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May 03, 2024

Good morning! 👋

A “weak” jobs report sends yields into the basement and traders get to buyin’.

I have no idea whether that sticks or not.

Then again.

I don’t much care either.

The biggest risk now is a short-term rug pull after sucking in the FOMO squad, including not for nothing, many of the “smartest people in the room” who have been grousing about the dollar, China, the Fed, politics and more and who will miss the turn yet again.

History is very clear.

Do NOT fall prey to headlines screaming about what might happen. Instead, concentrate on what’s likely to happen (which we talk about frequently in OBA if that’s of interest or helpful).

Investing is a process, not a light switch.

Here’s my playbook.

1 – Everything you need to know about Apple

Incidentally and as many of you have already pointed out in messages early this morning, I told you specifically yesterday that I “expected a rip” even though Wall Street expected a dip.

And I mentioned Apple specifically shortly ahead of earnings with the super-savvy Charles Payne (Watch)

Thank you for remembering!

This is a super tough business and it’s always nice to hit one outta the park; I could easily have been wrong.

Keith’s Investing Tip: Always do what Wall Street does, not what it says. You’ll be a lot less stressed and, dare I say it, more consistently profitable. Running like Rocky Balboa is optional.

2 - Job growth 27.08% less than expected and that’s good?! 🤦‍♂️

Non-farm payrolls were expected to increase by 240K in April but came in –27.08% lower at just 175K. (Read)

Crazy world, I know... bad is good and good is bad.

Remember what’s happening.

Team Powell wants the economy to cool off – meaning people to lose their jobs, not get hired as fast and for wages to go down – so the fact that there’s less jobs growth is being viewed as a sign that he’ll finally cool it with rates.

As I noted yesterday, that’s like asking a guy with scissors if you need a haircut, but that’s just me.

The important thing is that YOU are in to win because if you’re not... you won’t.

MyPOV: I’d rather be celebrating success than watching good people struggle any day of the week and happily pay higher rates if that was happening. But it’s not. The Fed is a worthless institution that has outlived its usefulness, imho. And yes, it is still as wrong about rates and labor as it was about transitory.

3 - Palantir reports Monday – here’s what you need to know

The company continues to establish new partnerships, win new contracts, and build astonishing new products at an astounding rate.

Recent examples include a $178M 2-year TITAN contract that includes 10 prototypes, $650M with the US government, $37M with the Lithuanian government and more.

At the same time, Palantir’s boot camps continue to accelerate; it’s now running 1,000+ a year if my numbers are right which, in turn, means 3,000-5,000 super excited attendees who are effectively spreading the word the way USN Top Gun graduates share tactics with the Fleet when they return to it.

“The demand is exponential” says Kevin Kawasaki, Palantir’s global head of business development.

Yep.

4 – AI engineers are griping = $$$

CNBC is reporting that big tech workers – primarily AI engineers – are experiencing burn out as the pressure to keep up with AI accelerates. And, evidently, are griping about it. (Read)

Part of me says welcome to the jungle.

That’s the career field you chose. Go cut lawns like I did if you can’t or don’t want to hack it.

Part of me says I hear you because, honestly, that’s tough.

I worked plenty of 60-80 hour weeks as I built my career and still do today because I like getting things done. You find ways to adapt or move on if that suits you.

The investor in me sees this very differently.

The whining, grousing, opinion voicing – whatever you want to call it – highlights just what an incredible investment opportunity there is at hand.

There are only a handful of products in human history capable of producing such intense demand and AI is one of ‘em.

Grand View Research projects AI growing at nearly 40% a year until 2030 but I think that figure is an order of magnitude low. Even so, and just for the sake of illustrating my point....

Imagine you have a small AI company that generates $1 million in sales today.

Year 1: $1 million x 1.40 = $1.4 million
Year 2: $1.4 million x 1.40 = $1.96 million
Year 3: $1.96 million x 1.40 = $2.74 million
Year 4: $2.74 million x 1.40 = $3.84 million
Year 5: $3.84 million x 1.40 = $5.38 million

A 40% growth rate means that your little $1 million AI company today will grow to a whopping $5.38 million, a jump of 284% in just 5 years. If you can maintain it, of course.

Keith’s Investing Tip: The markets are forward-looking so it’s important to think about where the world is going rather than trying to invest through the rear-view mirror (which is what most people do who don’t know any better). Revenues produce profits. And profits drive share prices over time.

5 – Time for Dr. Ducati

My bride and I will be on the road next week enroute to the Investment Masters Symposium in San Francisco where we are hoping to see as many members of the 5 with Fitz and OBA Family as possible.

I will be in touch sporadically but posting on Twitter, err X, from the road and the conference. And on Instagram, too. I pretty much stink at social media so please forgive me in advance for what will undoubtedly be some sub-par photography and wit!