Reformed Millennials - Learn Earn and Invest Reformed Millennials

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* NBA and NHL finals are upon us… who cares?
* The business of Top Golf
* How to make money drafting the momentum of sector shifts
* Market update
* Canadian housing and the Alberta election
* Recommendations and Predictions
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📈📊Market Update💵📉
The Transcript twitter thread explains what happened in markets last week or check out their audio episode here:
The Nasdaq is at 13 month highs but the financial headlines continue to be gloomy.
Everyone this year has been talking about bonds, inflation and real estate crisis. Now the debt ceiling is getting its day in the sun and I recommend listeners and readers go and check out our recommended reads this week. Matt Levine kills it with his most recent post.
To distill where we currently are in the market, I want people to check out the rotation report here as I felt they did a really good job discussing this market and what the participants are pricing in.
💸Reformed Millennials - Post of The Week
Best blog post we read this week: from Morgan Housel - Vicious Traps
There are times in nature when two plus two equals ten – when two little things combine to form one huge thing.
A little cool air from the north is no big deal. A little warm breeze from the south is pleasant. But when they mix together over Missouri you get a tornado.
Two calm water currents are not a problem. But if opposing currents meet, you get a deadly whirlpool.
Bleach and ammonia are common household products. Mix them together and you get lethal chloramine gas.
In each case it’s easy to underestimate risk – or at least be surprised at what happens – because the initial ingredients seem harmless. The idea that two innocent small things can combine to form one big dangerous thing isn’t intuitive.
This same thing happens with personality traits.
…
The right balance is knowing what you’re good at and not being afraid to say it while being just as eager to share what you’re not great at.
🎙Podcast & YouTube Recommendations🎙
Our favourite video and audio content from the week:
Lunch with Sam Zell: Founders Podcast
Deepdive on Restoration Hardware: Business Breakdowns
Peter Zeihan on Deodorization: Three things to look for
* Size and huge volume requirements (Eur, Yen, Chinese Yuan, USD)
* Availability of currency
* Freely traded currency
Peter Attia appeared on the Chris Williamson Show:
* Hazard ratio’s, the importance of exercise > diet and more
🔮Best Links of The Week🔮
* Ughhh more about the debt ceiling - Source: Matt Levine
* RBCs 5 things showing the NA Labor markets are cracking - Source: RBC Special Report
* Bob Elliot explains the case for Gold In portfolios - Source: Unlimited Funds
* "The price of copper has widened to the biggest discount against its futures equivalent in almost two decades, in a warning sign of a sudden weakening in global demand as China’s economic rebound stalls. Copper for settlement in two days was $66 cheaper on Monday than buying a contract to deliver the metal in three months’ time, a difference that traders said reflected concerns that China’s industrial rebound was not materializing. The gap between the two prices is the largest since 2006, according to the London Metal Exchange." - Source: FT
* "Elon Musk said he sees the need for an artificial-intelligence business to rival Google and Microsoft that could involve different parts of his corporate empire, including Twitter, which he predicted could halt its losses as soon as next month." - Source: WSJ
👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
Disclaimer:
Investing in equities, fixed-income instruments and/or alternative asset classes involves substantial risk of loss. Any action you may take as a result of the information presented on this website, blog or in any Reformed Millennials Podcast (a

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* Gary Bettman’s legacy
* Market Update
* Hard vs. Soft Landing
* Google IO - Bard vs. Open Ai
* Alberta Election is in 14 DAYS
* Recommendations and Predictions
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📈📊Market Update💵📉
The Transcript does a fantastic job on twitter summarizing last weeks most important market topics: see the link here to their running thread.
What a year it’s been.
Markets are up, but the participation has been super thin, especially in the US.
The rest of the world east of North America, while tangled in war, are all knocking on all time highs. JC at All Star Chats sets the table well in his newsletter here: Quotes blocks are his.
S&P can’t make up it’s mind:
BUT everything else is doing fine: Check the Nasdaq
When you look elsewhere, you continue to see strength in places that you would not expect to see it if, in fact, stocks all over were about to collapse.
Highest weekly close for the Nasdaq100 since August.
The Japanese market is banging on the door of 52 week highs:
All of this is to say that while North American markets feel expensive and challenged. There are pockets of the global market that continue to show signs of promise.
Heading into the week ahead, market participants will continue to be pricing in the likelihood of recession.
I highly recommend checking out the Datatrek daily market update if you want to keep your finger on the pulse of markets and interest rates.
💸Reformed Millennials - Post of The Week
As a kid I spent a lot of time alone. Golfing. Reading. Watching sandlot…
Now that I’m 33 with a family, a phone addiction and a reasonably strong network… I find it hard to get to know myself to the same degree I did as a kid.
A quote from the article:
“If you want to live a happy and fulfilling life, it’s important to take the time to get to know yourself.
That means spending time alone, reflecting on your thoughts and feelings, and exploring your interests. It also means being honest with yourself about your strengths and weaknesses.
Once you know yourself, you can start making choices that align with your values and goals. You can also build stronger relationships and set boundaries that protect your time and energy.”
🎙Podcast & YouTube Recommendations🎙
* Stan Druckenmiller appeared at Sohn and it is well worth the watch: Some of the things he talks about - Biotech, copper, silver, gold and the opportunity in AI.
* Google IO: “Seven years into our journey as an AI-first company, we’re at an exciting inflection point. We have an opportunity to make AI even more helpful for people, for businesses, for communities, for everyone. We’ve been applying AI to make our products radically more helpful for a while. With generative AI, we’re taking the next step. With a bold and responsible approach, we are re-imagining all of our core products, including search.”
🔮Best Links of The Week🔮
* Google IO and state of play in AI Source: Ben Thompson
* Blumhouse: The Hollywood Horror Hit Machine - How Jason Blum turned "constraints breed creativity" into a business model. Source: Trungphan
* All the tools and information you’ll need to track the Alberta Election - Source: Pocket Lobbyist
* "Howard Marks, the co-founder of $172bn investment group Oaktree Capital Management, has warned that the boom in private credit will soon be tested as higher interest rates and slower economic growth heap pressure on corporate America. The 77-year-old billionaire told the Financial Times that big asset managers had competed aggressively to lend to the largest private equity groups as money poured into their coffers in 2020 and 2021, raising questions over the due diligence the funds conducted when they agreed to provide multibillion-dollar loans." Source: FT
* "Smartphone applications developed by Chinese companies are spreading around the world, despite the growing trend of governments viewing them as poss

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* Business of winning a Championship
* Market update
* Federal reserve monetary policy
* Apple earnings
* Berkshire meeting
* Recommendations and Predictions
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📈📊Market Update💵📉
The big news from last week was Jerome Powell’s decision to raise the Fed Funds rate another 0.25%. This signaled what my people believe to be the last rate hike in a 14 month onslaught that saw the Fed raise rates 5%.
US stocks have weathered the most aggressive monetary policy tightening cycle since the late 1970s/early 1980s astoundingly well. There’s been a lot of volatility on the way, of course, but this is simply remarkable.
US large cap stocks are exiting the recent monetary policy cycle largely untouched from where the Fed first started “going big” – can be read in one of two ways. Either it says the road ahead is clearer than the bears think, or it says the impact of the last 9 Fed meetings has yet to be felt.
Chair Powell is hoping the former is true, but markets strongly believe the latter is correct.
Data Trek had a fantastic recap on what they thought was the most important pieces from Powells press release and commentary/Q&A.
Powell on Regional Banks:
Powell expressed guarded optimism that the rolling crisis in US regional banks is contained. In his prepared remarks he said conditions in the banking system have improved since March, when Silicon Valley Bank failed. During the Q&A session, he said regional banks are now improving their liquidity positions. In response to another question about the topic later in the press conference, he said the sale of First Republic “drew a line” under the current problems. He seems to view the issue as a macro problem.
Even with these reassuring words, the S&P Regional Bank Index (ETF symbol KRE) made a new 1-year low today. This is hardly a vote of confidence in Powell’s view, which seems to overlook the plodding but clearly apparent momentum of the problem.
Second, the Chair actually said, “This time could be different”, those famously dangerous words, about the risk of an upcoming recession. In his mental model, the US economy and particularly the country’s labor market both remain strong. To a degree, he has a point. The Fed has raised rates by 5.0 percentage points in a little over a year, and yet unemployment remains low and demand for labor is still high.
Some markets agree with Powell, and other do not. One could argue that an S&P 500 trading for 19-20x forward earnings is sympathetic to the Chair’s sunny forecast. But Treasuries and Fed Funds Futures both expect the FOMC to cut rates later this year, presumably because a recession has begun. And it’s not just fixed income markets saying that US rates are heading lower. The euro made a new 1-year high versus the dollar today.
Datatreks Favorite Sound Bites from Powell:
* Powell reaffirmed that the Fed continues to hold to a 2 percent inflation target. There has been a lot of speculation that the FOMC will change to a 3 percent target rather than drive the US economy into a deep recession.
* Corporate profit margins should continue to decline as supply and demand continue to come back into balance. This idea stands in stark contrast to Wall Street analysts’ earnings estimates, which continue to predict all-time high record S&P 500 profits by year end even as US economic growth continues to run below trend.
* US inflation has been stickier and more volatile than the Fed expected. We will dig into this issue in Data.
* Powell expressed the view that 3 percent wage inflation lines up with 2 percent price inflation. Last month’s Jobs Report showed average hourly wage growth of 4.2 percent, down from 5.9 pct a year ago. We clearly have a way to go on this front.
In closing, consider the following: cont. from datatrek
* On May 4th, 2022 the Fed raised rates by 50 basis points as it started to get more serious about taming inflatio

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* Big Sports Weekend
* Market Update
* Big Tech Earnings (Meta, Amazon, Microsoft, Google)
* The Canadian Housing Crisis
* Recommendations and Predictions
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📈📊Market Update💵📉
BUY WHAT YOU KNOW!
Recap of Big Tech Earnings This Week:
What a crazy week for earnings.
The consumer remains resilient but credit card data is showing a slowdown in consumption for the American consumer. This is echoed by Amazon's 0% sales growth YoY and this excerpt from the Capital One confrence call:
Meta’s family of apps continues to show signs of strength in the face of ATT, ticktock, and a slowing consumer/ad spend.
Highly recommend reading Eric Seufert’s twitter thread on revenue and ATT here.
With that said, the return of big tech dominance is mind-numbing. Consider the below:
* Apple and Microsoft have accounted for nearly 50% of the S&P500 move YTD.
* Add the rest of FAANG and it has accounted for a whopping 94% of the S&P500 return YTD.
* With Amazon having reported yesterday after the close with beats, FAANG outperformance could account for the entire S&P500 gain when the US opens today.
* Microsoft accounted for 140% of the NDX move on Thursday. The equal-weighted Nasdaq was actually down.
The question around markets has become - “Is this a flight to safety in America just for big tech? Or is there a flight out of US equities ex-big tech into Europe and emerging markets?
Or both?
Chart below is from: Jim Bianco
And the story about the chart from Jim’s Tweet thread:
The contribution to the year-to-date return of the S&P 500.
* Through yesterday (April 26), the year-to-date return S&P 500 (black line) was 5.13%
* The top eight FAANG+ M N T (names on the chart) contributed 5.57% to the overall 5.13% of the S&P 500
* The "other 492" contributed a -0.44% return to the S&P 500; the "other 492" has collectively dragged the S&P 500 lower. So, what is the message from the stock market?
* The economy is good as the stock market is up more than 5% after four months.
* The economy is suspect as collectively, "other 492" stocks are dragging the S&P 500 lower again this year like last year.
💸Reformed Millennials - Post of The Week
The main conversation I’m having with clients right now is whether or not housing prices have bottomed…
Obviously this is impossible to know. But I do think putting into perspective the rise in the price of a home and the subsequent rise in the cost of financing helps people think about what could happen to rents and the price of housing.
My thoughts regarding the Discipline funds chart above: if rates stay higher for much longer then...that puts downward pressure on the economy AND house prices.
Further, disposable income hasn't nearly kept pace with rent increases so landlords don't even have the pricing power to push rents up at the current rate of change.
This doesn't mean house prices have to crash. I don't think they will. But I do think the much more probable outcome here is a multi-year muddle through where house prices continue to fall modestly and rents grow modestly as the two converge in the coming years.
Wild card continues to be supply… prices bouncing hard up here recently on terrible supply.
And is why I don't think prices will crash. But supply shortage is also running into a demand shortage which is only going to get worse as lending standards continue to tighten.
Canadian Tweet of The Week🇨🇦
https://twitter.com/ronmortgageguy/status/1653022875710902275?s=20
🎙Podcast & YouTube Recommendations🎙
* Elon’s full interview with Bill where he talks about Twitter, AI, Water and Electric Vehicles.
* “When copies are free, you need to sell things that cannot be copied. Well, what can’t be copied? Trust, for instance.” ~@kevin2kelly
🔮Best Links of The Week🔮
* Books might be a colossal waste of productivity because we absorb very little of what we read. Is it time to d

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* Market update
* Space X Launch
* Netflix earnings
* HBO Max Makes a Branding Mistake
* AI Breakthroughs Of The Week
* Recommendations and Predictions
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📈📊Market Update💵📉
If you missed Friday's market action, here is a useful summary by CNBC.
US equities ended little changed on Friday after a raft of corporate earnings results. Large caps and small caps closed slightly higher: S&P 500 (+0.09%) vs. Russell 2000 (+0.10%).
Consumer discretionary (+1.20%) and consumer staples (+0.75%) bested the broader market indices, while materials (-0.91%) and energy (-0.59%) lagged. Procter & Gamble (+3.46%) and Disney (+1.53%) led the Dow (+0.07%) higher; Intel (-1.81%) and Dow Inc (-1.49%) were the index's worst performers.
The Nasdaq gained 0.11%, while tech lost 0.32%. The "FAAMG" stocks mostly fell: Meta (-0.08%), Amazon (+3.03%), Apple (-0.98%), Microsoft (-0.12%), Alphabet (+0.01%).
The VIX slipped 2.33% to 16.77. The 30-year and 10-year Treasury yields increased to 3.771% and 3.568% respectively, while the 2-year yield rose to 4.179%.
Most of US Big Tech reports calendar Q1 earnings this week (GOOG, MSFT, META, AMZN), with Apple scheduled to release next week.
With these stocks all outperforming the S&P 500 by a wide margin YTD, the expectations bar is set quite high for their earnings. Not only must these companies beat, but they must also guide to a re-acceleration of EPS growth in Q2 2023 and beyond. That’s what the Street is looking for and is the key catalyst behind this group’s remarkable resurgence in 2023.
Big Tech Earnings Expectations from Data Trek: everything below
Most of US Big Tech reports earnings this week, so for Disruption today we have a summary of what the Street is expecting from each name. We will also discuss Apple’s expected results, due out on May 4th. The discussion format for each company is the same:
* Year to date price returns (every one of these names has beaten the S&P 500 by a wide margin thus far in 2023).
* Calendar Q1 expected EPS and revenue growth.
* The company’s recent track record for beating/missing analysts’ EPS estimates.
* Current revenue and EPS growth expectations for Q2 2023.
Alphabet/Google, +19.5 percent YTD (reports Tuesday):
* Expected EPS: $1.07/share, down 13.0 percent from last year.
* Expected Revenues: $68.9 billion, up 1.3 percent from last year.
* Alphabet has missed earnings expectations in every quarter over the last year.
* Analysts expect GOOG to return to earnings growth in Q2 (up 5.0 percent year over year) on modestly accelerating revenue growth (+3.7 percent) versus Q1.
Comment: GOOG is the only name on today’s list that has missed estimates in every one of the last 4 quarters, so one would think numbers are finally set low enough that the company might actually beat. It needs to … The Street is looking for a resumption of year over year EPS growth in Q2 (the current quarter). Away from the nitty gritty of quarterly numbers, analysts and investors will likely want to know how Generative AI products might affect the company’s current dominance in search.
Microsoft, +19.2 percent YTD (also reports Tuesday):
* Expected EPS: $2.23/share, essentially unchanged from last year’s $2.22/share.
* Expected Revenues: $51.0 billion, up 3.4 percent from last year.
* Microsoft has beaten earnings expectations in 3 of the last 4 quarters, but only by 1-2 percent. Its one miss (calendar Q2 2022) was also small (3 percent).
* Analysts expect MSFT’s year over year earnings growth to reaccelerate in calendar Q2, to 10.3 percent.
Comment: The Street expects MSFT to go from zero year over year EPS growth in Q1 to 10 percent in Q2, the largest sequential increase among the names we are reviewing. It’s probably too early for its integration of ChatGPT to have a meaningful economic impact, so investors will want to understand the bridge between a flat calendar Q1 to a double-di

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* Market update
* WWE Merges with UFC
* Canada and its growth problem
* Important Items from the 2023 Canadian Budget
* Rogers > Shaw Merger
* 2023 Masters predictions
* Recommendations and Predictions
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📈📊Market Update💵📉
The market is feeling really tricky right now.
* Futures are pointing to a Fed pause and potentially outright cut while inflation implodes on a YoY basis.
* US and Canadian consumer has rolled over since the SVB/Credit Suisse saga per cc data. First real deceleration since Covid. And commodities breaking out might ruin all of the positives in point 1 above.
Tech companies sounded good at Microsoft Secure, but this was before SVB + CS collapse and it’s been a different consuming world since then.
Even though technology companies have all found religion on cost-cutting, margins and Stock Based Compensation, it wont likely be enough to crush the fears present in the market.
All of these dynamics are complicated by the fact that Large Language Models are the most important technology development since the iPhone at a minimum and are going to have a massive impact on the world.
To quote FireFox, they are going to “change the structure of our world.”

LLMs reshuffle the board for megacap tech as they are both an existential threat and opportunity for each company. Everyone was in their own swim lane for the last 10 years - and now there seems to be only one.
Execution will be everything.
Datatrek Has a Great recap of Q1 in their Sunday update: I’ve cleaned up and summarized it for easier digestion.
Q1 performance review for various equity indices as well as major currencies / commodities. The data is price return-only and equity index returns are based on the relevant MSCI index unless otherwise noted.
#1: Comparing US and non-US equity returns for Q1 2023:
* S&P 500: +5.5 percent
* S&P 500 (equal weight): +2.4 pct
* NASDAQ Composite: +16.8 pct
* Russell 2000: +2.3 pct
* S&P Mid Cap 400: +3.5 pct
* S&P Small Cap 600: +2.2 pct
* All-Country ex-US: +7.2 percent
* Europe: +10.3 pct
* Japan: +7.8 pct
* Emerging Markets: +4.1 pct
Comment: Non-US stocks broadly beat US equities in Q1, although their results are somewhat spotty. Europe and Japan were clear out-performers, even with currency appreciation. The NASDAQ Comp did better than every other index on the list, and by a wide margin. US Tech stock outperformance was Q1’s key global equity investment theme.
#2: Non – US single country equity indices:
* United Kingdom: +5.2 percent
* France: +14.1 pct
* Switzerland: +8.1 pct
* Germany: +15.1 pct
* Netherlands: +13.1 pct
* China: +5.0 percent
* Taiwan: +12.9 pct
* India: -5.7 pct
* South Korea: +8.4 pct
* Brazil: -2.1 pct
Comment: France, Germany and Taiwan were the standout performers in Q1, but for very stock-specific reasons. French equities got an outsized boost from LVMH, up 24.2 percent YTD on China’s reopening, worth almost a quarter (3.2 points) of their total Q1 performance. German equities saw a similar sized bump from SAP (+21.3 pct YTD) and Infineon (+31.1 pct YTD), which added 2.3 and 1.3 points to MSCI Germany’s Q1 performance. Taiwan Semi was up 24.9 percent in dollar terms in Q1, adding 5.6 points to MSCI Taiwan (43 pct of total YTD returns).
#3: US Large Cap sector returns (ranked high to low):
* Technology: +21.4 percent
* Communication Services: +20.8 pct
* Consumer Discretionary: +15.8 pct
* Materials: +3.8 pct
* Industrials: +3.0 pct
* Real Estate: +1.2 pct
* Consumer Staples: +0.2 pct
* Utilities: -4.0 pct
* Health Care: -4.7 pct
* Energy: -5.3 pct
* Financials: -6.0 pct
Comment: All the S&P 500’s positive 5.5 percent YTD return – and then some – comes from 3 sectors, and specifically 7 names, in that trio:
In Technology:
* Apple (+26.9 percent YTD): 1.8 points of total S&P YTD returns
* Microsoft (+20.2 pct): 1.2 points
* Nvidia (+90.1 pct): 1.4 points
In Communication Services:
* Al