Dec 14
Under Sociology read about an extraordinarily young man, Jaden. Listening to his story, I thought of Todd from Calhoun, a man with great intelligence and superior interpersonal skills but who made poor choices and now will die in prison. Todd is serving a 130 year sentence for wounding but not killing 5 people. Todd turned down a plea deal for 30 years. He pissed off the prosecutor and judge and demanded a jury trial, big mistake.
ALMOST always take the plea unless you have overwhelming evidence of innocence and no community morality issues are involved.
The November PPI print was hot because of soaring egg prices.
Egg prices may approach record highs, just about two years after they peaked during the pandemic era. Highly pathogenic avian influenza, better known as bird flu, has killed millions of chickens and reduced egg supply. Consumer egg demand is also highest around Thanksgiving and Christmas.
The trajectory of the bird flu outbreak is unclear. See CNBC.
After taking into account the CPI and PPI data, economists predict a print of 0.13% for November core PCE. Inflation is falling.
To reduce the federal deficit, reform Medicaid. See below under Medicaid.
Markets and Stocks
The market is a little expensive but I think that the next few years will offer low double digit annual returns. The economy is in good shape. Earnings are rising. Treasury yields will fall as the Fed reaches its 2% target. (The Fed is making progress on inflation.) The Trump Administration will go for growth. An era of deregulation is upon on. Economic friction will be reduced. The AI revolution is real. The Trump Administration will be committed to AI supremacy and global technology superiority. The United States will have low cost energy.
Broadcom is a great investment. I think the stock goes to $300, a 50% move by early 2026.
Broadcom, AVGO, says of its AI products will gain 65% in the fiscal first quarter, far faster than its overall semiconductor growth of about 10%. The chipmaker also predicted that the addressable market for AI components that it designs for data center operators would reach as high as $90 billion by fiscal 2027.
Broadcom’s AI revenue grew 220% during the year, fueled by demand for processors and networking components,
Boeing is starting to fly: The aerospace giant said it will invest $1 billion in its South Carolina operations to boost production of its 787 Dreamliner jets as it seeks to address a growing backlog. Share advanced 0.6% premarket. See WSJ.
I believe Boeing will go up 2x by early 2027, two years from now.
Costco Wholesale: The warehouse-club chain posted higher quarterly sales and said customers are starting to spend slightly more as inflation comes down—but that many are gravitating toward the higher and lower price extremes. Shares ticked up premarket. Costco is a great company, but the stock is very expensive, trading at almost 50x next year’s numbers. See WSJ.
The Trump Administration and the Republican Congress will take a sickle to unnecessary financial regulations and excessive capital requirements. Banks should flourish over the next four years. Significant consolidation should occur. I like GS, JPM, HOOD, CME, BAC and among smaller banks I like Glacier, GBCI and FLG, the old New York Community Bank.
https://www.wsj.com/finance/regulation/trump-advisers-bank-regulations-fdic-efa761dc
Meta could be a big winner from financial deregulation. Meta could relaunch its DIEM project through which individuals could transfer digital dollars via the WhatsApp network.
https://www.barrons.com/articles/costco-earnings-stock-price-news-e37d18cf
@NickTimiraos Watch out for that CPI wedge:
After the November PPI, forecasters have lowered their projections for core PCE inflation (the Fed's preferred gauge).
They now see core PCE rising 0.13% in November, which annualizes to 1.6%.
This would hold the 12-month rate at 2.8%.
Core goods deflation
Record household wealth will support consumption.
National Security
The United States needs a much stronger homeland air and missile defense; a significant increase in submarine and shipbuilding infrastructure in order to compete with China; space superiority; and rebuilding munitions capacity and stockpiles, notably in long-range fires. The country also must pivot from last century warfare to the age of embedding AI into all aspects of national defense. See WSJ.
SLASH MEDICAID
Medicaid for adults is often a waste of money. People don’t change . See the research on free public health in Oregon and articles about super users of healthcare spending
The Medicaid program – a joint federal-state program that provides health care to low-income populations – is projected to cost the federal government nearly $8 trillion over the next decade. With the national debt approaching record levels and policymakers seeking offsets to fund new initiatives, lawmakers may consider reforms to reduce federal Medicaid spending. https://www.crfb.org/blogs/medicaid-savings-options
Science
A humpback whale set a record by traversing at least three oceans and more than 8,000 miles — most likely in search of a mate, according to a new study.
A team of scientists identified the adult male, which swam 8,106 miles from breeding grounds in Colombia in South America to breeding grounds in Zanzibar in Africa from 2013 to 2022.
The unusual odyssey is the longest recorded distance traveled by the species and is the subject of a study published Wednesday in the journal Royal Society Open Science, potentially providing new insights into the migration patterns and behaviors of humpback whales.
https://www.nytimes.com/2024/12/12/us/humpback-whale-migration.html
Sociology
Earlier this week, I met Jaden, a young man of obvious intelligence and wonderful interpersonal skills. Jaden’s story blew me away. He does not know his father. He was raised by his mother, except when she was in jail or undergoing addiction treatment, then he lived in foster homes where he was often beaten but never sexually abused, at least that is what he says. Few men admit to sexual assault. His mother had a lot of boyfriends. They often knocked him around when they were drunk or high. He had a cat. Some of the boyfriends tortured the cat. One boyfriend, put the cat in the freezer. The cat survived. The stories were harrowing. But Jaden didn’t turn to drugs or alcohol. He graduated from high school, he started college but just couldn’t afford it. So he got a job working as a sales rep for a medical products company. The young man is doing well, he has a good job, he drives a nice car, and he says he doesn’t want a serious girlfriend right now, he is focused on his career. The young man impressed the hell out of me. Until Jaden bought his car, he and his mother had never had a vehicle. They walked everywhere or took public transport. It is highly unusual for a child to go through these life events and come out on top. Jaden has grit.
When I talked with Jaden I thought about Todd from Calhoun. Todd made the wrong choices. Todd will die in prison. A life wasted.