The Yield Curve, with the 10yr minus 3mo Treasury rate, is rising rapidly as investors anticipate more persistent inflation. Portfolio managers expect a significant rate decline, but recent industrial earnings reports and guidance suggest a shift towards industrials. This signals a turning point away from the sole focus on high tech investments to broader options.
Convertible bonds are regaining popularity in the strong US economy, with issuance surging in 2023 and 2024. They offer lower coupon rates compared to straight bonds and the potential for equity growth, making them attractive to both issuers and investors. Convertibles can effectively improve portfolio diversification and offer opportunities for investment.
The US economy experienced strong growth, leading to a delayed expectation for interest-rate cuts by the Fed. Factors such as increased labor force participation have supported this growth, leading to higher GDP forecasts. Inflationary pressures are expected to ease slowly, influencing the timing of rate cuts by the Federal Reserve.
The Fed kept rates unchanged at the May FOMC meeting, marking the sixth consecutive meeting without action. Rate cut expectations have shifted dramatically, with implied probability for fewer than two rate cuts. Chairman Powell appears inclined to cut rates, but data must lead the way. Quantitative tightening plans are also in focus for 2024. The Fed’s dot plot suggests fewer than three rate cuts may be reasonable.
Investors are holding back funds due to high money market rates, but with the Federal Reserve expected to cut rates, short-term bond funds may become more attractive. Portfolio managers believe that short-term bonds can benefit from rate cuts and offer good returns. Fidelity offers options like FLDB and FLTB to capitalize on this opportunity.
The content provides a comprehensive overview of indices, bond spreads, and yield curves. It also includes information on various bond indexes and investment risks. Additionally, it highlights the role and responsibilities of Madison Investments. The report emphasizes the need for careful consideration of investment objectives, risks, and charges before investing in Madison Funds.
The auto industry is competitive with high inventory levels, presenting a buyer’s market. Tesla offers affordable leasing, but misses out on EV tax credits. Toyota’s Camry Hybrid leases for $439/mo with lower down payment, while the Tesla Model 3 lease costs $329/mo with higher down payment but potential resale value advantage.
Tesla’s production ramps are moving in the right direction, and I expect the Cybertruck to contribute meaningfully to Tesla’s profits later this year, but in Q2, I expect Tesla’s Automotive margins to remain depressed
The hyperscale data centre market is dominated by leading tech companies, positioning them to lead the AI revolution and gain substantial value. Major players like Microsoft are expected to provide actual AI services, with substantial investments in digital infrastructure. The emergence of AI-driven solutions presents opportunities in various sectors, driving growth in the cloud software market.
ASML reported a cyclical downturn for q1’24, with an expected decline into eq2’24 before an upswing later in the year. The shift to EUV for advanced chip nodes is anticipated to boost demand, with significant investments expected from Intel and Taiwan Semiconductor. ASML shares are recommended as a BUY with a price target of $1,134/share at 32.49x EV/EBITDA.
Cloudflare’s share price surge may have outpaced its fundamentals, leading to overly optimistic near-term expectations. While the company’s fourth quarter results were strong, cautious customer technology investments and higher interest rates may affect spending. Cloudflare’s long-term promise is attractive, but current valuation and market conditions signal potential weakness ahead.
The Generative AI landscape is diverse, with various vendors offering solutions. Cloud computing giants like Google and Amazon are unveiling GenAI-powered capabilities, enhancing their services for GenAI applications. Amazon’s Bedrock GenAI now supports customized models and offers tools for creating AI agents and evaluating models. These enhancements are crucial as organizations focus on near data deployment and multi-platform GenAI use.
IBM’s AI development has mainly focused on the Software segment, but has not significantly impacted revenue growth. The company transitioned to an AI for Enterprise Strategy, launching watsonx AI platform. With 46 partnerships and a shift to a software-centric approach, IBM aims to drive growth through hybrid cloud solutions. Despite challenges, the company’s strategic initiatives show promise.
AMD is challenging Nvidia’s GPU dominance with new developments in their CUDA competitor and strong Q4 performance. By investing in open-source alternatives and fostering partnerships, AMD aims to disrupt Nvidia’s market share. With the AI sector projected to reach $400 billion by 2027, AMD’s strategy holds significant potential for capturing a substantial share of the future market.
