Eksentricity

Tech

AI Advancements

• Global AI Investments Surge: Investments in AI continue to rise globally, with countries like Saudi Arabia and the U.S. leading the way. In 2022, global AI investment reached $93.5 billion, a 42% increase from the previous year.
• Saudi Arabia’s AI Initiatives: The Saudi Data and AI Authority (SDAIA) is driving AI development in the country, hosting the Global AI Summit (GAIN) and promoting ethical AI frameworks aligned with Islamic values.
• U.S. Chips Act and AI Hardware: The U.S. Chips and Science Act, funding semiconductor production, is expected to bolster AI hardware development and potentially strengthen the country’s position in the global AI race.
• Ethical AI and Governance: Organizations like SDAIA and UNESCO are promoting ethical AI frameworks, emphasizing the need for responsible development and deployment of AI technologies.

Cryptocurrency Market

• Bitcoin and Ethereum Price Gains: Anticipation of a potential Fed rate cut has boosted the cryptocurrency market, leading to significant price gains for Bitcoin and Ethereum. Bitcoin has surged over 20% in the past month.
• Institutional Investment in Bitcoin: Institutional investors continue to show interest in Bitcoin, with companies like MicroStrategy making large investments and the growing number of Bitcoin Spot ETFs indicating growing acceptance.
• Regulatory Scrutiny on Cryptocurrencies: The SEC’s scrutiny of crypto firms and concerns about Tether’s transparency reflect the ongoing regulatory challenges facing the cryptocurrency industry.
• Telegram Game Tokens on TON: The Open Network (TON) is anticipating the launch of multiple Telegram game tokens, potentially generating significant interest within the crypto space.

Tech Company Performance

• Palantir’s Profitability and Growth: Palantir Technologies is experiencing strong revenue growth and profitability, fueled by its AI-powered platform and expanding commercial segment. The company’s stock price has risen significantly in recent months.
• SoundHound AI’s Voice Recognition Focus: SoundHound AI is a leading player in the voice recognition market, offering solutions for various industries, including automotive and restaurants. However, the company faces stiff competition from tech giants like Google and Amazon.
• Intel’s Semiconductor Manufacturing Partnerships: Intel has secured significant contracts to manufacture semiconductors for military applications, demonstrating its strong position in the defense sector. The company is also expanding its manufacturing facilities in the U.S. and Europe.
• OnlyFans’ High Revenue Per Employee: OnlyFans, a content subscription platform, boasts a significantly higher revenue per employee compared to tech giants like Apple and Microsoft, showcasing its efficient business model.

Electric Vehicle Market

• Tesla’s China Sales Rebound: Tesla’s China sales have rebounded, driven by increased production and demand in the region. The company is aiming to expand its manufacturing and sales network in China to meet growing consumer demand.
• Lucid’s Midrange EV Strategy: Lucid is targeting a more affordable market with a new mid-sized EV priced under $50K, aiming to compete directly with Tesla’s Model Y.
• Ford’s EV Production in India: Ford plans to resume EV production in India, focusing on exports to other markets. The company is aiming to capitalize on the growing EV market in India.
• Canoo’s Challenges and Guidance Withdrawal: Canoo, an EV startup, has withdrawn its revenue guidance due to weak performance, highlighting the ongoing challenges faced by many EV startups in a competitive market.

Finance

Index Adjustments

• KBW Nasdaq Financial Technology Index Changes: The KBW Nasdaq Financial Technology Index (KFTX) will replace Envestnet, Inc. (ENV) with Appfolio, Inc. (APPF). This adjustment reflects the increasing significance of technology within the financial services sector.
• KBW Nasdaq Financial Sector Dividend Yield Index Changes: The KBW Nasdaq Financial Sector Dividend Yield Index (KDX) will remove B Riley Financial Inc. (RILY). This indicates investors are seeking companies with higher dividend yields.
• KBW Nasdaq Premium Yield Equity REIT Index Changes: The KBW Nasdaq Premium Yield Equity REIT Index (KYX) will exclude Uniti Group Inc. (UNIT). This change reflects the current real estate market and investor preference for higher yields.

Class Action Lawsuits

• US: Lawsuits Against Companies: Several US companies are facing class action lawsuits from investors alleging misrepresentation of financial performance. Methode Electronics, Inc. (MEI), Coinbase Global, Inc. (COIN), and Nano Nuclear Energy Inc. (NNE) are accused of misleading investors about their financial performance, regulatory compliance, and product development progress.

Investment Recommendations

• High-Yield Stocks: Investors are advised to consider high-yield stocks such as Enterprise Products Partners, Brookfield Renewable Partners, and Portland General Electric. These companies offer above-average dividend yields and have consistently grown their dividends.
• Social Security COLA: The anticipated 2.5% Social Security COLA in 2025 might not fully offset inflation, but it signals a potential slowdown in inflation.
• Berkshire Hathaway (BRK.A, BRK.B): Despite its stock trading at a premium to historical price-to-book ratios, Berkshire Hathaway remains a suitable long-term investment. The company has a track record of generating returns above 10% and is expected to maintain this performance.
• Vanguard Growth ETF (VUG): The Vanguard Growth ETF is recommended for new investors due to its focus on growth stocks, which historically have driven market performance.
• Dividend ETFs: Investors seeking passive income should consider dividend ETFs such as the Schwab U.S. Dividend Equity ETF (SCHD) and the SPDR Portfolio S&P 500 High Dividend ETF (SPYD).
• Bank of America (BAC): While Warren Buffett has reduced Berkshire’s stake in Bank of America, it remains a significant holding. Bank of America is recommended for investors seeking a strong dividend-paying stock with a history of growth.

Financial News

• Gran Tierra Energy (GTE): Offering of Notes: Gran Tierra Energy is using the proceeds from its $150 million note offering to fund the acquisition of i3 Energy plc and for general corporate purposes.
• Eco Oro Minerals (EOM): CEO Resignation: Paul Robertson has stepped down as CEO of Eco Oro Minerals. Eric Tsung, the current CFO, will assume the CEO role.
• India: RBI Governor’s Warning: The Reserve Bank of India Governor has cautioned that inflation has not yet reached the target level of 4% and that global banks with substantial commercial real estate exposure might be vulnerable to short sellers.
• Aviat Networks (AVNW): Delayed Annual Report: Aviat Networks has announced a delay in filing its annual report due to the need for more time to finalize its assessment of internal control over financial reporting and complete closing processes.
• Flux Power Holdings (FLUX): Financial Statement Restatement: Flux Power Holdings is restating its financial statements due to errors in inventory accounting.
• PayPal (PYPL): Signs of Improvement: PayPal has experienced healthy growth with 9% year-over-year revenue growth and an 11% increase in total payment volume (TPV) in Q2. However, the company faces competition from younger, more agile players.
• International Money Express (IMXI): Potential Acquisition: Voss Capital has approached the company’s board and management regarding a possible sale of the company in a take-private transaction.
• Five Below (FIVE): Class Action Lawsuit: Investors are suing Five Below for allegedly misleading them about the company’s financial performance, specifically its sales and earnings outlook for 2024.
• Outset Medical (OM): Class Action Lawsuit: Investors are suing Outset Medical for allegedly misrepresenting its revenue growth and the regulatory status of its products.
• Endava plc (DAVA): Class Action Lawsuit: Investors are suing Endava for allegedly misleading them about its financial performance and client demand.
• Symbotic Inc. (SYM): Class Action Lawsuit: Investors are suing Symbotic for allegedly misleading them about its potential for margin growth and its ability to deploy its systems on time.
• Customers Bancorp, Inc. (CUBI): Investigation: Rosen Law Firm is investigating potential securities claims against Customers Bancorp, Inc., alleging the company may have provided false information to investors.
• Sage Therapeutics, Inc. (SAGE): Class Action Lawsuit: Investors are suing Sage Therapeutics for allegedly misleading them about the effectiveness of its drug zuranolone and the regulatory status of its other drugs.
• ZoomInfo Technologies, Inc. (ZI): Class Action Lawsuit: Investors are suing ZoomInfo Technologies for allegedly misleading them about its financial performance and customer retention tactics.

Healthcare

Cancer Immunotherapy Advancements

• Combination Therapies Show Promise in Head and Neck Cancer: IO Biotech’s lead investigational cancer vaccine, IO102-IO103, combined with Merck’s anti-PD-1 therapy KEYTRUDA® (pembrolizumab), showed a confirmed 44.4% overall response rate (ORR) in patients with squamous cell carcinoma of the head and neck (SCCHN). This combination therapy also achieved an encouraging 6.6-month median progression-free survival (PFS) and a 66.7% disease control rate (DCR).
• Targeting TIGIT:PD-1 Axis in Lung Cancer: iTeos Therapeutics presented interim data from its Phase 2 GALAXIES Lung-201 study, demonstrating that belrestotug, a TIGIT inhibitor, in combination with dostarlimab (anti-PD-1) resulted in a clinically meaningful ORR of roughly 60% in patients with PD-L1 high non-small cell lung cancer (NSCLC). This outcome suggests the TIGIT:PD-1 doublet could provide a differentiated approach in this challenging cancer setting.
• Re-sensitizing PD-1 Resistant Tumors in Melanoma: NuCana presented final data from its Phase 2 NuTide:701 study on NUC-7738 in combination with pembrolizumab for patients with metastatic melanoma refractory to prior PD-1 inhibitor therapy. The combination demonstrated a 75% disease control rate and a favorable safety profile, highlighting NUC-7738’s potential to re-sensitize PD-1 resistant tumors.

Novel Cancer Therapies

• Targeted Therapy for Non-Classical EGFR Mutations in NSCLC: Black Diamond Therapeutics presented real-world data on EGFR mutations in NSCLC, highlighting the unmet need for new treatments for patients with non-classical mutations. The company’s BDTX-1535, a fourth-generation EGFR TKI, is designed to address this broad spectrum of mutations, including PACC mutations, and is expected to show initial Phase 2 data in Q1 2025.
• Precision Medicine for Endometrial Cancer: Acrivon Therapeutics presented updated data from its Phase 2 trial of ACR-368, showing a confirmed ORR of 62.5% in endometrial cancer patients prospectively selected by the company’s AP3-based OncoSignature assay. This success underscores the platform’s ability to deliver actionable data across discovery and development.
• Targeting Fibroblast Activation Protein (FAP) in Solid Tumors: Avacta Group plc presented updated data from its Phase 1a trial of AVA6000, a peptide drug conjugate (PDC) of doxorubicin that targets FAP, a protein highly expressed in solid tumors. The data demonstrated that AVA6000 is well-tolerated and showed early signs of efficacy with ongoing, durable RECIST responses in patients with FAP high disease.

Emerging Therapeutic Modalities

• Targeting KRAS Mutations with TCR-T Therapy: Medigene AG presented data on its TCR library targeting KRAS mutations, showcasing its lead KRAS G12D candidate, enhanced by the costimulatory switch protein (CSP) PD1-41BB. This candidate demonstrated promising T cell functionality and a strong safety profile.
• Universal Tagging and Tracking System for TCRs: Medigene also introduced its UniTope & TraCR technology, a universal system for tagging and tracking recombinant TCRs (rTCRs) across multiple modalities. This technology aims to streamline quality control and provide precise data for determining the correct drug dosing for TCR-T therapies.

Economy & Real estate

Economy & Real Estate

US Economic Outlook

• Inflation Slowing Down: Inflation has begun to ease, with the all-items consumer price index (CPI) increasing by just 0.2% in August. This suggests that the annual inflation rate could reach 2.5%, bringing it closer to the Fed’s target of 2%.
• Potential for Rate Cut: The Federal Reserve is expected to decrease interest rates at its upcoming meeting, possibly by a larger-than-expected 50 basis points. This is due to concerns about a potential weakening of the labor market.
• Consumer Sentiment: Consumer confidence remains stable, with surveys indicating that inflation is seen as subdued, with expectations for 2.7% inflation over the next year.
• Labor Market Concerns: While the labor market has shown signs of weakness, with payroll numbers declining and unemployment rising, the Fed is aiming to prevent further cooling in labor market conditions.

Portugal Real Estate Boom

• Algarve Housing Market Surge: The Algarve region in Portugal is experiencing a housing market boom driven by increasing tourism, particularly from American visitors. Prices for prime properties have increased by over 30% in the past year.
• American Buyer Demand: The number of American tourists traveling to Portugal has nearly doubled since 2022, with many choosing the Algarve as their destination. This has fueled a significant increase in American buyers in the high-end residential market.
• Price Increases and Market Dynamics: High demand and limited supply have led to a surge in property prices, with average prices for prime properties reaching €3.5 million in 2023. This trend was initially driven by the “golden visa” program, which has now been discontinued for real estate purchases.
• Digital Nomad Program: Portugal’s digital nomad program is attracting more foreign buyers, allowing non-EU residents with sufficient income to work remotely from Portugal.

Social Security & Retirement

• 2025 COLA Announcement: The Social Security Administration will announce the 2025 cost-of-living adjustment (COLA) on October 10, 2024. Current estimates point to a COLA of 2.5%, which would translate to an average monthly benefit increase of $48.
• Historical COLA Trends: COLAs have been smaller in recent years, averaging 2.6% since 2014. Despite the intent to match inflation, the COLA has fallen short in eight of the last 15 years.
• Rising Costs for Seniors: Inflation disproportionately affects seniors due to rising costs for essential items like housing and food. The COLA may not fully compensate for these increases, potentially leaving some retirees worse off.
• Taxable Benefits: More Social Security benefits are becoming subject to income tax due to the lack of adjustment of income thresholds for inflation. This could reduce the actual benefit increase received by retirees.

Medicare Premium Increase

• Medicare Premium Increase: The Medicare Part B premium is anticipated to rise by $10.30 in 2025, reaching $185 per month. This increase will reduce a significant portion of the average monthly benefit increase from the COLA.
• Inflation Impact: Despite signs of moderating inflation, the cost of living for seniors is still rising faster than the COLA. This forces many retirees to tighten their budgets. There is hope for a return to low and stable inflation, which would improve the buying power of their Social Security checks.

Retail

U.S. Retail Sales Trends

• Celebrity-Backed Brands Gaining Momentum: Selena Gomez’s cosmetics company, Rare Beauty, is generating an estimated $350 million to $400 million in annual revenue, showcasing the increasing influence of celebrity-driven brands in the cosmetics industry. Warren Buffett’s Berkshire Hathaway has also invested $250 million in Ulta Beauty, a leading cosmetics retailer with over 1,300 stores. This move reflects Buffett’s confidence in the retail sector, particularly in companies with strong brand recognition and diverse customer bases.
• Ulta Beauty’s Valuation Potential: Ulta Beauty’s P/E ratio is significantly lower than its peers in the beauty industry, potentially indicating undervaluation. While same-store sales growth has slowed, the company’s robust cash flow and share buyback program suggest a positive outlook.

Starbucks’ Revitalization Efforts

• New CEO’s Four-Point Plan: Starbucks’ new CEO, Brian Niccol, has outlined a comprehensive strategy to revive the company, focusing on improving the customer experience, empowering employees, optimizing operations, and re-establishing its brand identity.
• Investment in Technology and Staffing: Niccol plans to invest in technology and supply chain improvements to enhance customer experiences, especially with mobile ordering. However, the company may need to hire more baristas to address staffing shortages and deliver personalized service.
• International Expansion Focus: After addressing the U.S. business, Niccol will focus on improving performance in international markets, prioritizing China as Starbucks’ second-largest market.

Chili’s Turnaround

• Strong Same-Store Sales Growth: Chili’s, owned by Brinker International, reported a 14.8% jump in same-store sales during the fiscal fourth quarter, demonstrating the success of its revitalization efforts.
• Effective Marketing Strategies Drive Sales: Chili’s has leveraged viral social media campaigns and value-oriented advertising to attract customers, driving sales growth throughout fiscal 2024.
• Improved Customer Experience and Value: The chain has focused on enhancing its physical locations, customer experience, and employee morale, contributing to the positive sales turnaround.

Commodities

Energy Financing

• Gran Tierra Energy Debt Offering: Gran Tierra Energy Inc., a Colombian and Ecuadorian oil and gas exploration and production company, announced a $150 million private placement of 9.500% Senior Secured Amortizing Notes due 2029. The proceeds will fund the acquisition of i3 Energy plc and for general corporate purposes. The company anticipates closing the offering on September 18, 2024, with net proceeds estimated at US$136.0 million after deducting fees and expenses.

Executive Changes

• Eco Oro Minerals CEO Resignation: Eco Oro Minerals Corp., a publicly-traded company pursuing arbitration against the Republic of Colombia, announced the resignation of Paul Robertson as CEO. Eric Tsung, the current Chief Financial Officer, will assume the role of CEO, also retaining his CFO position. Pierre Amariglio also resigned from the board of directors.

Cannabis Market Performance

• InterCure H1 2024 Results: InterCure Ltd., an Israeli medical cannabis company, reported revenues of 126 million NIS ($33.97 million) for H1 2024, exceeding estimates but below pre-October 2023 levels due to disruptions at its southern Israeli facility. InterCure achieved an EBITDA of 17.6 million NIS, including government compensation for conflict-related damages. The company expects its southern facility to return to full operational capacity in the coming quarters and forecasts double-digit sales growth in H2 2024 with projected revenues of 140 million NIS.

Cannabis Real Estate

• New Lake Capital Partners Performance: New Lake Capital Partners NLCP, a cannabis-focused real estate investment trust, reported a 10% year-over-year increase in rental income for H1 2024, reaching $12.2 million. Its Adjusted Funds from Operations (AFFO) rose by 17% year-over-year in Q2 2024. NLCP’s quarterly dividend of $0.43 per share provides an 8.7% yield, significantly higher than IIPR’s 5.9% yield. However, a tenant, Revolutionary Clinics, missed 50% of its June and July 2024 rent payments, raising concerns about potential concentration risks in NLCP’s portfolio.

Politics

US Presidential Election

• Harris vs. Trump: A Tight Race: Recent polls show Kamala Harris and Donald Trump neck-and-neck in the upcoming election. While Harris holds a slight lead in national polls, the race remains tight in key battleground states.
• Trump’s Electoral College Advantage: Despite Harris’ poll lead, analyst Nate Silver argues that Trump is still in a strong position due to his advantage in the Electoral College and the favorable economic climate.
• Investor Concerns Over Harris’ Policy Silence: Shark Tank investor Kevin O’Leary expresses concern over Harris’ lack of detailed policy proposals, which he believes makes it difficult for investors to make informed decisions.
• Trump Campaign Struggles: Silver highlights several missteps made by Trump’s campaign, such as the selection of Senator JD Vance and lack of preparation for the debate, suggesting that Trump may be losing momentum.

US Politics

• Pope Francis Calls for ‘Lesser Evil’ Vote: Pope Francis urges American Catholics to vote for the “lesser evil” in the upcoming election, expressing concern over the candidates’ stances on abortion and migration.
• Harris’ Pledge to Eliminate Degree Requirements: Kamala Harris has promised to remove college degree prerequisites for certain federal jobs, citing the need to acknowledge alternative routes to success.
• Trump’s Plan to Overhaul Federal Workforce: Donald Trump has vowed to restore the president’s authority to remove “rogue bureaucrats” and wield that power aggressively.

Indian Politics

• Sebi Chief Denies Conflict of Interest: Madhabi Puri Buch, the head of India’s market regulator, has denied all allegations of conflict of interest raised by Hindenburg Research and opposition political parties.
• Buch Accused of Favoring Specific Companies: The opposition Congress party has alleged that Buch has benefited specific companies, including ICICI Bank, through her association with her husband.

US Marijuana Policy

• Federal Raid on Texas Marijuana Dispensary: Federal marshals raided a legal medical marijuana dispensary in Denton, Texas, seizing $10,000 in products, despite the shop’s compliance with state regulations.
• Texas Attorney General Targets Marijuana Decriminalization: Ken Paxton has filed lawsuits against five Texas towns seeking to decriminalize marijuana, arguing that their initiatives violate state law.

Stock Picks

Technology

Earnings Season Review

• Strong Earnings Across the Sector: The majority of technology companies in the portfolio reported strong earnings, exceeding analyst expectations. The sector benefitted from strong demand for AI-related products and services, as well as resilient consumer spending. Companies like AMD, Nvidia, and DuPont saw significant growth due to AI advancements.
• AI-Driven Growth: AI-related products and services continue to be a major driver of growth in the technology sector. Nvidia, for instance, reported exceptionally strong results driven by the demand for their AI chips.
• Resilient Consumer Spending: Despite inflationary pressures, consumer spending remains strong, supporting technology companies like Apple and Best Buy that cater to consumer needs.
• Lower Interest Rate Expectations: Expectations of lower interest rates in the future are seen as a positive for the sector, as it could boost consumer spending and business investment.

Semiconductor Outlook

• Strong Demand for AI Chips: AMD and Nvidia saw strong demand for their AI chips, with Nvidia seeing exceptionally strong results.
• Supply Constraints Persist: While the supply of chips is improving, it is expected to remain tight throughout 2025.
• AI-Enabled PC Demand: AMD anticipates strong demand for its new “Zen 5” processors, driven by the adoption of AI-enabled PCs and a refresh cycle.

Cloud Computing

• AWS Growth Continues: Amazon Web Services (AWS) continues to be a major growth engine for Amazon, with revenue reaching a $105 billion annual run rate. Operating margins for AWS are also trending higher.
• Increased AI Infrastructure Investment: Companies are investing heavily in AI infrastructure and services, driving growth in cloud computing services.

Retail

• Resilient Consumer Drives Sales Growth: Target and TJX Companies saw strong sales growth driven by a resilient consumer seeking value.
• Continued E-Commerce Growth: Digital sales continue to be a strong growth area for companies like Target.

Consumer Staples

• Dividend Kings Attract Income Investors: Coca-Cola, PepsiCo, and Hormel Foods all have a long history of dividend increases, making them attractive for income investors.
• Steady Growth and Resilience: Consumer staples companies generally provide steady growth and are considered relatively resilient to economic shifts.

Real Estate

• Fed Rate Cuts Expected to Boost Housing Market: Companies like Redfin, Opendoor Technologies, and eXp World Holdings are expected to benefit from lower interest rates, which could boost the housing market.