Former hedge fund star says this is what will trigger the next bear market.

Much of Wall Street expects easing inflation, but an overshoot could dash hopes of a May rate cut, curtailing the S&P 500’s
SPX
waltz with 5,000, warn some.

Read: Arm’s frenzied stock rally continues as AI chase trumps valuation.

What might take this market down eventually? Our call of the day from former hedge-fund manager Russell Clark points to Japan, an island nation whose central bank is one of the last holdouts of loose monetary policy.

Note, Clark bailed on his perma bear RC Global Fund back in 2021 after wrongly betting against stocks for much of a decade. But he’s got a whole theory on why Japan matters so much.

In his substack post, Clark argues that the real bear-market trigger will come when the Bank of Japan ends quantitative easing. For starters, he argues we’re in a “pro-labor world” where a few things should be playing out: higher wages and lower jobless levels and interest rates higher than expected. Lining up with his expectations, real assets started to surge in late 2023 when the Fed started to go dovish, and the yield curve began to steepen.

From that point, not everything has been matching up so easily. He thought higher short-term rates would siphon off money from speculative assets, but then money flowed into cryptos like Tether and the Nasdaq recovered completely from a 2022 rout.

“I have been toying with the idea that semiconductors are a the new oil – and hence have become a strategic asset. This explains the surge in the Nasdaq and the Nikkei to a degree, but does not really explain tether or bitcoin very well,” he said.

So back to Japan and his not so popular explanation for why financial/speculative assets continue to trade so well.

“The Fed had high interest rates all through the 1990s, and dot-com bubble developed anyway. But during that time, the Bank of Japan only finally raised interest rates in 1999 and then the bubble burst,” he said.

He notes that when Japan began to tighten rates in late 2006, “everything started to unwind,” adding that the BOJ’s brief attempts [to] raise rates in 1996 could be blamed for the Asian Financial Crisis.

In Clark’s view, markets seem to have moved more with the Japan’s bank balance sheet than the Fed’s. The BOJ “invented” quantitative easing in the early 2000s, and the subprime crisis started not long after it removed that liquidity from the market in 2006, he notes.

“For really old investors, loose Japanese monetary policy also explained the bubble economy of the 1980s. BOJ Balance Sheet and S&P 500 have decent correlation in my book,” he said, offering the below chart:


Capital Flows and Asset Markets, Russell Clark.

Clark says that also helps explains why higher bond yields haven’t really hurt assets. “As JGB 10 yields have risen, the BOJ has committed to unlimited purchases to keep it below 1%,” he notes.

The two big takeaways here? “BOJ is the only central bank that matters…and that we need to get bearish the U.S. when the BOJ raises interest rates. Given the moves in bond markets and food inflation, this is a matter of time,” said Clark who says in light of his plans for a new fund, “a bear market would be extremely useful for me.” He’s watching the BOJ closely.

The markets

Pre-data, stock futures
ES00,
-0.41%

NQ00,
-0.80%

are down, while Treasury yields
BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
hold steady. Oil
CL.1,
+0.79%

and gold
GC00,
+0.46%

are both higher. The Nikkei 225 index
JP:NIK
tapped 38,000 for the first time since 1990.

Key asset performance

Last

5d

1m

YTD

1y

S&P 500

5,021.84

1.60%

4.98%

5.28%

21.38%

Nasdaq Composite

15,942.55

2.21%

6.48%

6.20%

34.06%

10 year Treasury

4.181

7.83

11.45

30.03

42.81

Gold

2,038.10

-0.17%

-0.75%

-1.63%

9.33%

Oil

77.14

5.96%

6.02%

8.15%

-2.55%

Data: MarketWatch. Treasury yields change expressed in basis points

The buzz

Due at 8:30 a.m., January headline consumer prices are expected to dip to 2.9% for January, down from 3.4% in December and the lowest since March 2021. Monthly inflation is seen at 0.3%.

Biogen
BIIB,
+1.56%

stock is down on disappointing results and a slow launch for its Alzheimer’s treatment. A miss is also hitting Krispy Kreme
DNUT,
+1.99%
,
Coca-Cola
KO,
+0.24%

is up on a revenue rise, with Hasbro
HAS,
+1.38%
,
Molson Coors
TAP,
+3.12%

and Marriott
MAR,
+0.74%

still to come, followed by Airbnb
ABNB,
+4.20%
,
Akamai
AKAM,
-0.13%

and MGM Resorts
MGM,
+0.60%

after the close. Hasbro stock is plunging on an earnings miss.

JetBlue
JBLU,
+2.19%

is surging after billionaire activist investor Carl Icahn disclosed a near 10% stake and said his firm is discussing possible board representation.

Tripadvisor stock
TRIP,
+3.04%

is up 10% after the travel-services platform said it was considering a possible sale.

In a first, Russia put Estonia’s prime minister on a “wanted” list. Meanwhile, the U.S. Senate approved aid for Ukraine, Israel and Taiwan.

Best of the web

Why chocolate lovers will pay more this Valentine’s Day than they have in years

A startup wants to harvest lithium from America’s biggest saltwater lake.

Online gambling transactions hit nearly 15,000 per second during the Super Bowl.

The chart

Deutsche Bank has taken a deep dive into the might of the Magnificent Seven, and why they will continue to matter for investors. One reason? Nearly 40% of the world still doesn’t have internet access as the bank’s chart shows:

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.

Ticker

Security name

TSLA,
-2.81%
Tesla

NVDA,
+0.16%
Nvidia

ARM,
+29.30%
Arm Holdings

PLTR,
+2.75%
Palantir Technologies

NIO,
+2.53%
Nio

AMC,
+4.11%
AMC Entertainment

AAPL,
-0.90%
Apple

AMZN,
-1.21%
Amazon.com

MARA,
+14.19%
Marathon Digital

TSM,
-1.99%
NIO

Random reads

Everyone wants this freak “It bag.”

Dumped over a text? Get your free dumplings.

Messi the dog steals Oscars’ limelight.

Love and millions of flowers stop in Miami.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Check out On Watch by MarketWatch, a weekly podcast about the financial news we’re all watching – and how that’s affecting the economy and your wallet.

Source link

#hedge #fund #star #trigger #bear #market

My brothers are co-owners on $1.9 million of our mother’s bank and brokerage accounts. She now has Alzheimer’s. How can I rectify this?

I have three adult siblings living in different states, and we are disputing the circumstances surrounding the joint accounts shared with our 85-year-old mother, who has early stage Alzheimer’s. Our mom has a net worth of around $2 million, which is spread across several different bank and brokerage accounts. Late in life, she added a different sibling as a co-owner on each of her accounts to help manage her money.  

My brother “Joe” is listed as the sole co-owner on the bulk of our mother’s brokerage accounts, totaling $1.3 million, while my brother “Andy” is the sole co-owner of a $600,000 bank account and I am the sole co-owner of a $100,000 brokerage account. I think our mom simply forgot to add my sister, “Sue,” as a co-owner on any account. Her intention has always been for the four of us to equally inherit her assets.

I suggested to my three siblings that we should change all the accounts to sole ownership under our mother’s name with four equal beneficiaries. I thought this could avoid many possible complications with gift taxes and distribution at the time of our mother’s death, since as it stands, each co-owner would have to divide the money from their co-ownership account and send it to the other siblings.

Sue is named as power of attorney and could manage our mother’s individual accounts as needed. However, Joe is adamant that the current setup of co-ownership of accounts is the best way to help our mother, especially to protect her against financial fraud in case she needs to move to a nursing home. He insists there will be no gift taxes with the eventual distribution and that this setup is straightforward and easy to co-manage.

This situation is causing a lot of stress and distrust among my siblings, which I hate. I suggested we change things in order to make our mother’s financial situation as simple as possible, especially at the time of death, and not because I don’t trust Joe. Right now, no one is touching our mother’s accounts, and I am paying most of her expenses, as she lives with me.

Please advise.

Frustrated Sibling

Also read: My wife and I sold our home to her son at a $100,000 discount. He’s now selling at a $250,000 profit. Do I ask for a cut?

“Sue, as power of attorney, should be able to withdraw money from your mother’s other accounts and/or set up a bank account with those funds in your mom’s name,” the Moneyist writes.


MarketWatch illustration

Dear Frustrated,

Your brothers have every reason to act like white truffle butter wouldn’t melt in their mouths.

Between them, they have sewn up your mother’s largest bank accounts, and you are very likely dependent on the kindness of these brothers to either add you to the accounts as co-owners or distribute the funds between all four siblings after your mother passes away. 

I would not hold my breath for Joe or Andy to do either of these things. They can just as easily resist with politeness and smiles as with anger and resentment. I’m sorry to say that the most damaging actions — for you and your sister— have already been taken. 

We may never know the conversations that took place when your brothers were added as co-owners. But there is a very important difference between a “co-owner” and a “co-signer” on an account. The latter can withdraw money but does not own the money in the account.

If your mother was not of sound mind or her mental capacity was diminished when your brothers were added to these accounts, or if she had intended to add them as co-signers, there may be a case where you can contest your brothers’ ownership of these accounts.

The legal framework around such cases vary depending on the state, but it’s usually up to the estate of the original owner of the account to prove that there was elder abuse and/or undue influence taking place. As always, you should consult an attorney who specializes in elder law.

Limitations to power-of-attorney duties 

Sue, as power of attorney, should be able to withdraw money from your mother’s other accounts and/or set up a bank account with those funds in your mom’s name. She should preserve these funds for additional medical bills and long-term care as her condition progresses.

But the bottom line is that without the cooperation of your two brothers after your mother dies, failing any legal case to reverse matters, you will remain with the sole ownership of the $100,000 brokerage account, and the four of you will inherit whatever else is left in the estate. 

It’s virtually impossible to say without more information, but Sue, as power of attorney, is unlikely to have the ability to change the ownership of these accounts unless that is specified in the terms of her POA contract. That would also depend on the laws of your state.

“The power of attorney permits the agent to access their parent’s bank accounts, make deposits and write checks,” Jupiter, Fla.-based Welch Law says in this POA overview. “However, it doesn’t create any ownership interest in the bank accounts. It allows access and signing authority.”

The law firm continues: “If the person’s parent wants to add them to the account, they become a joint owner of the account. When this happens, the person has the same authority as the parent, accessing the account and making deposits and withdrawals.”

But those with power of attorney cannot self-deal when it comes to their parent’s finances. “As a POA, they are a fiduciary, which means they have a legally enforceable responsibility to put their parent’s benefits above their own,” Welch Law adds.

You should not have to pay for your mother’s care out of your own bank account. Your sister, as power of attorney, should be managing that. Talk to your siblings about your mother’s Alzheimer’s and how the four of you plan to manage her care in the months and years ahead.

Will your brothers fulfill their promise and make you and your sister whole? Only time will tell.

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

‘I don’t like the idea of dying alone’: I’m 54, twice divorced and have $2.3 million. My girlfriend wants to get married. How do I protect myself?

‘If I say the sky is blue, she’ll tell me it’s green’: My daughter, 19, will inherit $800,000. How can she invest in her future?

‘They have no running water’: Our neighbors constantly hit us up for money. My husband gave them $400. Is it selfish to say no?



Source link

#brothers #coowners #million #mothers #bank #brokerage #accounts #Alzheimers #rectify

My Tinder match asked if I ‘rent or own’ my apartment. Is it gauche to ask financial questions before a first date?

I met a guy on Tinder
MTCH,
+0.75%

and had an introductory telephone conversation, which I always think is a good idea before making the effort to meet in person. During our 15-minute telephone conversation, he told me about his divorce, his job and his hobbies. He described himself as easygoing and outdoorsy, and someone who likes to socialize and play sports. 

He talked a lot about his children, for five minutes or longer. He said he owned a small house. He asked what I did for a living, when my last relationship was, what neighborhood I lived in and — this stuck in my craw — whether I rented or owned my apartment and if it was a studio, one- or two-bedroom apartment. I felt uncomfortable, but I answered.

I live in New York City, and I happen to own my apartment, but I felt like he was sizing me up and trying to get a picture of my finances before he decided to meet me. He also asked how long I’ve been in my apartment, probably to assess how much equity I had in it. I replied, “a while,” as I already felt like he was getting too into my finances for a first conversation.

Once he was satisfied with my answers to these questions, he suggested we meet. I am busy this weekend, so he suggested driving into the city during the week. Based on his job and profession, I can reasonably estimate that I earn about twice his salary, though this does not mean anything to me, and I could care less. But given his money-related questions, I find that ironic.

I asked some friends. Some did a spit take, while others felt such questions were fair game. What do you think?

Irritated Even Before Our First Date

Related: I want my father to quitclaim his home so I can refinance it — and take out a $200,000 annuity for my sister and me. Is this wise?

“Based on his questions, it’s important to him that you have the same level of financial security that he does. If it were not an issue for him, he would not have asked.”


MarketWatch illustration

Dear Irritated,

He is not your real-estate agent or financial adviser, so I agree that it’s strange for a virtual stranger to quiz you on your living arrangements.

Based on his questions, it’s important to him that you have the same level of financial security that he does. If it were not an issue for him, he would not have asked. It’s as simple as that. Similarly, if he were wealthy beyond his wildest dreams, he may care less than someone who has climbed partly up the property ladder. But do I think it’s a bit much to ask in a first conversation? Yes.

Don’t give the Greek chorus too much importance. Whether or not other people are comfortable with such questions in a first call is immaterial; if you are not comfortable, you have your answer. You, after all, are the person who will have to date him, and expect him to show a semblance of emotional intelligence and sensitivity. It’s imperative to be able to read the room.

Let there be no mistake: If he is asking a question about your real-estate holdings or finances, he’s interested in them as a way of assessing (or judging) your suitability as a partner. Maybe he romanticizes his relationship prospects based on first impressions, and wonders whether he could combine assets and live in splendor. But words and questions have meaning.

Social acceptability vs. social mobility 

In America, it may be seen as more acceptable than in some European countries to ask what you do for a living, and even whether you rent or own in a big city like New York. The U.S. is a country of immigrants, and has more immigrants than any other population in the world, according to the Pew Research Center

The idea is to strive, work hard, and do better than the previous generation, although a majority of Americans reportedly doubt the attainability of generation-to-generation upward mobility, and millions of people are reassessing their relationship to work-life balance in the wake of the pandemic.

Wealth and looks play a role in whether someone swipes left or right, but the former appears to become more important when a connection is made with a partner who is deemed attractive. “When long-term interest is considered, the physical attractiveness of the model appeared to serve as an initial hurdle that had to be cleared prior to any other factors being considered by the participants,” according to this 2020 study.

People do swipe right based on economic factors. It would be foolhardy or idealistic to suggest that they don’t. If, however, a man poses in sunglasses with two thumbs up next to a Lamborghini, listing bitcoin
BTCUSD,
+1.57%

trading as one of his pastimes, chances are he doesn’t own that Lamborghini and, in my estimation, may have “Tinder Swindler”-level intentions.

And if a potential partner is both attractive and wealthy? That seems to be an appealing combination. Female online daters are 10 times more likely to click on profiles with men who have higher incomes, at least according to this study published in the Journal of Economic Behavior and Organization, while male online daters are equally likely to click on women’s profiles, regardless of income. 

I don’t put too much stock in studies that say men are looking for attractive partners, while women are more interested in men who look wealthy. You could probably do an analysis of any online dating site and gather a sample that would give you conclusions that say pretty much anything you want them to say. It all depends on the individual: Someone who knows the exact size of their backyard and strives to keep up with the Joneses is more likely to ask whether you rent or own.

In other words, this fellow who grilled you over your own socioeconomic circumstances may still be a perfect match — for someone else.

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

I want my son to inherit my $1.2 million house. Should I leave it to my second husband in my will? He promised to pass it on.

My adult sons live rent-free in my house, while I pay for 50% of utilities in my second husband’s condo

My brother lives in our parents’ home, which we’ll inherit 50/50. I want to keep it in the family for my children. How do I protect my interests?



Source link

#Tinder #match #asked #rent #apartment #gauche #financial #questions #date

‘I can’t afford to keep paying for two households’: My adult sons live rent-free in my house, while I pay for 50% of utilities in my second husband’s condo

In 2007, my now ex-husband and I bought a home, where we lived as a family with our two boys for just a few years before we divorced in 2009. I refinanced the house in my name, and have paid the mortgage and utilities as a single parent ever since. 

In 2016, I met and started dating a man. We lived apart, only about 10 to 15 minutes from each other. In 2021, after I battled cancer, he proposed and I accepted. Since we only lived a few minutes apart, I stayed at my husband’s two-bedroom condo Thursday through Sunday, and spent Sunday through Thursday at my house, where I worked from home. I did this for years. 

My oldest son moved back in with me in 2021. He graduated high school in 2017 and I gave him a gap year living at my house to decide on his next move, after which he moved out and started his career. He lived on his own for a year, then lived with my parents for a year. He met a girl; they signed a lease and then the pandemic hit. After their lease was up, they broke up, and he decided to go back to college full time. I agreed that he could live in my home while he attended college. His tuition is covered by grants and a 529 fund his grandmother set up.

In 2022, my then boyfriend and I married. However, we still didn’t move in together full time, as I still had my house, and my youngest son had not yet graduated high school. I wanted to be home with him. 

Helping to support two households

My youngest son, 19, graduated high school in 2023. Later that summer, I moved out of my house to stay with my husband full time. I pay 50% of the expenses living with my husband and 100% of the expenses for my house, where the boys live. 

I kept both households going so my youngest could have a gap year of his own, and to cushion my oldest, whom I really didn’t think would go to college, while he attended to his studies. They are young and finding their way, and I wanted to give them the support I felt like they needed. But here we are in 2024, and I can’t afford to keep both households running without impacting my ability to save for retirement.

Here’s my dilemma: I don’t know how to get my boys out of my house so I can clean it up, stage it and list it for sale. We live in an area where the average two-bedroom apartment rents for $1,800 a month. My youngest works full time following his passion for BMWs and makes about $2,400 a month. My oldest, 25, works part time in retail and makes about $1,000 a month while he attends college. They both work within 3 miles of my home. They simply can’t afford to move out, and I can’t afford to keep paying for two households.

To complicate matters, I have about $100,000 in equity in the house, and I’d like to use it to pay off some small debts and buy a car, as well as put the rest in retirement.  But my mother, who has had a long and successful career in real estate, thinks I should wait it out and let my equity continue to build, giving the boys some cushion while they are still finding their way. 

Do I shop around and find them an apartment, help them set up utilities and help them with movers? Do we build a project plan with a deadline, or just keep looking for places in the hope that we eventually find one we like? Do I subsidize their monthly expenses and give them each $400 a month for utilities, if they cover their rent? 

I know this is probably easy for other people, but I am at a loss as to how and when to do this. We all feel stuck, scared and anxious. Any advice is appreciated.

Wife & Mother

Related: My cousin left his estate to 6 relatives, but only one cousin, worth $30 million, received the inheritance — due to an ‘unexpected surprise’

“On the subject of mothers, listen to your own. If you can rent out your home, pay the mortgage and wait for the value to increase, do that.”


MarketWatch illustration

Dear Wife & Mother,

The longer you support your two adult sons, the longer they will lean on you and need you as their personal ATM. You’ve brought them over the finish line, and then some. You raised them, educated them, and fed and clothed and housed them. Now you are paying for their electricity and other bills. It’s time for your sons to stand on their own two feet and, as my Irish mother would say, cut their cloth according to its measure.

On the subject of mothers, listen to your own. If you can rent out your home, pay the mortgage and wait for the value to increase, do that. Your mother works in real estate and knows what she’s talking about. Real estate, in an ideal world, is a long-term game. It’s time for your sons to downsize to a small apartment, and experience the joys of paying their own way and standing on their own two feet. You need to cut the cord.

Act with integrity and intention. The best way to make a big move — and this is probably as big a move emotionally as it is financially — is to prepare. Sit down with your sons and an independent financial adviser, and do a forensic accounting of their income and expenditure and where they spend their money. I can almost guarantee you that their subsidized lifestyle lends itself to spending money in areas where they could easily cut back.

There is an underlying feeling of guilt in your letter. Have you done enough? Yes. Should you do more? No, you have done plenty, and you’re now putting your sons before your own financial peace of mind and retirement. Does it make you a bad person, or an unfeeling one, if you decide to cut them off? Of course not. Quite the contrary: You can lead by example by showing them what it means to make tough decisions and stick to them.

When you have accounted for your sons’ income and expenditure, look at rentals in your neighborhood or adjoining neighborhoods, if need be. The aim is for them to start taking responsibility for themselves. They don’t need a two-bedroom apartment. They can live in a one-bedroom condo and take turns sleeping on the sofa bed. This is a rite of passage, and it teaches young people the value of money and what it means to take accountability for oneself.

The share of adult children in the U.S. living with their parents has steadily risen since the 1960s. In 2020, during the pandemic, one-third of children ages 18 to 34 lived with their parents as non-caregivers. Men and 18- to 24-year-olds, respectively, were more likely to live at home than women and 25- to 34-year-olds, according to a study distributed by the National Bureau of Economic Research. Parents get support at home; kids get to experience a low-cost lifestyle.

But while the NBER found social benefits to living with adult children and that it does not necessarily delay, retirement, the benefits of providing your children with a head start by giving them somewhere to live start to decline when your ability to save for retirement is impeded, and you’re burning money supporting two households. This is also money you can put towards vacations and new cars, and building a future with your husband. You deserve to enjoy life and put yourself first for a change. Tell your sons, “You’re ready. I’m ready. I love you. Let’s do this.””

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

‘She’s obsessed’: My mom moved into my house and refuses to move out. She has paid for repairs and appliances. What should I do?

My parents want to pay off my $200,000 mortgage, and move into my rental. They say I’ll owe my sister $100,000. Is this fair?

‘I hate the 9-to-5 grind’: I want more time with my newborn son. Should I give up my job and dip into my six-figure trust fund?



Source link

#afford #paying #households #adult #sons #live #rentfree #house #pay #utilities #husbands #condo

Why investors should be wary of New Year ‘head fakes’ for this hot asset class

The first trading day of the New Year looks set to challenge the Santa Rally theory, with Dow futures down over 200 points as bond yields surge. An Apple downgrade may not have helped investor confidence.

This week will bring the minutes of the Federal Reserve’s last meeting and important December jobs data.

“Data that comes in too hot will kill the idea of rate cuts starting as soon as March, and data that comes in too cold will kill the idea of a soft landing. It means Goldilocks must return from her Christmas trip to Aruba and appear this week,” says Michael Kramer, founder of Mott Capital Management.

Read: A stock investor’s guide to the first trading days of 2024

Onto our call of the day from MacroTourist blogger Kevin Muir, who sees a rally in small-cap stocks as one big theme for the coming year, though investors should beware of getting in too soon.

In a post, Muir draws on a 2021 observation from Raoul Paul, co-founder and CEO of Real Vision financial media platform, who posted on Twitter now X, at the time about the perils of piling into “head fakes” or new ideas in January.

Paul noted how hedge funds and asset managers start the new year with a clean investment slate, but then two weeks later start moving into so-called consensus Wall Street year-ahead trades. And once the rest of the investment world gets in, the trend reverses or corrects, and those managers get back to flat or have to start over.

Muir says given the Fed’s pivot away from monetary tightening at the end of 2023, small-caps will end up as stock leaders this year. A bull on that asset class, he flagged his readers to buy in early November and December.

After a tough year, the Russell 2000
RUT
rallied late in 2023 as it became clearer that Fed interest rate increases, particularly hard on smaller companies, were drawing to a close.

As per this Russell 2000 chart, Muir says he did get the timing right on that bullish call:

However, Muir says he’s concerned that the rally was mainly from “hedge fund covering,” and not a solid signal that the bear market for those stocks has ended.

One reason, he notes was that the stocks blasting higher at the end of 2023 were the most heavily shorted — he offers the Goldman Sach’s most-shorted index chart here:

MacroTourist

The chart is evidence of how hedge funds that got caught out when the Fed surprisingly guided toward interest rate cuts at the December meeting. Within a few hours of the Fed announcement, the Most-Short index had rallied 15%. But along with that, the ARKK Innovation ETF
ARKK
also shot higher, a red flag for Muir.

That short index is tightly correlated to ARKK and the Russell 2000 small-cap index, he said.

So says it’s possible the small-cap push was “just a hedge fund short-covering rally that will sag back down now that the buying has flamed out.” And based on Raoul Paul’s theory, it makes sense that hedge funds and other investors may be piling into the asset class.

Muir says he stands by his view that small-caps are cheap and deserving of gains. “However, if this small-cap rally is for real, then it can’t be led by crap. We can’t have the GS Rolling Most-Short leading the charge. We need quality small-cap stocks to rally,” he said.

So the correlation between broader small-cap indexes and the most-shorted index (also tightly correlated with ARKK) will have to break down.

“As a proxy for this index, and a hedge against my small-cap long position, I am shorting ARKK. So far, the short covering drove all these smaller capitalized stocks higher, but my bet is that an actual small-cap bull market will see much better differentiation, and that new small-cap leadership will emerge (and it won’t be ARKK),” he says.

The markets

U.S. stock index futures
ES00,
-0.67%

YM00,
-0.26%

NQ00,
-1.19%

are falling sharply as Treasury yields
BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
climb. Gold
GC00,
+0.32%

is up, and oil
CL.1,
+0.14%

is up 2% after Iran sent warships to the Red Sea after the U.S. Navy sank some Houthi militia-backed boats. The Hang Seng
HK:HSI
fell 1.5% after weak China factory activity.

Key asset performance

Last

5d

1m

YTD

1y

S&P 500

4,769.83

0.32%

3.81%

24.23%

24.23%

Nasdaq Composite

15,011.35

0.12%

4.94%

43.42%

43.42%

10 year Treasury

3.933

3.28

-24.22

5.23

18.77

Gold

2,082.50

0.87%

1.67%

0.52%

13.79%

Oil

72.78

-0.97%

-0.70%

2.03%

-9.60%

Data: MarketWatch. Treasury yields change expressed in basis points.

The buzz

U.S. nonfarm payroll data for December is due Friday, with the Institute for Supply Management’s manufacturing report and minutes of the Dec. 12-13 Fed meeting both on Wednesday. Construction spending is due at 10 a.m. on Tuesday.

Read: Health of U.S. labor market looms large on markets’ radar this coming week

Apple
AAPL,
-2.97%

is down 2% in premarket after Barclays’ analysts cut the iPhone maker to underweight from equal weight, on signs of weak iPhone 15 and other hardware sales.

Voyager Therapeutics stock
VYGR,
+29.74%

is up 32% after the biotech announced a licensing deal with Novartis unit Novartis Pharma
NOVN,
+0.99%
.

Joyy
YY,
-14.65%

is off 11% after Baidu
BIDU,
-3.40%

cancelled a $3.6 billion offer for the Singapore-based live-streaming platform.

Bitcoin
BTCUSD,
+4.23%

is at $45,447, a high not seen since April 2022, on ETF approval hopes.

Tesla
TSLA,
-0.55%

said it delivered 484,507 EVs in the fourth quarter, producing 494,989. Deliveries grew 83% to 1.81 million for 2023 as a whole. Tesla shares are slipping. Meanwhile, China’s BYD
002594,
-2.73%

sold 3.02 million electric vehicles in 2023, eclipsing Tesla a second-straight year.

Japan’s western coast was hit by several heavy earthquakes on New Year’s Day, leaving at least 30 people dead and more quakes could come. A collision between a Japan coast guard plane and a Japan Airlines flight that caught fire on the runway on Tuesday resulted in the deaths of five people.

Best of the web

This year, resolve to pack a ‘go bag’ to be ready for the next disaster: Here’s what to put in it

Why Suze Orman never goes out to dinner

Topless massages, cage fights and private flights: CEO mishaps of 2023

The chart

More on small-cap caution from Chris Kimble at See It Market. He points out that investors may be getting greedy as some big resistance levels approach for the Russell 2000:


See It Market

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker

Security name

TSLA,
-0.55%
Tesla

MARA,
+7.47%
Marathon Digital Holdings

NIO,
-5.79%
Nio

NVDA,
-3.27%
Nvidia

GME,
-1.14%
GameStop

AAPL,
-2.97%
Apple

AMC,
AMC Entertainment

COIN,
-2.62%
Coinbase GLobal

MULN,
-4.69%
Mullen Automotive

RIOT,
+5.69%
Riot Platforms

Random reads

New Year’s Eve in a Japanese cat bar.

Woman sues Hershey for $5 million over a faceless Reeses pumpkin.

Viral Burger King worker buys first home after crowdsourcing.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Source link

#investors #wary #Year #fakes #hot #asset #class

Nvidia and AI changed landscape of the chip industry, as rivals play catch-up

This year’s artificial-intelligence boom turned the landscape of the semiconductor industry on its head, elevating Nvidia Corp. as the new king of U.S. chip companies — and putting more pressure on the newly crowned company for the year ahead.

Intel Corp.
INTC,
+2.12%
,
which had long been the No. 1 chip maker in the U.S., first lost its global crown as biggest chip manufacturer to TSMC
2330,

several years ago. Now, Wall Street analysts estimate that Nvidia’s
NVDA,
-0.94%

annual revenue for its current calendar year will outpace Intel’s for the first time, making it No. 1 in the U.S. Intel is projected to see 2023 revenue of $53.9 billion, while Nvidia’s projected revenue for calendar 2023 is $56.2 billion, according to FactSet.

Even more spectacular are the projections for Nvidia’s calendar 2024: Analysts forecast revenue of $89.2 billion, a surge of 59% from 2023, and about three times higher than 2022. In contrast, Intel’s 2024 revenue is forecast to grow 13.3% to $61.1 billion. (Nvidia’s fiscal year ends at the end of January. FactSet’s data includes pro-forma estimates for calendar years.)

“It has coalesced into primarily an Nvidia-controlled market,” said Karl Freund, principal analyst at Cambrian AI Research. “Because Nvidia is capturing market share that didn’t even exist two years ago, before ChatGPT and large language models….They doubled their share of the data-center market. In 40 years, I have never seen such a dynamic in the marketplace.”

Nvidia has become the king of a sector that is adjacent to the core-processor arena dominated by Intel. Nvidia’s graphics chips, used to accelerate AI applications, reignited the data-center market with a new dynamic for Wall Street to watch.

Intel has long dominated the overall server market with its Xeon central processor unit (CPU) family, which are the heart of computer servers, just as CPUs are also the brain chips of personal computers. Five years ago, Advanced Micro Devices Inc.
AMD,
+0.90%
,
Intel’s rival in PC chips, re-entered the lucrative server market after a multi-year absence, and AMD has since carved out a 23% share of the server market, according to Mercury Research, though Intel still dominates with a 76.7% share.

Graphics chips in the data center

Nowadays, however, the data-center story is all about graphics processing units (GPUs), and Nvidia’s have become favored for AI applications. GPU sales are growing at a far faster pace than the core server CPU chips.

Also read: Nvidia’s stock dubbed top pick for 2024 after monster 2023, ‘no need to overthink this.’

Nvidia was basically the entire data-center market in the third quarter, selling about $11.1 billion in chips, accompanying cards and other related hardware, according to Mercury Research, which has tracked the GPU market since 2019. The company had a stunning 99.7% share of GPU systems in the data center, excluding any devices for networking, according to Dean McCarron, Mercury’s president. The remaining 0.3% was split between Intel and AMD.

Put another way: “It’s Nvidia and everyone else,” said Stacy Rasgon, a Bernstein Research analyst.

Intel is fighting back now, seeking to reinvigorate growth in data centers and PCs, which have both been in decline after a huge boom in spending on information technology and PCs during the pandemic. This month, Intel unveiled new families of chips for both servers and PCs, designed to accelerate AI locally on the devices themselves, which could also take some of the AI compute load out of the data center.

“We are driving it into every aspect of the applications, but also every device, in the data center, the cloud, the edge of the PC as well,” Intel CEO Pat Gelsinger said at the company’s New York event earlier this month.

While AI and high-performance chips are coming together to create the next generation of computing, Gelsinger said it’s also important to consider the power consumption of these technologies. “When we think about this, we also have to do it in a sustainable way. Are we going to dedicate a third, a half of all the Earth’s energy to these computing technologies? No, they must be sustainable.”

Meanwhile, AMD is directly going after both the hot GPU market and the PC market. It, too, had a big product launch this month, unveiling a new family of GPUs that were well-received on Wall Street, along with new processors for the data center and PCs. It forecast it will sell at least $2 billion in AI GPUs in their first year on the market, in a big challenge to Nvidia.

Also see: AMD’s new products represent first real threat to Nvidia’s AI dominance.

That forecast “is fine for AMD,” according to Rasgon, but it would amount to “a rounding error for Nvidia.”

“If Nvidia does $50 billion, it will be disappointing,” he added.

But AMD CEO Lisa Su might have taken a conservative approach with her forecast for the new MI300X chip family, according to Daniel Newman, principal analyst and founding partner at Futurum Research.

“That is probably a fraction of what she has seen out there,” he said. “She is starting to see a robust market for GPUs that are not Nvidia…We need competition, we need supply.” He noted that it is early days and the window is still open for new developments in building AI ecosystems.

Cambrian’s Freund noted that it took AMD about four to five years to gain 20% of the data-center CPU market, making Nvidia’s stunning growth in GPUs for the data center even more remarkable.

“AI, and in particularly data-center GPU-based AI, has resulted in the largest and most rapid changes in the history of the GPU market,” said McCarron of Mercury, in an email. “[AI] is clearly impacting conventional server CPUs as well, though the long-term impacts on CPUs still remain to be seen, given how new the recent increase in AI activity is.”

The ARMs race

Another development that will further shape the computing hardware landscape is the rise of a competitive architecture to x86, known as reduced instruction set computing (RISC). In the past, RISC has mostly made inroads in the computing landscape in mobile phones, tablets and embedded systems dedicated to a single task, through the chip designs of ARM Holdings Plc
ARM,
+0.81%

and Qualcomm Inc.
QCOM,
+1.12%
.

Nvidia tried to buy ARM for $40 billion last year, but the deal did not win regulatory approval. Instead, ARM went public earlier this year, and it has been promoting its architecture as a low-power-consuming option for AI applications. Nvidia has worked for years with ARM. Its ARM-based CPU called Grace, which is paired with its Hopper GPU in the “Grace-Hopper” AI accelerator, is used in high-performance servers and supercomputers. But these chips are still often paired with x86 CPUs from Intel or AMD in systems, noted Kevin Krewell, an analyst at Tirias Research.

“The ARM architecture has power-efficiency advantages over x86 due to a more modern instruction set, simpler CPU core designs and less legacy overhead,” Krewell said in an email. “The x86 processors can close the gap between ARM in power and core counts. That said, there’s no limit to running applications on the ARM architecture other than x86 legacy software.”

Until recently, ARM RISC-based systems have only had a fractional share of the server market. But now an open-source version of RISC, albeit about 10 years old, called RISC-V, is capturing the attention of both big internet and social-media companies, as well as startups. Power consumption has become a major issue in data centers, and AI accelerators use incredible amounts of energy, so companies are looking for alternatives to save on power usage.

Estimates for ARM’s share of the data center vary slightly, ranging from about 8%, according to Mercury Research, to about 10% according to IDC. ARM’s growing presence “is not necessarily trivial anymore,” Rasgon said.

“ARM CPUs are gaining share rapidly, but most of these are in-house CPUs (e.g. Amazon’s Graviton) rather than products sold on the open market,” McCarron said. Amazon’s
AMZN,
-0.18%

 Graviton processor family, first offered in 2018, is optimized to run cloud workloads at Amazon’s Web Services business. Alphabet Inc.
GOOG,
+0.66%

GOOGL,
+0.63%

also is developing its own custom ARM-based CPUs, codenamed Maple and Cypress, for use in its Google Cloud business according to a report earlier this year by the Information.

“Google has an ARM CPU, Microsoft has an ARM CPU, everyone has an ARM CPU,” said Freund. “In three years, I think everyone will also have a RISC-V CPU….It it is much more flexible than an ARM.”

In addition, some AI chip and system startups are designing around RISC-V, such as Tenstorrent Inc., a startup co-founded by well-regarded chip designer Jim Keller, who has also worked at AMD, Apple Inc.
AAPL,
+0.54%
,
Tesla Inc.
TSLA,
+2.04%

and Intel.

See: These chip startups hope to challenge Nvidia but it will take some time.

Opportunity for the AI PC

Like Intel, Qualcomm has also launched an entire product line around the personal computer, a brand-new endeavor for the company best known for its mobile processors. It cited the opportunity and need to bring AI processing to local devices, or the so-called edge.

In October, it said it is entering the PC business, dominated by Intel’s x86 architecture, with its own version of the ARM architecture called Snapdragon X Elite platform. It has designed its new processors specifically for the PC market, where it said its lower power consumption and far faster processing are going to be a huge hit with business users and consumers, especially those doing AI applications.

“We have had a legacy of coming in from a point where power is super important,” said Kedar Kondap, Qualcomm’s senior vice president and general manager of compute and gaming, in a recent interview. “We feel like we can leverage that legacy and bring it into PCs. PCs haven’t seen innovation for a while.”

Software could be an issue, but Qualcomm has also partnered with Microsoft for emulation software, and it trotted out many PC vendors, with plans for its PCs to be ready to tackle computing and AI challenges in the second half of 2024.

“When you run stuff on a device, it is secure, faster, cheaper, because every search today is faster. Where the future of AI is headed, it will be on the device,” Kondap said. Indeed, at its chip launch earlier in this month, Intel quoted Boston Consulting Group, which forecast that by 2028, AI-capable PCs will comprise 80% of the PC market..

All these different changes in products will bring new challenges to leaders like Nvidia and Intel in their respective arenas. Investors are also slightly nervous about Nvidia’s ability to keep up its current growth pace, but last quarter Nvidia talked about new and expanding markets, including countries and governments with complex regulatory requirements.

“It’s a fun market,” Freund said.

And investors should be prepared for more technology shifts in the year ahead, with more competition and new entrants poised to take some share — even if it starts out small — away from the leaders.

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#Nvidia #changed #landscape #chip #industry #rivals #play #catchup

I don’t want to leave my financially irresponsible daughter my house. Is that unreasonable?

I am at my wit’s end and hope someone can recommend ways to help my daughter’s unwillingness to manage her money. When I am gone her chances are slim to none. I am a senior citizen and I’ve had cancer four times in the last three years, so I don’t know how much longer I have. 

I already told her I’d leave her a few thousand dollars from my retirement funds, but I know she’ll blow through whatever I give her. I don’t want to leave her my house in my will. Am I being unreasonable? The loan balance is only $28,000 and mortgage payments are very low. One reason: She’ll be even less motivated to manage her finances wisely if she knows she will get it.  

I’ve talked to my therapist and he has no solutions. All my daughter’s friends are similarly ill-equipped, and there is no adult that she would heed. My therapist said: “Why should I care?” But I do. Plus, she won’t be able to pay the ongoing taxes, insurance and maintenance because of her free-wheeling spending.  

I told her not to spend her modest retirement balance from a previous job. She did and her reason was that she said it was small. I let her use my car, and pay maintenance and insurance.  I pay for her phone. She pays no rent and nor does she do many chores. Oftentimes, she is short of money, and I have to give her a loan. She keeps getting credit cards, pays them off, then repeats the cycle.

When I try to talk to her calmly, she argues. I tried to get her to set up a budget. She won’t do it.  Earlier she agreed to pay the entire phone bill as her contribution. She simply auto-paid using her credit card. The card went into arrears so I had to make good on that, and resume responsibility.

I try to set up small goals for her, but she’s not receptive. Yet she buys plenty of snacks, cosmetics and goes on vacations. I’ve offered to have us meet an adviser of her choice to tackle these issues, but again she’s not interested. I’ve even suggested I’m going to take a home-equity loan to spend on myself and she’d have to pay it back but again, no response.

I love her very much, but don’t know what to do. My wife sabotaged my efforts in her misguided kindness when our daughter was younger. She no longer does that, but it’s too late.

In short, she’s not willing to manage her money properly. She is in school now, but worked several years full time, and is now working part time. I promised her I’d put money toward her degree, but I’m going to pay it directly to the school.

I have calmly told her of the dire consequences of her actions, but it doesn’t get through to her.

The Father 

“You may not realize it, but your daughter, your wife and your good self are all playing a game.”


MarketWatch illustration

Dear Father,

Think twice before disinheriting your daughter. If she is your only child, don’t allow your frustrations to posthumously punish her.

First things first: Take care of yourself. You have had recurring battles with cancer, and that may have taken a toll on your health. Your fears and concerns about your own mortality may be contributing to this laser focus on your daughter’s wellbeing. It could be that you believe you have a shorter period of time to ensure your daughter balances her books, and gets back on the right track, but the truth is that she is operating on her own timetable.

That said, the situation you describe sounds extremely dysfunctional. You are both the enabler and the avenger — paying her phone bill and rent, and threatening to cut her out of your will. What’s more, you and your wife — intentionally or not — are playing good cop/bad cop. This is a “Kramer vs. Kramer” situation where your daughter is able to play her parents off against each other. One rewards, the other chastises. 

It seems like your daughter’s cycle of taking out credit cards is mirrored by the cycle of cat-and-mouse you play with her, even if you do it without realizing it. You are all caught inside a long-running saga that is, perhaps, inherited from your own parents. Your daughter will never be who you want her to be. She can only be who she is, make mistakes, learn from them (or not) and hopefully grow and mature over time. 

You may not realize it, but your daughter, your wife and your good self are all playing a game. Your daughter rebels, you threaten to disinherit her, and your wife plays peacemaker. You are tough with your daughter, your wife shows her kindness, and your daughter plays you both off against each other. Not all games are fun, but they do form a pattern that is so embedded in the family dynamic that it’s hard to see it from the inside.

The ‘games’ people play

Eric Berne wrote a landmark book in 1964 entitled “Games People Play.” He defined these games as follows: “A game is an ongoing series of complementary ulterior transactions progressing to a well-defined, predictable outcome.” It could be “If It Weren’t For You” (perhaps a common one between unhappy spouses) or “Yes, but” (where one person cajoles another to take action, but the other person always has an excuse for inaction). 

Each game has a gimmick and a payoff. I’m not sure what game you’re playing, but it’s repetitive and everybody is getting some kind of reward, even if it is an unhappy one. That is something you will have to figure out. You get to be the leader who knows how the world works, your wife gets to be Switzerland (while surreptitiously fanning the flames) while your daughter gets to defy you and assert her independence, knowing it will provoke you to repeat the cycle.

My point is: You all need family therapy! Not just your daughter. Or you. Or your wife. You need to process this together. Whether or not you leave your daughter your house is, at this point, irrelevant. The threat that you will withhold a large part of your inheritance is the key part. Why would you do that? Would it really solve anything to make your daughter even more financially insecure? Is punishing her more practical and effective than rewarding her?

Elephant in the room

The other elephant in the room is what happens if you predecease your wife. You may wish for your daughter to be disinherited except for a few thousand dollars, but this game of good cop/bad cop and rebellious daughter may continue after you’re gone with your daughter convincing your wife to not act in accordance with your wishes. That may be the final denouement to this “game,” or perhaps a relative or lawyer would take your place.

Your daughter is, I suspect, being infantilized by the constant criticisms and interference in her finances. You don’t trust her enough to make her own decisions, so you interfere and get frustrated by all her bad habits and, as you see them, mistakes. But it also helps prevent her from standing on her own two feet and facing the music when things go wrong. Why? She knows you will step in to show (a) you care and (b) you told her so.

There are financial therapists who can help you analyze your emotional relationship to money and why you make the decisions we do. But it may be that you all have to make decisions that go against your instincts. Stop trying to change your daughter, and stop bailing her out. She may do her utmost to provoke you to lose your cool with her. No more loans. Let her go on vacation. Just don’t be around to pick up the bill.

You could set up a trust with stipulations: when your daughter receives certain amounts of money and how she is allowed to spend it. There is a balance between being too controlling and prescriptive enough to encourage her to make good choices. But ultimately that is out of your hands. As I said at the beginning of my response, I worry that your responses to her are exacerbated by your fears over your own health.

It would be a shame to waste these years sparring with your child when you could put all that aside, and enjoy each other for you are, instead.

More from Quentin Fottrell:

Is it OK for my new boyfriend to ask me to split the bill? ‘I don’t want him to get used to me paying for my own meals.’

My stepdaughter is executor to her late father’s will, and believes she’s now on the deed to my home. Is that possible?

I inherited $246,000 from my late mother and used $142,000 to pay off our mortgage. If we divorce, can I claim this money?

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter. The Moneyist regrets he cannot reply to questions individually.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write to me with all sorts of dilemmas. Post your questions, or weigh in on the latest Moneyist columns.

By emailing your questions to the Moneyist or posting your dilemmas on the Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.



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#dont #leave #financially #irresponsible #daughter #house #unreasonable

Lukas Gage’s viral video audition haunts the ‘hot labor summer’ actors’ strike sweeping Hollywood

In November 2020, the actor Lukas Gage was auditioning for a role via video link when he heard the producer make some disparaging remarks about the size of his apartment. 

“These poor people who live in these tiny apartments,” the producer said. “I’m looking at his background and he’s got his TV and …”

Gage, who at that time had had a four-episode arc on HBO’s “Euphoria” among other small roles, interrupted the producer — British director Tristram Shapeero, who later apologized for his remarks — to let him know that he was not muted and that Gage could, in fact, hear him. 

“Yeah, I know it’s a sh—y apartment,” Gage said. “That’s why — give me this job so I can get a better one.”

Shapeero replied, “Oh my god, I am so, so sorry … I am absolutely mortified.”

Putting together an audition tape can often take up an entire day and involve setting up a studio space for sound and lighting.

“Listen, I’m living in a four-by-four box, just give me the job and we’ll be fine,” Gage responded. 

Gage kept his sense of humor, but he also decided to post the video on his Twitter account to show how actors are sometimes treated from the moment they audition for a role — and perhaps to remind people to make sure you’re on mute if you’re trash-talking someone on a Zoom
ZM,
+1.76%

call.

It’s three years later, and members of the Writers Guild and Screen Actors Guild are on strike, looking for more pay, better working conditions and stricter rules around things like the use of actors’ images in the age of artificial intelligence and the lack of residuals from streaming networks. 

The perils of the online audition

Meanwhile, Gage’s 2020 online audition is resonating again. 

For a working actor — who, like the majority of SAG-AFTRA members who may not be an A-list star — simply getting in front of a producer as Gage did can be a long and difficult process. And since the start of the pandemic, the nature of auditions has changed dramatically. This has come to symbolize the uphill struggle actors face from the moment they hear about a role. 

In May, Ezra Knight, New York local president of SAG-AFTRA, asked members to authorize strike action, saying contracts needed to be renegotiated to reflect dramatic changes in the industry. Knight cited the need to address artificial intelligence, pay, benefits, reduced residuals in streaming and “unregulated and burdensome self-taped auditions.”

In the days of live auditions, actors would read for a role with a casting director. But several actors told MarketWatch that it’s become harder to make a living in recent years, and that it all starts with the audition tape, which has now become standard in the industry. 

By the time Gage got in front of producers, for instance, he had likely either already delivered a tape and was put on a shortlist to read in front of a producer, or the casting director was already familiar with his work and wanted him to read for the part. 

But an audition tape can often take up an entire day to put together, actors say. When the opportunity to audition arrives, actors typically have to drop everything they’re doing — whether they’re working a side hustle or taking time off or even enjoying a vacation.

Cadden Jones: “All the financial responsibilities have fallen on us. The onus is on us to create our auditions.”


Cadden Jones

They need to arrange good lighting and a clean backdrop — Gage’s TV set became a distraction for the producer during his audition — set up the camera, and scramble to find a “reader” — someone to read the other roles in the scene, preferably another actor. 

Then the actor has to edit the audition to highlight their strongest take and upload it. There are currently no regulations on the amount of pages a casting director can send to a candidate, and actors say there’s often not enough time to properly prepare.

“Unfortunately, it’s been going in this direction for some time now,” said Cadden Jones, an actor based in New York who has credits on shows including Showtime’s
PARAA,
-1.47%

“Billions” and Amazon Prime’s
AMZN,
+0.03%

“The Marvelous Mrs. Maisel.” 

“This was the first year I did not qualify for health insurance in decades,” she told MarketWatch. “I just started teaching.”

To put that into perspective: Members of SAG-AFTRA must earn $26,470 in a 12-month base period to qualify for health insurance. The median annual wage in the U.S. hovers at around $57,000, based on the weekly median as calculated by the Bureau of Labor Statistics.

Jones and her partner, Michael Schantz, an actor who works mostly in theater, are starting a communications consulting company to increase their income.

“Most if not all of my actor friends have had to supplement their income since the pandemic,” she said. “We’re in trouble as a community of actors who used to make a good living doing what we do. It’s not like any of us lost our talent overnight. I, for one, am very glad that we’re striking.”

But Jones said that, with the auditioning process taking place mostly online since the onset of the pandemic, casting agents — who work for producers — are able to see more people for a given role, making the competition for roles even more intense.

‘This was the first year I did not qualify for health insurance in decades.’


— Cadden Jones, an actor based in New York

“We don’t go into casting offices anymore,” Jones said. “All the financial responsibilities have fallen on us. The onus is on us to create our auditions. It’s harder to know what they want, and you don’t have the luxury to work with a casting director in a physical space to get adjustments, which was personally my favorite part of the process — that collaboration.”

She added: “Because the audition rate accelerated, the booking rate went down dramatically for everybody. But don’t get me wrong. Once the strike is officially over, I want all the auditions I can get.”

SAG-AFTRA has proposed rules and expectations to address some of the burden and costs actors bear when it comes to casting, including providing a minimum amount of time for actors to send in self-taped auditions; disclosing whether an offer has been made for the role or it has already been cast; and limiting the number of pages for a “first call” or first round of auditions.

Before the negotiations broke down with the actors’ union, the Alliance of Motion Picture and Television Producers, which represents over 350 television and production companies, said it offered SAG-AFTRA $1 billion in wage increases, pension and health contributions and residual increases as part of a range of proposals related to pay and working conditions.

Those proposals included limitations on requests for audition tapes, including page, time and technology requirements, as well as options for virtual or in-person auditions, AMPTP said. The producers’ group characterized their offer as “the most lucrative deal we have ever negotiated.”

Michael Schantz: “How does the broader culture value storytelling and the people who make stories?”


Michael Schantz

Jones said she doesn’t blame the casting directors. It’s up to the producers, she said, to be more mindful of how the changes in the industry since the advent of streaming, the decline in wages adjusted for inflation, and poor residuals from streaming services have taken a toll on working actors.

Bruce Faulk, who has been a member of SAG-AFTRA since 1992, said that for work on a one-off character part or a recurring role on a network show, he might receive a check for hundreds or even thousands of dollars in residuals. And — crucially — he knows how many times a particular show has aired. 

Residuals are fees paid to actors each time a TV show or film is broadcast on cable or network television. They are based on the size of the role and the budget of the production, among other things. For shows that air on streaming services, however, residuals are far harder to track. 

What’s more, residuals decline over time and can often amount to just a few cents per broadcast. 

Actor Kimiko Glenn, who appeared on episodes of Netflix’s
NFLX,
-2.27%

“Orange Is the New Black,” recently shared a video on TikTok showing $27 in residuals from her work on that show.

Faulk sympathizes. “A lot of checks from HBO
WBD,
-1.37%

for ‘The Sopranos’ or ‘Gossip Girl’ I get are for $33,” he said. “I never know how many people watched me on ‘Gossip Girl’ in the three episodes I’m in. All we know is whatever the streaming services decided to announce as their subscriber numbers.”

Like Jones, Faulk said this will be the first year he won’t qualify for SAG-AFTRA health insurance, which covers him, his wife and his son. This is despite him having worked enough over the past 10 years to qualify for a pension when he turns 67. “Mine is up to $1,000 a month now,” he said, noting that the pension will keep increasing if he keeps getting acting work.

Schantz, who had a three-episode arc on NBC’s
CMCSA,
-0.74%

“The Blacklist” in addition to his other TV, film and theater credits, finds the recent shifts in the landscape for actors somewhat difficult to reconcile with the way people turned to TV and film during the loneliest days of the pandemic.

“One of the most concerning things I can think of right now is the conversation around value. How does the broader culture value storytelling and the people who make stories?” he said. “The arts always tend to fall to the wayside in many ways, but it was striking during the pandemic that so much of our attention went to watching movies and television. There’s obviously something inside of us that feels like we’re part of the human story.”

Actors battle other technology

While big companies like Disney
DIS,
+1.13%
,
HBO, Apple
AAPL,
-0.62%
,
Amazon and Netflix make millions of dollars from films and TV series that are watched again and again, Schantz said that actors are unable to make a living. “No one wants to go on strike,” he said. 

Those five companies have not responded to requests for comment from MarketWatch on these issues.

Since his audition tape went viral, Gage has booked regular work, and he found even greater fame when he went on to star in Season 1 of HBO’s “White Lotus.” In 2023, he will star in nine episodes of “You,” now streaming on Netflix, and in the latest season of FX’s “Fargo.” 

Earlier this year, he told the New York Times: “I had never judged my apartment until that day.” He added, “I remember having this weird feeling in the pit of my stomach afterward, like, why am I judging where I’m at in my 20s, at the beginning of my career?”

‘There’s enough Bruce out there where you could take my likeness and my voice and put me in the scene.’


— Bruce Falk, a member of SAG-AFTRA since 1992

But advances in technology are not just hurting actors in the audition process. A debate is raging over the use of AI and whether actors should be expected to sign away the rights to their image in perpetuity, especially when they might only be getting paid for half a day’s work.

“AI is the next big thing,” Falk said. The industry is concerned about companies taking actors’ likenesses and using AI to generate crowd scenes. 

“Even an actor at my level — that guy on that show — there’s enough Bruce out there where you could take my likeness and my voice and put me in the scene: the lieutenant who gives you the overview of what happened to the dead body,” he said. “At this point, I could be technically replaced. We have to get down on paper, in very clear terms, that that can’t be done.”

The Alliance of Motion Picture and Television Producers also said it agrees with SAG-AFTRA and had proposed — before the actors’ strike — “that use of a performer’s likeness to generate a new performance requires consent and compensation.” The AMPTP said that would mean no digital version of a performer should be created without the performer’s written consent and a description of the intended use in the film, and that later digital replicas without that performer’s consent would be prohibited.  

“Companies that are publicly traded obviously have a fiduciary responsibility to their shareholders, and whatever they can use, they will use it — and they are using AI,” Schantz said. “Yes, there are some immediate concerns. Whether or not the technology is advanced enough to fully replace actors is an open question, but some people think it’s an inevitability now.

“To let companies have free rein with these technologies is obviously creating a problem,” he added. “I can’t go show up, do a day’s work, have my performance be captured, and have that content create revenue for a company unless I’m being property compensated for it.”

Schantz said he believes there’s still time to address these technological issues before they become a widespread problem that makes all auditions — however cumbersome — obsolete. 

“We haven’t crossed this bridge as a society, but God only knows how far along they are in their plans,” he said. “All I know is it has to be a choice for the actors. There has to be a contract, and we have to be protected. Otherwise, actors will no longer be able to make a living doing this work.”



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These stocks could be the next Magnificent Seven market leaders, says Goldman Sachs.

The second half of the year kicks off with a holiday-shortened week, though jobs data comes at the end of it. That’s as Tesla may have lit a firecracker for tech with some pretty bullish sales numbers out Sunday.

“Can tech keep up the pace?” is a burning question for many with regards to a sector that helped drive the S&P 500
SPX,
+1.23%

to its best first half since 2019. On the plus side, history dictates that one good half can lead to another, though some worry too much investor exuberance could spoil things.

So naturally, another obvious question looking ahead is how to find outperformers like the so-called “Magnificent Seven” tech names that led the first half — Amazon
AMZN,
+1.92%
,
Microsoft
MSFT,
+1.64%
,
Alphabet
GOOGL,
+0.50%
,
Meta
META,
+1.94%
,
Tesla
TSLA,
+1.66%

and Nvidia
NVDA,
+3.63%
.

Our call of the day, from a team at Goldman Sachs led by chief U.S. equity strategist David Kostin, offers up some ideas on that front and spoiler, Tesla is among them.

To find the new names, Goldman spiffed up its “Rule of 10” stock screen that pinpoints companies with realized and future sales growth greater than 10% for 2021 to 2025. They note that strong sales growth has been a common thread running through each of those names, as each have grown sales at a faster rate than the broader index since 2010, except 2022.

“The largest tech stocks in the U.S. equity market make it clear that identifying firms capable of posting sustained 10%+ sales growth in their nascent stages can be rewarding for investors. Rapid and consistent sales growth was a common attribute of today’s largest stocks as they ascended the index ranks,” said Kostin and the team.

Roughly 20 names meet this criteria and among them is one of those big tech outperformers — Tesla. Salesforce
CRM,
+0.39%

has consistently made the cut, said Goldman. The top 10 names on this list are Enphase Energy
ENPH,
+5.49%
,
Tesla, SolarEdge
SEDG,
+5.94%
,
Palo Alto Networks
PANW,
+0.86%
,
ServiceNow
NOW,
+2.53%
,
Paycom Software
PAYC,
+2.41%
,
Fortinet
FTNT,
+0.67%
,
DexCom
DXCM,
+0.45%

and Insulet
PODD,
-0.91%
.

Goldman also presented a screener for stocks based on net income growth. Those must have more than 10% per year net income growth for the 2021 to 2025 period.

Currently 18 names fit this criteria and are trading at below average premiums to the S&P on a price/earnings and price to earnings growth ratio, they say. The top 10 are Baker Hughes
BKR,
+0.80%
,
Match Group
MTCH,
-0.07%
,
Insulet , Aptiv, Bookings Holdings
BKNG,
+1.67%
,
ServiceNow, Schlumberger
SLB,
+1.34%
,
Chipotle
CMG,
+1.35%
,
Paycom and Halliburton
HAL,
-0.60%
.

And eight companies are on both lists: Paycom, Fortinet, Insulet, Salesforce, Intuit, Cadence Design Systems
CDNS,
+2.62%

and Aptiv.

As an aside, Kostin and the team address the whole narrow market issue, saying that in any given year, returns have been concentrated on a group of outperformers. Observe the below chart:

“Excluding the top 10 contributors in each year, the S&P 500 would have delivered an 8% average annual return since 1990 (vs. 12% for the full index),” they said. The top 10 contributors account for roughly 12 percentage points of the S&P 500’s 15% year-to-date return.

The market

It will be a shortened session for Wall Street ahead of Tuesday’s 4th of July holiday. Ahead of that, equity futures
ES00,
-0.06%

YM00,
-0.18%

are mostly lower, except for tech
NQ00,
+0.02%
,
thanks to Tesla, while bond yields
TMUBMUSD10Y,
3.856%

were mildly mixed. Oil prices
CL.1,
+1.12%

got a lift after Saudi Arabia and Russia said they would extend oil production cuts into August. Asia had a strong session, led by a 1.7% gain for the Hang Seng
HSI,
+2.06%
.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Tesla
TSLA,
+1.66%

delivered 466,140 vehicles in the second quarter, surpassing estimates as the EV maker boosted dividends and incentives. That should “beat the bears back into hibernation,” says Wedbush analyst Dan Ives. Indeed, the stock is up over 6% in premarket trading.

Upbeat delivery data has also lifted shares of XPeng
XPEV,
+13.44%

and Nio
NIO,
+3.19%
,
by 10% and 6%, respectively.

Shares of Fidelity National Information Services
FIS,
+3.36%

also surged 6% after a report late last week cited private-equity interest in buying a possible majority stake in the company’s Worldpay business. 

Apple
AAPL,
+2.31%

has reportedly slashed its production targets for its pricey Vision Pro headset, as components makers are struggling with its complicated design. The report comes as Apple closed above a $3 trillion valuation on Friday.

A holiday shortened week will finish with the June jobs report on Friday. The week begins with the S&P U.S. manufacturing purchasing managers index at 9:45 a.m., followed by the Institute for Supply Management’s manufacturing index at 10 a.m. and construction spending on Monday. Other highlights include minutes of the Fed’s June meeting on Wednesday and the ISM services index on Thursday.

A private gauge for China’s factory activity showed slightly lower activity in June.

It was a lukewarm weekending opening for Walt Disney
DIS,
+0.37%

and Lucasfilm’s “Indiana Jones and the Dial of Destiny.”

The grandmother of a slain French teen has pleaded for calm after a fifth night of riots in France. The government says social media has fueled the unrest.

Best of the web

These are your options if you can’t pay back your student loans when payments start up again.

Leveraged-loan logjam eases after banks unload tens of billions of debt.

Carmakers are getting into the mining business.

The chart

Here’s a chart from head of @topdowncharts, Callum Thomas, looking at some residential property values that are starting to roll over a bit:


@callum_thomas

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker

Security name

TSLA,
+1.66%
Tesla

NIO,
+3.19%
Nio

AAPL,
+2.31%
Apple

NVDA,
+3.63%
Nvidia

GME,
-2.61%
GameStop

MULN,
-7.16%
Mullen Automotive

AMC,
-0.45%
AMC Entertainment

AMZN,
+1.92%
Amazon.com

PLTR,
+0.86%
Palantir Technologies

TOP,
+20.38%
TOP Financial Group

Random reads

It’s no joke. Elon Musk and Mark Zuckerberg may really get in a cage and fight.

Fed up with the U.K., the Orkey Islands want to be part of Norway.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.

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Here’s what Wall Street’s most bullish analyst heading into the year thinks of the stock market now

It’s back to business on Monday, but there’s a bit of nervousness after the near coup/rebellion/cage fight in one of the world’s biggest nuclear powers over the weekend.

Questions remain over a possible power struggle in Russia, as it continues to wage war on Ukraine. But barring bigger developments, investors are returning their focus on whether aggressive central banks will spark a recession and market fallout.

Read: What’s next for markets after aborted Wagner mutiny leaves Russia’s Putin weakened

Wall Street has been growing more bullish after entering 2023 in a fearful state, following the S&P 500’s
SPX,
-0.77%

worst year since 2008. One analyst who led bullish views headed into 2023 was Deutsche Bank’s chief U.S. equity and global strategist, Binky Chadha, who sees a 4,500 finish, and others have been playing catch up to him.

In our call of the day, Chadha spoke to MarketWatch about why he’s not budging from that bullish call and what, if anything, could derail his optimistic view.

He said the year has been playing out as the bank had forecasted — strong rallies led by a squeeze on markets due to underweight positioning, with tech in the driver’s seat — the Nasdaq
COMP,
-1.01%

is up 16% so far this year. The path higher will be more of a grind as some of that positioning has caught up, he says.

Investors underweight in equities from late last year have largely caught up with their exposure, while others stay wary, says Deutsche Bank’s Binky Chadha.


Deutsche Bank

Read: Why the ‘easy money’ has been made in the stock-market rally — and what comes next

Chadha said he’d rethink his more bullish outlook on “signs of corporate risk aversion. Companies pulling back and going back into the bunker.” That is corporates becoming risk averse, cutting working capital, hoarding cash, and paring capital expenditure, he said. For now, he doesn’t see that.

The strategist also weighed in on narrow market leadership, where S&P 500 gains are led by just a handful of names. “Keep in mind that the selloff of last year was also narrow,” he said, when energy stocks soared on higher prices.

But this year the reversal has seen techs rally and now he sees indeed the gains spreading to more names. He said the bank recently removed its overweight on mega-tech stocks because earnings are rebounding, but markets have priced in a lot more than they expect.

As for where to put money now? “I wouldn’t be long financials here. The events of March have painted financials with a very broad brush. Most of the large -cap financials are really beneficiaries of what happened in March, but the market has put a risk premium on them,” said Chadha

As for cyclical consumer stocks, the risk/reward is asymmetrical because so much is priced in for the downside. “Everybody in the market has been waiting so long for the recession and some things are priced for even more than an average recession,” he said.

“And so I think you want to be long the cyclical parts of the consumer, and I think you want to be underweight defensives, because rates stay here and that’s where everybody has been hiding,” he said.

And what would make Chadha lift that 4,500 S&P 500 target? “Better prospects for the economy, better prospects for gorwth. In the event of a soft landing, and to be clear that is not our house view, but that would not be a terrible thing.” And that would eventually lead to upside for markets, he said.

The markets

Stock futures
ES00,

YM00,
+0.01%

are marginally lower, with Treasury yields
TMUBMUSD10Y,
3.691%

and oil prices
CL.1,
+0.48%

dipping, and silver
SI00,
+1.97%

making some strides. Lots of weakness across Asia, led by the Shanghai Composite
SHCOMP,
-1.48%
,
while Europe stocks
SXXP,
-0.07%

are lower after a newsy Russia weekend, and natural gas futures
NG00,
+1.17%

are higher both in the U.S. and Europe. The ruble
USDRUB,
+0.91%

is down 1.7% against the dollar
DXY,
-0.27%
,
which is a little softer overall.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Goldman Sachs became the third Wall Street bank in a week to downgrade Tesla shares
TSLA,
-3.03%

to neutral, saying the stock has had a strong runup and competition grows for the EV maker. The stock is down 2% in premarket.

PacWest shares
PACW,
+0.56%

are up 8% after the regional bank said it sold its loan portfolio to Ares Management
ARES,
-2.37%

in deal that will generates $2 billion ‘to improve liquidity.’

Lucid
LCID,
-4.54%

stock is up 7% after the EV and battery pack maker agreed a deal to provide Aston Martin with powertrain and battery system technology for luxury EVs.

IBM
IBM,
-1.33%

has confirmed a $4.6 billion all-cash deal for privately held software group Appio. IBM shares are down slightly.

The Fed’s preferred inflation gauge — the personal consumption expenditures price index — is a big economic highlight, due Friday. Durable goods and some housing market data is coming Tuesday, with appearances by Fed Chairman Jerome Powell on Wednesday and Thursday.

German business sentiment fell in June Fell in June as the country’s manufacturing outlook worsened.

Russia’s defense minister Sergei Shoigu was spotted visiting troops in Ukraine on Monday — his first public appearance since the weekend rebellion pushing for his ouster. Not heard from — President Vladimir Putin or Belarus-bound Wagner chief Yevgeny Prigozhin.

Best of the web

We asked a language model to write career advice based on caterer-turned-coup leader Yevgeny Prigozhin. Here’s what it generated.

Second-quarter corporate profits are set for their biggest drop since the start of the pandemic. But then the worst could be over.

Here’s to not traveling, which turns us into the worst version of ourselves as it convinces us we’re at our best.

Octupus farming — a symbol of what humans should not be doing

The chart

“If this is still a bear market rally it will end up being the longest bear market rally in history (which probably means it isn’t a bear market rally!),” says the Weekly S&P 500 Chartstorm blog by Callum Thomas, head of research and founder @topdowncharts, referring to the below chart:


@joosteninvestor

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker

Security name

TSLA,
-3.03%
Tesla

GME,
-2.55%
GameStop

AMC,
-3.84%
AMC Entertainment

NVDA,
-1.90%
Nvidia

LCID,
-4.54%
Lucid

NIO,
-5.49%
Nio

AAPL,
-0.17%
Apple

SPCE,
-18.42%
Virgin Galactic

MULN,
-4.83%
Mullen Automotive

AMZN,
-0.63%
Amazon.com

Random reads

Man bought lifetime United Airlines pass three decades ago, has “lived like a sultan” ever since.

Kylie Minogue’s “Padam Padam’ single is fast-tracking its way to gay classic status.

Naples tells billionaires to park their superyachts somewhere else.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.



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