(LOOKING BEYOND THE TECH SECTOR FOR INVESTMENT IDEAS IN AI)
April 22, 2024
Hello everyone.
The week ahead calendar
Monday, April 22
8:30 a.m. Chicago Fed National Activity Index (March)
Euro Area Consumer Confidence
Previous: -14.9
Time: 10:00 am ET
Earnings: Verizon Communications, Ameriprise Financial, Truist Financial
Tuesday, April 23
8 a.m. Building Permits final (March)
9:45 a.m. PMI Composite preliminary (April)
9:45 a.m. Markit PMI Manufacturing preliminary (April)
9:45 a.m. Markit PMI Services preliminary (April)
10 a.m. New Home Sales (March)
Australian Inflation Rate
Previous: 4.1%
Time: 9:30 pm ET
Earnings: Baker Hughes, Visa, Enphase Energy, Tesla, NextEra Energy, Freeport-McMoRan, Philip Morris International, Halliburton, United Parcel Service, PepsiCo, Lockheed Martin, Raytheon Technologies, GE Aerospace.
Wednesday, April 24
8:30 a.m. Durable Orders preliminary (March)
Previous: 1.4%
Time: 8:30 am ET
Earnings: Chipotle Mexican Grill, International Business Machines, Lam Research, Ford Motor, Align Technology, Waste Management, Universal Health Services, Raymond James Financial, Meta Platforms, Boeing, Hilton Worldwide Holdings, AT&T.
Thursday, April 25
8:30 a.m. Continuing Jobless Claims (04/13
8:30 a.m. GDP (Q1)
Previous: 3.4%
Time: 8:30 am ET
8:30 a.m. Initial Claims (04/20)
8:30 a.m. Wholesale Inventories preliminary (March)
10 a.m. Pending Home Sales (March)
11 a.m. Kansas City Fed Manufacturing Index (April)
Earnings: T-Mobile US, Capital One Financial Corp, Intel, Western Digital, Microsoft, Alphabet, Comcast, American Airlines Group, Southwest Airlines, Valero Energy, Caterpillar, Tractor Supply, Royal Caribbean Group, PG&E, GE Vernova.
Friday, April 26
8:30 a.m. PCE Deflator
8:30 a.m. Personal Consumption Expenditure
8:30 a.m. Personal Income
10 a.m. Michigan Sentiment NSA final
Japan Interest Rate Decision
Previous: 0%
Time: 12:00 am ET
Earnings: T. Rowe Price Group, Colgate-Palmolive, Exxon Mobil, Chevron, AbbVie, Phillips 66.
Big Tech is on stage this week – among other sectors - to deliver earnings results. Will they be mighty results and revive the flagging market? Let’s wait and see. Tech has had an incredible run since last October, so it should not be a surprise to see this sector taking a rest. This week will also give us a sense of where investors’ perceptions are in relation to AI.
In addition, Consumer spending will be under the spotlight this week, so we will get some understanding of the U.S. consumer’s behavior in the face of higher prices. Are they still consuming and borrowing?
The Bank of Japan is set to meet Friday at 12 am EST. With the USD/JPY reaching above 154.00, forex traders will be listening closely to hear any commentary from the BoJ regarding the depreciation of their currency.
Brief Market Update
US Dollar: The dollar will continue to rally for the medium term at least. Euro, Pound, Yen, Aussie, and KIWI will continue to weaken against the USD.
S&P 500: Correction in progress. Having advanced almost in a straight line since last October, the market is drawing breath. From an Elliott Wave perspective, the market is interpreted as undergoing a 4th wave correction. Market should find support around 4,820 or at worst in the low 4,700’s. Still potential for this market to extend to new highs after it takes a rest.
GOLD & SILVER: Bull market in progress. Gold’s uptrend to extend on to the next target around $2,500 over the coming weeks. Silver will rally toward $32.00.
Bitcoin: The coin has been undergoing a complex correction. Next upside target is around $83,000.
10-Year Yields: Yields could rally a little further before taking a rest.
Revisiting some Trades and Recommendations made last year.
October 25, 2023, Newsletter Title: Finding Defensive and Stable Stocks Amongst Changing Global Forces.
Stocks recommended:
Johnson & Johnson (JNJ) @ $ 150 April 19, 2024 @ $147.91
Visa (V) @ $ 235.00 April 19, 2024 @ $269.78
Google (GOOGL) @ $132.50 April 19, 2024 @ $ $154.09
November 11, 2023, Title: It’s a Green Light for the Market according to this Indicator.
Recommended: Digital Ocean (DOCN) $26.30 April 19, 2024 @ $32.43
November 13, 2023, Title: Which Noise is the Market Listening to: Wars in Europe and the Middle East or the Recession Drums?
Recommended: Trade ideas for Palo Alto Networks (PANW)
1/ Buy 1 Dec. 15, 2023, 250 call.
Sell 1 Dec. 15, 2023, 260 call.
2/ (More aggressive at the time)
Buy 1 June 21, 2024, out of the money 260 call.
Sell 1 June 21, 2024, out of the money 270 calls. Profit $540. Loss $460.
Current price of PANW as of Friday, April 19, 2024, is $277.71. If you took this trade, take profits.
What Stocks will Power the AI revolution?
Investors are starting to look beyond tech stocks when it comes to investing in artificial intelligence. They are now looking at real estate, energy, and utilities.
WHY?
Data centers will support a new world of AI technologies, and this is also fuelling demand for the providers of data center parts. In other words, we need to start thinking about power producers, grid equipment makers, providers of grid technology, as well as commodity companies tied to uranium and copper, used for cabling and electricity networks serving the data center.
Power usage for data centers will more than double and then some. Power usage is expected to grow at a compound annual rate of between 25% and 33% between 2023 and 2028. AI processing tends to happen on graphics processing units, or GPUs, which are more power-intensive.
According to Bank of America analysts, several companies stand to benefit from the rapidly growing power needs of data centers, including Caterpillar (CAT) and Equinix (EQIX).
Caterpillar is underrated here. The company is the leading manufacturer of diesel generator sets with more than 450,000 kilowatts installed in data centres and hospitals in a single year. Management is raising its own capital expenditures for the first time in a decade to meet the power demand for data centers. Caterpillar dropped last week but is a quality stock to own for the long term.
Equinix (EQIX) is starting to capture the very early signs of AI demand. Most of the total opportunity is yet to come. (EQIX) is anticipating strong top-line revenue growth this year. Bank of America expects Equinix to jump roughly 33% this year. Equinix has dropped around 7% so far this year.
Bank of America is also bullish on electrical components maker Eaton (ETN) in relation to its ability to provide data center infrastructure and power supply. BofA believes Eaton shares could climb another 12% after gaining more than 25% this year.
Generally speaking, analysts expect data center demand to likely exceed supply. It is understood that AI demand will emerge in two phases – training and inference – where training new AI models will require power and cooling while new data centers will need to be built to accommodate those needs.
Quite Interesting (QI) Corner
Cheers,
Jacquie
