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Is Musk’s next move a META killer?

Aug 31, 2023

Good morning! 👋

The S&P 500 tacked on a fourth day of gains, ending 0.4% higher yesterday. And, so far at least, the major indices are all in the green—which, if it holds, could extend the streak to a fifth day.

I’ll take it.

If for no other reason than that August was looking to be even more abysmal than usual summer trading (which is typically scattered, loose, and often directionless).

Fall is typically a time to power up:

Retail investors re-engage after the summer holiday, which can bring a lot of money running into markets.
Institutional investors have big bonuses on the line, so they often make strategic decisions to improve their performance into the tail-end of the year, a practice known as “window dressing.”
Traders pick up on the added activity because volatility can be a huge source of opportunity as liquidity improves and spreads (the difference between bid and ask) tighten.

Here’s my playbook.

Apple testing 3D printing at scale & it’s a game-changer

We’ve been tracking 3D printing for some time now in One Bar Ahead® because it’s gonna change the world in ways that most people haven’t yet thought about.

This is a big step forward.

Apple is reportedly testing 3D printing to produce the new Series 9 Apple Watch chassis. (Read)

From there, it’s only a short jump to aluminum enclosures used in both Macs and iPads. Titanium, too. Profit margins could jump significantly (which is undoubtedly why Apple is doing this in the first place).

My guess is that other companies will be watching VERY closely… airlines and other high-tech producers in particular. Imagine how this’ll change the concept of inventory management, purchasing, and more.

I hope I own enough Apple and a few of the other makers I’ve got my eye on.

Chinese consumer demand bouncing back

China’s Beige Book shows consumer spending bouncing back in August after a less-than-impressive July, according to a new report. (Read)

Data show that all five categories—auto, apparel, furniture, appliances, and luxury goods— jumped demonstrably in what is euphemistically called “revenge spending” in Asia.

If you’re not familiar with the term, “revenge spending” is when consumers rush to do something or, in this case, spend more money than they normally would in response to an event like the pandemic or other economic calamity that has held ‘em back.

That’s good for global demand, for two reasons: a) it drives higher global trade volumes, which, in turn, b) stimulates innovation and consumption.

Even so, I’d rather invest because of China than in China any day of the week—with only two very specific, Vegas-style exceptions. Upgrade to Paid

Is Morgan Stanley’s downgrade a sign PLTR is poised for a big move?

Morgan Stanley downgraded Palantir this morning from equal weight to underweight, saying the stock could fall 40%. (Read)

Could it be that the firm’s clients missed the 154% run up this year, and now they want in?

It’s an open secret, albeit a very nasty one, on Wall Street.

Issue a “research” report that contradicts price action and public opinion to drive prices in a favourable direction. In some cases, that’s lower so a firm’s best clients can get on board at lower prices. In others, it’s to take prices higher so they can sell into strength.

I’m not saying that’s happening here, but I do find the timing very suspicious, given Wall Street’s dubious track record of similar shenanigans.

The situation reminds me very much of NVDA when Morgan Stanley, Wedbush, and Baird all downgraded NVDA before its last big move.

Salesforce shares pop on earnings and stronger guidance

What to do now?

I was not enthusiastic when the company’s finance chief Amy Weaver said, “We are still seeing elongated sales cycles, additional deal approval layers, and deal compression in our subscription and support and professional-services businesses.”

Why?

Her remarks strike me as buzzword bingo or word salad and tell me that the upside might be limited.

CEO Marc Benioff seems to think that AI will help lead the charge into new territory, but I’m not sure how that translates into earnings potential absent specifics.

“Hold, but tighten stops considerably” would be my verdict.

That said, I don’t own it (and won’t) because I think there are better opportunities out there for my money.

The stock is trading at $226.55, and the 52-week high is $238.22 at a time when the average price target is $243.53.

Musk’s latest move is a META killer

Maybe it’s just me, but the word “X” in the same sentence as “audio and video” brings to mind less-than-savory images on par with, shall we say, very specifically focused alternatives.

Still, this is significant.

Unka Elon has announced that X users will be able to make audio and video calls through the app without having to reveal their phone number. (Read)

Most Westerners still do not understand the concept of a Super-App, so the moves he’s making don’t register as an investment opportunity.

They should—and a monster one at that!

The closest thing on the planet is WeChat, which is so indispensable and so deeply ingrained in Chinese society that it’s almost impossible to get by without it.

At the risk of sounding like a broken record, what I would give to be able to buy X shares right now. And while I’m at it, I can’t help but wonder if META is DOA when Musk makes this happen.

Putskies?