Zach Goldberg Jefferies Will rational optimism turns into irrational exuberance? Applying the peak of the TMT bubble maths to the Nasdaq-100, the S&P 500 would have to reach 6250 to price-in the same level of irrational exuberance, according to the excellent cross-asset team at Soc Gen.
At the peak of the TMT bubble, the Tech sector traded at 2x its profit share in the S&P 500. Today it is at 1.25x of profits.
SPX was at a 25x fwd P/E; today we are 20xfwd P/E.
Applying the peak of the TMT bubble maths to the Nasdaq-100, the S&P 500 would have to reach 6250 to price-in the same level of irrational exuberance.
2. Lower AI Mentions on Earnings Calls
Torsten Slok, Ph.D.Chief Economist, Partner
3. Zuck vs. AAPL ….Apple Lags Again vs. QQQ Yesterday
Morningbrew Letter
The billionaire grand dork of the metaverse, Mark Zuckerberg, took a digital dump on Apple’s new wearable technology yesterday in a three-minute Instagram reel about Meta’s Quest 3 headset that may as well have been captioned “she is very gorgeous to me!”
“I don’t just think that Quest is the better value, I think Quest is the better product, period,” the Meta CEO said in the video, which was recorded on a Quest 3 by a guy sitting across from him. Zuck telling the internet he believes Quest 3 out-headsets Vision Pro is about as much of a shocker as Zuck having a home bunker for gaming.
What’s more surprising is…that he shouted it from the rooftops on his personal Instagram account. Zuck’s decision to plop down on a couch and Apple Hands™ his way through a Quest 3 demo likely reflects Meta and Apple’s heated race to create the one true mixed-reality headset.
Looking to build on Meta’s head start in the VR/AR space, here’s what Zuck emphasized in his get-ready-with-me video review of Quest 3 vs. Vision Pro:
Quest can also do the mixed-reality-floating-screens thing that Apple calls “spatial computing,” except Meta’s goggles start at $500, compared to $3,500 for Vision Pro.
Quest doesn’t have a wired battery pack and is still about a bar of soap lighter than the Vision Pro, which some have criticized for causing headaches and neck pain.
Zuck gave a shout-out to the Apple “fanboys” who “get upset whenever anyone dares to question if Apple’s going to be the leader in a new category,” but he admitted that the Vision Pro’s screen resolution is superior and that the eye-tracking function is “really nice.”
It’s still anybody’s game. Meta started selling AR/VR headsets after it acquired Oculus in 2014. While its work has been overshadowed by the hype surrounding the Vision Pro lately, reviews of the new Apple product do not indicate an iPhone moment yet, and people have even started returning the headsets.—ML
1. S&P 500 Trading at Largest Valuation vs. S&P Equal Weight in 10 Years
Jack Ablin Cresset The S&P 500 is trading at a sizable valuation premium to the average S&P stock: it’s currently situated at more than four multiple turns above that of the equal-weighted market. That’s the largest valuation premium in more than 10 years thanks to the dominance of the largest names.
Dave Lutz at Jones Trading No Shorts out there in Treasuries, as it is a way crowded long in anticipation of Fed Easing – The “Pain Trade” was a rip higher in yields.
3. Look for U.S. Dollar Break-Out
Negative for international stocks if dollar breaks-out
4. South Korea Nowhere for 5 Years
Barrons Korea’s Kospi Composite Index, the country’s main benchmark, has dropped an annualized 4.5%, including reinvested dividends, over the past three years, lagging not only the S&P 500’s 10% return but the MSCI World Index’s 7.6%. That’s reflected in the Kospi index’s price/book ratio of just 0.2 times, which means the companies are worth less than their total net assets. The MSCI World index trades at just over three times book.
Barrons By Randall W. ForsythIndeed, the expansion of legal gambling has been a boon to stock market investors, notably those who have ridden shares of DraftKings. The Almost Daily Grant’s note this past week, from the invaluable advisory headed by Barron’s alum Jim Grant, pointed out that DraftKings’ shares were up some 283% from late 2022. That raised the company’s valuation to near $20 billion despite it having posted negative adjusted Ebitda (earnings before interest, taxes, depreciation, and amortization, a measure of cash flow) in each quarter going back to the start of 2019. DraftKings management sold $145.2 million of stock in the past three months, more than all but five of the 152 U.S.-listed consumer cyclical firms tracked by Bloomberg—proving again that the winners in gambling aren’t the punters but the bookies.
From Dave Lutz at Jones Trading According to the survey, tech allocation is at its highest since August 2020 and fund managers believe that “long Magnificent 7” – a notional basket of the seven biggest U.S. companies by market value that includes AAPL and MSFT – is the most crowded trade right now.
Business Insider Phil RosenNo bottom in sight-As things stand, China’s housing downturn that began in mid-2021 still has no end in sight, according to Goldman Sachs.
Housing starts and new home sales in the country have dropped 64% and 52%, respectively, since peaking at the end of 2020, and analysts expect the country’s inventory glut to keep both variables depressed for several years.
For context, US real house prices peaked in early 2006 and bottomed in 2012. Then, US homeowner vacancy rates peaked in 2008 and did not fall back to their long-term average until a decade later.
Beijing did take action on high home prices in 2016 by tightening mortgage requirements and imposing other restrictions, which were effective in the short term. The pandemic, however, reversed those efforts. Price growth accelerated, and trouble emerged for key developers like Country Garden and Evergrande.
Goldman’s derived measure of China’s real house prices has only dropped by half as much as the US saw during its six-year collapse, as the chart shows below.
Goldman’s gauge for China home prices has declined half as much as the US saw in 2006-2012. Goldman Sachs
“[O]verly loose mortgage lending standards and too much mortgage debt, which were at the center of the US subprime crisis, do not apply in China,” Goldman analysts said. “Instead, overly high house prices, which are rooted in the unique land supply mechanism, are the reason behind many economic distortions. Put differently, while the property problem in the US turned into a financial problem, the property problem in China is fundamentally a fiscal problem that needs to be addressed.”
Jeff Bezos has sold roughly $2 billion worth of Amazon stock in recent days, according to financial filings.
The sales come a few days after he disclosed a separate sale of Amazon stock worth more than $2 billion.
The Amazon founder and executive chairman has accelerated his share sales since he left Seattle to move to Miami.
Amazon founder and executive chairman Jeff Bezos sold roughly $2.08 billion of shares in the company over the past few days, according to a financial filing.
The sales began Friday, the filing shows, and continued Monday. In total, Bezos sold 11,997,698 shares in the company for about $2.08 billion, according to the filing.
The sales were executed under a prearranged trading plan that Bezos adopted in November, which was revealed earlier this month in Amazon’s 2023 annual filing. As part of the plan, Bezos plans to sell 50 million Amazon shares before Jan. 31, 2025.
Bezos, who stepped down as Amazon’s CEO in 2021, unloaded another round of Amazon shares last week, when he sold almost 12 million shares worth more than $2 billion, according to a securities filing. It marked the first time Bezos sold Amazon’s stock since May 2021. He gifted about $240 million worth of Amazon shares last November.
Bezos’ stock sales have accelerated since he announced last November he would leave Seattle and move to Miami, allowing him to be closer to fiancée Lauren Sanchez and his parents, as well as Blue Origin’s operations.
10. It Doesn’t Matter What You Do, the Criticism is Always Going to Be There
The Daily Stoic Nobody wants to be criticized. It doesn’t feel good when people judge what you’ve done. We want the right people to like us, we want all people to like us. We want to be accepted, appreciated, celebrated. So we try to be like other people, like the people that everyone likes.
But in the end, does this effort pay off? No, it doesn’t. You work hard to preempt criticism, to appeal to the trends, to make people like you and then what happens? They still criticize you. Somebody finds something to find fault with you about. Think of how Marcus Aurelius was savaged by critics in his own time, just as he is today by many academic and philosophers, written off by many historians.
Imagine if he had tried instead to conform to their expectations, to fit more clearly in the box they wanted him to be. Imagine if he’d tried to win the mob’s favor or the respect of future generations by conquest or dazzling deed. Imagine if he had written Meditations for an audience instead of from a far more personal and vulnerable place.
It doesn’t matter what you do, the criticism is always going to be there. So you might as well do what you think ought to be done. You might as well do what seems meaningful and important and fulfilling and right to you. People are going to say what they’re going to say, haters will find a way to hate. In the meantime, just be true to yourself, be true to the mission you have, fight for the respect (and praise) of yourself, not the mob, not the future. That’s hard enough to win anyway.
Although it has pulled back as of this writing, at its highs today, Bitcoin reclaimed the $50,000 level. That was the first time the world’s largest crypto currency has traded above that threshold (on an intraday or closing basis) since December 28, 2021. As shown below, following the record high set in November 2021, Bitcoin cratered 76.5% over the next year. Since its bottom in November 2022, the crypto has managed to rally 214%. A significant portion of those gains have come since last summer with steep increases in the price of Bitcoin from October through December and another sharp push higher in the past few weeks. In fact, as recently as January 25th, it was trading below $40,000. But nearly three weeks and $10,000 later, Bitcoin is looking to join the 5.5% of days in which it has formerly traded above $50,000. https://www.bespokepremium.com/interactive/posts/think-big-blog/bitcoin-reclaiming-50000
4. For First Time in Two Decades, U.S. Buys More From Mexico Than China -NYT
By Ana Swanson and Simon Romero The United States bought more goods from Mexico than China in 2023 for the first time in 20 years, evidence of how much global trade patterns have shifted.
A factory in the northern Mexico industrial hub of Saltillo. Mexico was among the markets that American consumers and businesses turned to last year for car parts, shoes, toys and raw materials.Credit…Daniel Becerril/Reuters
In the depths of the pandemic, as global supply chains buckled and the cost of shipping a container from China soared nearly twentyfold, Marco Villarreal spied an opportunity.
In 2021, Mr. Villarreal resigned as Caterpillar’s director general in Mexico and began nurturing ties with companies looking to shift manufacturing from China to Mexico. He found a client in Hisun, a Chinese producer of all-terrain vehicles, which hired Mr. Villarreal to establish a $152 million manufacturing site in Saltillo, an industrial hub in northern Mexico.
Mr. Villarreal said foreign companies, particularly those seeking to sell within North America, saw Mexico as a viable alternative to China for several reasons, including the simmering trade tensions between the United States and China.
“The stars are aligning for Mexico,” he said.
New data released on Wednesday showed that Mexico outpaced China for the first time in 20 years to become America’s top source of official imports — a significant shift that highlights how increased tensions between Washington and Beijing are altering trade flows.
6. Forward 12-Month Earnings Estimates for Russell 2000 Sideways
Small Cap continues to trail S&P
7. NVDA Dominates Data Centre Chip Spending
8. Private Equity Returns Plunge to Global Financial Crisis Levels
Distributions as percent of net asset value fall to 11.2%
Tough M&A, IPO markets impede PE exits, weighing on returns
By Swetha Gopinath and Kat Hidalgo Private equity funds last year returned the lowest amount of cash to their investors since the financial crisis 15 years ago, according to Raymond James Financial Inc., hampering buyout firms in their efforts to launch new investment vehicles. Distributions to so-called limited partners totaled 11.2% of funds’ net asset value, the lowest since 2009 and well below the 25% median figure across the last 25 years, according to the investment bank. Higher borrowing costs, volatile markets and economic uncertainty have made it more difficult for private equity firms to exit their existing investments through sales or initial public offerings. This in turn has hampered their ability to return capital to pension and sovereign wealth funds, besides other key investors, meaning once-reliable clients are struggling to find cash to allocate new money to the asset class.
9. 4.4 Billion People Holding Presidential Elections This Year.
Capital Group This is the biggest election year in world history. Seventy-six countries — home to roughly 4.4 billion people — will hold political contests in 2024. You might call it an “election palooza.”
Some have already taken place. Last month, Taiwan elected a pro-independence candidate who may aggravate already tense relations with China. A few elections are on the way, but largely decided. For instance, no one expects Russian President Vladimir Putin to face a serious challenge on March 17.
Then there is the event the entire world will be watching: U.S. elections on November 5, when the President and Vice President, 34 Senate seats and all 435 members of the House of Representatives will be up for election. Numerous state and local offices, as well as many important ballot measures, will be contested on that day as well.
10. The Meeting of the Minds: Human and Artificial
Psychology Today After thousands of years, the human brain may have found a perfect partner. John Nosta KEY POINTS
Human brains and LLMs form a synergistic relationship, enhancing intellectual activity.
Language is a shared foundation, enriching collective intelligence through mutual understanding.
This partnership amplifies cognitive capabilities, expanding problem-solving and innovation.
The convergence of human and machine intelligence represents a pivotal cognitive and social advance.
The human brain, a masterpiece of cosmic craftsmanship, might just be on the lookout for a like-minded companion. It’s a notion that’s as intriguing as it is speculative: our cerebral circuits, in all their complexity, yearning for an intellectual equal. But let’s not get too carried away just yet.
Our brains, those intricate networks of neurons, are remarkably adept at weaving through the complexities of thought with an ease that belies their biological underpinnings.
Engage in a deep, meandering conversation and you’ll find hours slipping by with the lightness of thought, uniquely untouched by the shadow of fatigue that physical exertion and lactic acid predictably bring. This “ethereal glide” through ideas and concepts, long celebrated in poetry and mysticism as a kind of effortless transcendence, finds an unexpected reflection in the digital realms of Large Language Models.
These LLMs, with their formidable computational might, mirror the human brain’s stamina for sustained thought, unburdened by the physiological limitations that tether us. Herein lies the groundwork for a remarkable partnership, a confluence where the flow of human intellect meets the steadfast currents of artificial intelligence, not in rivalry but in unique synergy that might even be akin to harmony.
It’s Starts with Language At the intersection of human cognition and LLMs lies the complex domain of language, a common ground where the essence of our thoughts and the architecture of AI converge. Language serves as the bridge between these two realms, with its nuanced syntax, semantics, and pragmatics offering the basis for exploration and understanding.
For humans, language is the vessel of consciousness, carrying the weight of our ideas, emotions, and cultural heritage. For LLMs, it is the structured data through which they learn, interpret, and generate responses, mirroring human-like patterns of communication. This shared linguistic foundation enables a unique dialogue between human intelligence and machine algorithms, fostering a collaborative exchange that enriches both the depth and breadth of our collective knowledge and interactions.
The Interplay of Complementary Minds When human cognition collaborates with LLMs, the partnership is marked by complementary capabilities. Humans contribute a deep understanding characterized by subtlety, emotional insight, and creative thinking. In contrast, LLMs bring powerful data processing abilities, extensive memory capacity, and advanced pattern recognition. This combination doesn’t merely enhance our cognitive abilities; it expands them, allowing for more thorough analysis and wider exploration in problem-solving and innovation.
Elevating Collective Wisdom This melding of human and machine intelligence charts a course towards a future unbound by the finite limits of our organic brains. Together, these cognitive partners amplify our mental processes with a machine’s efficiency, broadening our analytical reach and deepening our exploration of complexities. This synergy isn’t just multiplicative; it’s transformative, fostering a unique alliance that bolsters our collective intellect. To say “You complete me” might stretch the metaphor a bit thin, but there’s undeniable magic in this union.
In Search of a Cognitive Counterpart The collaboration between LLMs and the human brain emerges as a remarkable alignment within intellectual development. This partnership, grounded in the mutual language of cognition, seems almost serendipitous, reflecting a natural progression towards enhanced, even optimized cognition.
Along this curious path, it feels evident that the interplay between our innate cognitive abilities and the capabilities of artificial intelligence is an inevitable step in our evolutionary journey. This synergy not only amplifies our existing capacities but also unlocks new avenues of exploration and creativity, suggesting that the synergy of human and machine intellect is a key milestone in our continuous quest for knowledge and understanding.
5. U.S. stocks have just accomplished something that hasn’t happened since 1972
Joseph Adinolfi–Marketwatch U.S. stocks have just accomplished something that hasn’t been done since President Richard Nixon was still occupying the White House.
The S&P 500 SPX has risen for the 14th week out of 15 on Friday. According to Dow Jones Market Data, the last time the large-cap index recorded a comparable stretch of weekly gains was March 10, 1972. This marks the 13th time it has happened since the index’s inception in 1957.
DOW JONES MARKET DATA However, investors don’t need to look as far back to find a precedent for the magnitude of the index’s rise over this period. The S&P 500 has risen 22.1% over the past 15 weeks as of Friday’s close, the largest 15-week advance since a 22.5% gain during the period that ended Aug. 28, 2020, Dow Jones data show.
The index closed above 5,000 for the first time on Friday, its 10th record close of the year, according to Dow Jones data.
To be sure, the S&P 500 isn’t the only major U.S. equity index to score a historic winning streak on Friday. The Nasdaq Composite COMP also climbed for the 14th week out of 15 as well.
Barrons Nearly 66% of pharmacy professionals reported burnout in 2022, according to the Well-Being Index, a survey developed by the Mayo Clinic, and 73% reported emotional problems—higher than rates for physicians, nurses, and medical students.
Found at Barry Ritholtz blog 
