DHUnplugged #686: Picking on The Rich

– BIG News – Apple loses to….

– World Economic Forum Davos Happening – Picking on Rich Peeps AGAIN – let them eat stimulus!

– Best of CES? – EVs getting some shade thrown

– Bitcoin ETF approved

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

Love the Show? Then how about a Donation?

Follow John C. Dvorak on Twitter

Follow Andrew Horowitz on Twitter

Warm Up
- BIG News - Apple Loses to....
- World Economic Forum Davos Happening - Picking on Rich Peeps again
- Best of CES?
- EVs getting some shade thrown
- Bitcoin ETF approved

Market Update
- Natural Gas price on the move - huge jump
- 3 downgrades for Apple last week
- Bank earnings - mixed, but could say disappoint
- Another Stop-gap bill to AVERT a government shutdown

Can You Believe this?
- Microsoft ended Friday's U.S. trading session as the most valuable publicly traded company, surpassing Apple after briefly topping the iPhone maker during intraday trading on Thursday.
- Shares of Microsoft climbed more than 3% for the week, bringing the company's market cap to $2.89 trillion, while Apple's stock dropped by over 3%, lowering its valuation to $2.87 trillion.

More Apple
- Apple said on Thursday that former Vice President Al Gore will retire from the company's board next month after serving as a director since 2003.
- Other: 3 Downgrades last week! (Stock still up 2.5% for the week although down 3.5% for the year 2024

More Wealth News
- Just in time for Davos - pick on the rich - LET THEM EAT STIMULUS!
- The world's five richest men have more than doubled their vast wealth since 2020, according to an Oxfam report, as the charity calls for curbs on "corporate power."
- The report found that the combined fortune of the world's wealthiest people — Tesla CEO Elon Musk, LVMH boss Bernard Arnault and family, Amazon founder Jeff Bezos, Oracle founder Larry Ellison, and veteran investor Warren Buffett — has jumped from $405 billion in March 2020 to $869 billion in November 2023.
- Seven of the world's ten biggest companies have a billionaire as their CEO or main shareholder, the report found. Meanwhile, the world's richest 1% of people own 43% of global financial assets, according to the research, such as publicly listed instruments like stocks and bonds, along with stakes in privately-held businesses.
- "If current trends continue, the world will have its first trillionaire within a decade but poverty won't be eradicated for another 229 years," Oxfam said.

Even MORE Davos
- The global economy faces a year of subdued growth prospects and uncertainty stemming from geopolitical strife, tight financing conditions and the disruptive impact of artificial intelligence, a survey of top economists released on Monday found.
- Conducted each year ahead of the World Economic Forum's (WEF) annual meeting in the Swiss resort of Davos, the survey of 60-plus chief economists drawn globally from the private and public sectors attempts to sketch priorities for policymakers and business leaders. (meaningless)
- Some 56% of those surveyed expect overall global economic conditions to weaken this year, with a high degree of regional divergence. While majorities saw moderate or stronger growth in China and the United States, there was broad consensus that Europe would muster only weak or very weak growth.
- The outlook for South Asia and East Asia and Pacific was more positive, with very high majorities expecting at least moderate growth in 2024.
- 70% see financial conditions loosening (rate cuts and stimulus) as inflation slows

Speaking of Rate Cuts (NOT)
- The European Central Bank may defy market expectations and hold off on starting interest rate cuts during the whole of 2024, the institution's Governing Council member Robert Holzmann said Monday.
- Asked about those who call for the first rate cut to take place as soon as April, Austria's central bank governor told CNBC, "I'm afraid, leaving Davos, those people will be deeply disappointed."
- "I cannot imagine that we'll talk about cuts yet, because we should not talk about it. Everything we have seen in recent weeks points in the opposite direction, so I may even foresee no cut at all this year."
- AGREE WITH THAT?

Oil and Energy
- Prices for U.S. crude jumped as much as 4.5% on Friday before settling up 0.9%, after several oil tankers diverted course from the Red Sea following overnight air and sea strikes by the United States and Britain on Houthi targets in Yemen. The energy sector ended up 1.3%.
- Natural Gas Prices are on the move as severe cold takes control in parts of the US and LNG tankers are on hold due to Red Sea fear.
- Natural gas prices shot up more than 400% as a deep freeze is set to hit Texas, potentially sending demand for the heating fuel soaring.
- Spot prices for the key US Henry Hub in Louisiana for the long holiday weekend rose as high as $17 per million British thermal units Friday, trading in a range of $15-$17, according to market participants with knowledge of the matter who asked not to be named because the information is private.
- That compares with more than $3 for the most actively traded futures, which are for delivery next month.

Bank Earnings
- Major U.S. banks reported lower profits on Friday in a choppy fourth quarter clouded by special charges and job cuts, with signs an income boost from high interest rates is waning and some consumer loans are starting to sour.
- Still, the country's largest lenders JPMorgan (JPM.N), Wells Fargo (WFC.N), Bank of America (BAC.N), and Citigroup (C.N) struck an upbeat tone on the economy, noting that American consumers remained resilient even as defaults on consumer loans began returning to pre-pandemic levels.
- Jamie Dimon, CEO of JPMorgan Chase, the biggest U.S. bank and a bellwether for the economy, said consumers were still spending and that the markets were expecting a soft landing, but warned government spending could continue to push prices higher.
- Biggest issues were the one-off chanrges for paying back for the bank failures in 2023 - The banks combined set aside more than $8 billion to refill the government's deposit insurance fund (DIF), which took a $16 billion hit after Silicon Valley Bank and two other lenders failed last year.
- Net Interest Margin (margin) was lower than expected for Bank of America and warned it couple 7-9% lower than a year ago due to lower rates (odd)
- Jobs cuts were also announced by a few during their calls.

EVS - What Up with This?
- Tesla cutting car prices in China as they blame the Red Sea turmoil for other issues
- Stock is down 12% YTD
- Hertz surprised last week when the car-rental company announced it would be selling about a third of its global electric vehicle fleet
- Hertz CEO Stephen Scherr told CNBC's Jim Cramer on "Squawk on the Street" on Thursday that the company's move, which followed large purchase orders of Tesla and GM EVs, was "responding to the reality, which is we're trying to bring supply in line with demand."
- "The reality of EVs and Tesla's being the best-selling car will, at some point, render them the best rental car," Scherr said. "It's not yet, so we may have been ahead of ourselves in the context of how quickly that will happen, but that will happen."
- 20,000 vehicles being sold - supposedly good bargains available (Hetz turns over cars regularly - is this any different?)

CES - Best of?
- According to Tom's Guide...
- Artificial intelligence startup Rabbit unveiled its r1 AI device at CES 2024, quickly becoming a show favorite and within 48 sold out two runs of 10,000 units.
- hand held - (why not app/software?) that can be an AI task rabbit
- $199 R1 (no subscription fee - which is dumb
- Unlike the voice assistants in your smartphone, it can take complex requests, break it down into different tasks and perform those tasks on your behalf. It removes the need for individual apps.
- For example, if you want an Uber to get six people to the restaurant by 6pm a rabbit will hook into the Uber API, look for options, and present the choice back to the large language model. It will then present that to the user who can then press a button on the screen to confirm the ride. (Multiple picks ups and split the ride cost?) Probably not...
---- Once the user confirms another rabbit will go back to Uber, send all the relevant information, pre-submitted payment information and return with confirmation and tracking information.
-- Order delivery for a specific time from several restaurants?
---- Book airline tickets?

Bitcoin ETFs Approved
- The U.S. securities regulator on Wednesday approved the first U.S.-listed exchange traded funds (ETFs) to track bitcoin, in a watershed for the world's largest cryptocurrency and the broader crypto industry.
----- AH Take - The leak on Tuesday was an error on SEC part - and they just tried to cover it up
- The Securities and Exchange Commission said it approved 11 applications, including from BlackRock, Ark Investments/21Shares, Fidelity, Invesco and VanEck, despite warnings from some officials and investor advocates that the products carried risks.
- Initially Bitcoin and related stocks shot up - then the sold off hard.
- Big moves from GrayScale Funds out - apparently moving to ETF versions
- - Coinbase getting custody, but shares sold off hard as well (-15%)
- IPO blackout period ending in a few days - expect lots of advertisements/chatter and commentary from sponsoring companies.
- Biggest is IBIT (Ishares from Blackrock)
- Kudos - Tom Mclellan that identified this approval as having the potential for an important price top for Bitcoin

ETH
- Now everyone abuzz about the potential for an Etherium Spot Fund - Prices doing well into the new speculation.

ChatGPT Copyright infringement
- Thoughts on this? Did we discuss?
- The New York Times filed a lawsuit against Microsoft and OpenAI, creator of the popular AI chatbot ChatGPT, accusing the companies of copyright infringement and abusing the newspaper's intellectual property to train large language models.
- Microsoft both invests in and supplies OpenAI, providing it with access to the company's Azure cloud computing technology.

US Debt
- The U.S. government ran up another half a trillion dollars in red ink in the first quarter of its fiscal year, the Treasury Department reported last Thursday.
- For the October through December 2023 period, the budget deficit totaled just shy of $510 billion, following a shortfall of $129.4 billion in just December alone. The jump in the deficit pushed total government debt past $34 trillion for the first time.
- Compared to last year, which saw a final deficit of $1.7 trillion, 2024 is running even hotter.
- How is this sustainable?
- If the current pace continues, 2024 would end with a deficit of just over $2 trillion.

Inflation Watch
- CPI up hotter than expected
- PPI Lower than expected (cooler)
- That combo is good for corporate profitability