DHUnplugged #678: Manufactroversy

AI technology in the hot seat.

Apple gives in to pressure on messaging

Short week – plenty of action.

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Warm Up
- CROCs CTP is almost over - 4 days until end... Then December starts the CTP CUP 2024!
- - Back from an RCL cruise- my, have things changed
- Market starting to overheat (KRI +5)
- End of Year - Santa Claus Rally - on schedule
- PSI - Markets Closed Thursday and after 1pm Friday
- Big doings in Crypto World - Pied Pipers (Binance now in hot water)

Market Update
- WEIRD Action - in the AI Space - Fire, Quit, Oust and then Hire
- USD continues to fall
- VIX has a 13 handle
- BIG news - NVDA earnings

What in the?
- Sam Altman pushed out over the weekend....
--- Hair on FIRE in Silicon Valley
- - Weekend scramble - MSFT picks up Altman to hear AI Unit
- Hundreds of OpenAI employees have signed a letter demanding the board resign or face an employee exodus to Sam Altman’s new venture at Microsoft “eminently.”
- What is going on?

MORE OpenAI
- OpenAI named ex-Twitch boss Emmett Shear as interim CEO
- Commercialization of product seems to be at the heart of the matter
- Microsoft Chief Executive Satya Nadella said in posts on X that Altman would become CEO of a new research group inside the software maker, along with other departing OpenAI colleagues such as outgoing President Greg Brockman who quit following Altman's ouster.
--- Was there a deeper and darker plan here?

Hmmm- This sounds Off
- OpenAI customers are looking for the exits, signaling a possible exodus of business that could devastate the startup.
- More than 100 OpenAI customers contacted OpenAI competitor Anthropic over the weekend, a startup that has raised billions from both Amazon and Google in recent months, according to someone familiar with the situation.
- Sounds like companies trying to create a corpse and pick on its remains or manufactroversy
- A manufactured controversy is a contrived disagreement, typically motivated by profit or ideology, designed to create public confusion concerning an issue about which there is no substantial academic dispute. This concept has also been referred to as manufactured uncertainty.

BitCoin ETF
- I was interviewed about this very topic last week by Paul Barron (he intimated I was a boomer - look up the view)
- The US Securities and Exchange Commission has deferred making a decision again on whether to approve the first US exchange-traded fund that invests directly in Bitcoin.
- The primary US securities regulator deferred on filings from Franklin and Globe X, according to documents Friday. The deferrals come after delays for other filers because both companies had put

More Crypto Crap
- Changpeng “CZ” Zhao is stepping down as CEO of Binance as part of a major $4 billion settlement between the Department of Justice and the cryptocurrency exchange he founded, according to sources close to the discussions with the agency.
- The settlement will be with the DOJ and Commodities Futures Trading Commission; the Securities and Exchange Commission is not participating.
- As part of the settlement, Zhao will also plead guilty to anti-money laundering charges brought by the Department of Justice. He is scheduled to enter the plea in federal court in Seattle on Tuesday afternoon, the Wall Street Journal reported.
- Binance, the DOJ, CFTC, and SEC had not replied to requests for comment at the time of publication.
- The SEC charged Binance, and its founder CZ, in June with operating an unregistered exchange and misleading investors by using a Switzerland-based fund Sigma Chain, which was also owned by CZ, to inflate the trading volume on Binance’s U.S. platform. “Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” SEC chair Gary Gensler said in June.

Chanos
- Jim Chanos, the legendary short seller known for his bearish bets against Enron and Tesla Inc., is shuttering his hedge funds after almost four decades.
- Chanos & Co., which he founded as Kynikos Associates in 1985, plans to return most capital to investors by the end of the year, according to a letter to clients Friday.
- Peak was $4 billion in 2008
-- Lat known value - $200M
- Thought question: Is fundamental short selling dead?

AMAT - Bad Practice
- Semiconductor equipment maker Applied Materials is under U.S. criminal investigation for potentially evading export restrictions on China's top chipmaker SMIC, according to three people familiar with the matter.
- The largest U.S. semiconductor equipment maker is being probed by the Justice Department for sending equipment to SMIC via South Korea without export licenses, the sources said. Hundreds of millions of dollars of equipment is involved, one of the people said. Reuters is reporting details of the probe for the first time.
- Shares in Applied Materials fell 7.3% after the news and the company reported quarterly results.
- Is there really anyway to stop the diverting of goods if the number are high enough to bring in big profits. (then a slap on wrist if caught)

More Chips
- Microsoft announcing that is is /has created its own AI Chip
- The first, its Maia 100 artificial intelligence chip, could compete with Nvidia's highly sought-after AI graphics processing units. The second, a Cobalt 100 Arm chip, is aimed at general computing tasks and could compete with Intel processors.

NVDA Earning
- Smashed the estimates
- $2 billion in revenue over estimate and beat EPS estimates by 25%
- BUT, met whisper numbers
- Nothing bad to say about earnings - actually pretty incredible....

XI Dinner
- Apple CEO Tim Cook, Tesla chief Elon Musk and Blackrock's Steve Schwarzman were among the guests Wednesday night at a gala reception and dinner in San Francisco for visiting Chinese President Xi Jinping.
- Hosted by the U.S.-China Business Council and the National Committee on U.S.-China Relations, the dinner followed Xi's daylong summit with President Joe Biden, which Biden called "some of the most constructive and productive discussions we've had."
- On the guest list: Salesforce CEO Marc Benioff, Boeing CEO Stan Deal, FedEx CEO Raj Subramaniam, Visa chief Ryan McInerney, Bridgewater Associates' Ray Dalio, Pfizer chairman and CEO Albert Bourla, Mastercard chair Merit Janow, and BlackRock's Larry Fink.

Retail Earnings
- Mixed bag
- Target pretty good (Used the word value - customers buying up the lower price items)
- Shares shot up after earnings $108 - $208)

FED Speak
- New staging vidoe: Richmond Fed President Thomas Barkin (not a voting FOMC member) says inflation is coming down nicely, but job is not done

Pot Distributor Collapse
- HERBL, one of California’s largest cannabis distribution companies, was on the verge of collapse. So Mike Beaudry, the company’s CEO, sent out an email on May 18 declaring that “these rumors are categorically not true. HERBL continues to be fully operational.”
- Less than a month later, HERBL had completely collapsed.
- Probably this industry more than others should not be sampling the product while working.

Watches - Prices sinking
- The prices of Rolex and Patek Philippe watches slid to new two-year lows in October as demand in the secondary market declined. The Bloomberg Subdial Index, which looks at the pricing for the 50 most traded watches by value, fell 1.8% last month—to its the lowest since 2021. In the last 24 months, the prices have dropped about 18%, according to the index.
- “We are seeing growing downward pressure in the market, which could lead to a further downward drift in prices as dealers cut valuations to chase sales,” said Christy Davis, the co-founder of London-based Subdial, a watch trading platform that tracks their prices, according to Bloomberg. As a result, the average number of days to sell pre-owned watches has shot up by 8% since August, the watch group said.

PSA
- Vinyard Fruit and Vegetable Company issued a voluntary recall of fresh-cut cantaloupe, which has been tied to at least 43 illnesses within 15 states, according to the Centers for Disease Control and Prevention (CDC).
- Seventeen people have already been hospitalized, the CDC said.

TSLA Stock
- Getting ripped - even the diehard Musk fanboys are pissed at latest
- ESG rating must be really terrible for Tesla at this point

FWIW - Argentina
- Politics can be market moving
- Argentina ETF +11.6% makes a strong move following election win by far-right candidate Javier Milei
- Individual Argentina stocks also moving: YPF +41%, TEO +23%, GGAL +21%, MELI +1.7% (regional play)

Tickemaster
- Live Nation and its subsidiary Ticketmaster is being sent a subpoena for documents regarding ticket pricing, fees and secondary sales, a U.S. Senate panel said on Monday.
-Ticketmaster, which for decades has been criticized for hardball tactics and high prices, took a new round of rhetorical beatings around this time last year after botched ticket sales for Taylor Swift's "Eras" tour.
- "Live Nation has egregiously stonewalled my Subcommittee’s inquiry into its abusive consumer practices — making the subpoena necessary," Senator Richard Blumenthal, Democratic chair of the U.S. Senate Permanent Subcommittee on Investigations, said in a statement.

Retail Earnings
- Dicks Earnings per share: $2.85, adjusted, vs. $2.44 expected, Revenue: $3.04 billion vs. $2.94 billion expected
- - The company's reported net income for the three-month period that ended Oct. 28 was $201 million, or $2.39 per share, compared with $228 million, or $2.45 per share, a year earlier. Excluding one time items, Dick's saw earnings per share of $2.85. (Shares Up)
- Best Buy - cut its full-year sales outlook Tuesday, as the company weathers a period of cooler demand and prepares for price-conscious holiday shoppers.
- - The consumer electronics retailer beat Wall Street's quarterly earnings expectations, but fell short on revenue.
---- Best Buy said it now expects revenue to range from $43.1 billion to $43.7 billion for the fiscal year, down from its previous range of between $43.8 billion to $44.5 billion. The retailer said it expects comparable sales to decline by between 6% and 7.5%, lower than its previous guidance of a 4.5% to 6% drop.
---It also lowered the high end of its profit guidance, saying it expects adjusted earnings per share to range from $6 to $6.30 instead of between $6 and $6.40. (Sotck DOWN)
- Lowes - lowered its full-year sales outlook, after customers spent less than expected on do-it-yourself projects and caused its fiscal third-quarter sales to tumble nearly 13% year over year.
-- Earnings per share: $3.06, Revenue: $20.47 billion vs. $20.89 billion expected (Shares DOWN)

AND
- Ford is scaling back plans for a $3.5 billion battery plant in Michigan as consumers shift to electric vehicles more slowly than expected, labor costs rise and the company moves to cut costs.
- Ford announced the facility in February. It quickly became a political target due to a licensing deal with Chinese battery manufacturer Contemporary Amperex Technology Co., or CATL.
- The company said Tuesday it is cutting production capacity by roughly 43% to 20 gigawatt hours per year and reducing expected employment from 2,500 jobs to 1,700 jobs.