BEAT....that the company put up yesterday.

You know.....in the "old days".....I dont remember this micro-focus being like it is now. Investors were happy to see a big picture beat from a company. There was simple logic applied by investors....who realized....that the entire earnings is what matters.

This is why you have multiple income streams and business niches in a single company.....so when one is performing well it helps to carry the one that is not....or....is slightly lagging. I AM NOT SAYING THAT ANY PART OF GOOGLES EARNINGS WAS LAGGING YESTERDAY......I dont think their slight miss on Cloud Business was significant in the slightest.

In any earnings report on a BIG company there is going to be variance between different segments of the company. This is basically meaningless. Personally......I own the entire company known as GOOGLE......not just the CLOUD segment.

This sort of BS has been going on for at least 5-10 years now....although it is now reaching a CRESCENDO OF IGNORANT FOOLISHNESS. It is now the norm to see a great earnings beat and some small segment of the earnings take all the focus.

Another reason to IGNORE the short term.