USA Stocks discussion - Part 3

[d5dude]

I'm long. No shorts.

Market now possibly trying to guess between a soft landing and hard landing of US economy. Yesterday, there was a BoJ statement about rate hike coming (which will contribute towards a harder landing). Sell-off also partly due to whale selling Nvidia (related to the DoJ) triggering cross-market correlations.

Why still go long if you are so sure that the "people behind Kamala" controls a 55T market and is now going to crash it? Quickly go buy puts and max short ES/NQ, maybe you will become more famous than Michael Burry or Steve Eisman very soon.

 

[stanlawj]

Don't buy INTC for at least another 2 years.
Intel 18A still not ready. High NA EUV is also facing a big technical barrier.

https://www.reuters.com/technology/intel-manufacturing-business-suffers-setback-broadcom-tests-disappoint-sources-2024-09-04/#:~:text=Broadcom received the wafers back,move to high-volume production.

Exclusive: Intel manufacturing business suffers setback as Broadcom tests disappoint, sources say​

Intel's (INTC.O), opens new tab contract manufacturing business has suffered a setback after tests with chipmaker Broadcom (AVGO.O), failed, three sources familiar with the matter told Reuters, dealing a blow to the company's turnaround efforts.

The tests conducted by Broadcom involved sending silicon wafers - the foot-wide discs on which chips are printed - through Intel's most advanced manufacturing process known as 18A, the sources said. Broadcom received the wafers back from Intel last month. After its engineers and executives studied the results, the company concluded the manufacturing process is not yet viable to move to high-volume production.

Reuters could not determine the current relationship between Broadcom and Intel or whether Broadcom had decided to walk away from a potential manufacturing deal.

"Intel 18A is powered on, healthy and yielding well, and we remain fully on track to begin high volume manufacturing next year," an Intel spokesperson said in a statement. "There is a great deal of interest in Intel 18A across the industry but, as a matter of policy, we do not comment on specific customer conversations."

A Broadcom spokesperson said the company is "evaluating the product and service offerings of Intel Foundry and have not concluded that evaluation."
Intel's contract manufacturing business was launched in 2021 as a key part of Chief Executive Pat Gelsinger's turnaround strategy.

Broadcom is not a household name but makes crucial networking gear and radio chips that helped generate $28 billion in overall chip sales in its last fiscal year. It has benefited from the boom in spending on artificial intelligence hardware, and J.P. Morgan analyst Harlan Sur estimated it will bank $11 billion to $12 billion from AI this year, up from $4 billion last year.



Intel 18A for contract manufacturing. Only in 2027.

 

[elvintay07]

Last night provided the definitive evidence for the crash in 2025 that is NOT a conspiracy theory: "Yenmageddon" BoJ hiking rates causing more unwinding of any short JPY positions.

This year, BoJ won't hike rates yet, because latest Japan CPI is only 2.7% annualised (BoJ core CPI 1.8%).
Wait for all their core CPI to jump to annualized 3% next year.
Then BoJ will be forced to act and raise rates. This will trigger the continuation of the August crash:

• US big cap tech stocks (Mag7)
• SMH
• Tech countries: Nikkei, Taiwan & Kospi stocks
• Commodity mining stocks
• AUD
• CAD

UST bond crash will be postponed again as US stocks crash and drive more UST buying. This seems to be a nice opportunity for US Treasury Dept to issue more longer-term bonds at lower interest rates.

Utilities and SREITS will be the best performers. Gold and BTC may drop alittle, but mostly stay unchanged while XAUJPY will drop more significantly.

Let me put this on record and see what happens next year.

When market crash, need to be magnificent 7. The rest of the Mickey Mouse companies may bankrupt. I love recession. Usually double/ triple my warchest when recession hits. But my long portfolio will be red like mad

 

[DevilPlate]

When market crash, need to be magnificent 7. The rest of the Mickey Mouse companies may bankrupt. I love recession. Usually double/ triple my warchest when recession hits. But my long portfolio will be red like mad

u love recession?
which means yr ready warchest is at least the same amt as yr current invested amt?
Else dont make sense whahaha

Maybe some newbies naively think that stock market will always rebound back within 1-2years

 

[DevilPlate]

Why still go long if you are so sure that the "people behind Kamala" controls a 55T market and is now going to crash it? Quickly go buy puts and max short ES/NQ, maybe you will become more famous than Michael Burry or Steve Eisman very soon.

Actually from what i gather, most Bears still long in the market….it is js that they hold more cash/gold.

Imo, if u hold more than 30% in cash/Tbills/SSB and equivalent…..u are a bear liao.
I am a bear currently

 

[elvintay07]

u love recession?
which means yr ready warchest is at least the same amt as yr current invested amt?
Else dont make sense whahaha

Maybe some newbies naively think that stock market will always rebound back within 1-2years

Long position usually keep like 10-20 years. That is investing. Last few years loaded quite a bit of SRS in SSB. Also building up cash position. Recession is an opportunity. Nowadays recession is shorter because of the magic bullet of 0 interest and QE. All playing monopoly money. We can’t avoid recession. Whatever will come, will come. So why not love it?

 

[DevilPlate]

Long position usually keep like 10-20 years. That is investing. Last few years loaded quite a bit of SRS in SSB. Also building up cash position. Recession is an opportunity. Nowadays recession is shorter because of the magic bullet of 0 interest and QE. All playing monopoly money. We can’t avoid recession. Whatever will come, will come. So why not love it?

So whats yr percentage in cash/ssb?

 

[yslvlys]

Actually from what i gather, most Bears still long in the market….it is js that they hold more cash/gold.

Imo, if u hold more than 30% in cash/Tbills/SSB and equivalent…..u are a bear liao.
I am a bear currently

Yeah I am bear also cos more than 70% cash lol. But I keep buying mostly also, but at a slow rate.

 

[yslvlys]

Ya indeed recession will come one day and that is the time to buy more so need to keep building warchest. Meanwhile also keep buying just at a slow rate and take partial profit also if the gains hit 100% or more.

 

[weng0202]

Ya indeed recession will come one day and that is the time to buy more so need to keep building warchest. Meanwhile also keep buying just at a slow rate and take partial profit also if the gains hit 100% or more.

You must be very good at spotting good stocks. Not many stocks can hit 100% unless you keep buying only growth stocks.

 

[stanlawj]

The next level in AI training: MULTI-DATACENTER TRAINING
Google is already sort of doing it. But enter the rest: MSFT and OpenAI.

https://www.semianalysis.com/p/multi-datacenter-training-openais?/=

Multi-Datacenter Training: OpenAI's Ambitious Plan To Beat Google's Infrastructure​

Gigawatt Clusters, Telecom Networking, Long Haul Fiber, Hierarchical & Asynchronous SGD, Distributed Infrastructure Winners​

Buildouts of AI infrastructure are insatiable due to the continued improvements from fueling the scaling laws. The leading frontier AI model training clusters have scaled to 100,000 GPUs this year, with 300,000+ GPUs clusters in the works for 2025. Given many physical constraints including construction timelines, permitting, regulations, and power availability, the traditional method of synchronous training of a large model at a single datacenter site are reaching a breaking point.

Google, OpenAI, and Anthropic are already executing plans to expand their large model training from one site to multiple datacenter campuses. Google owns the most advanced computing systems in the world today and has pioneered the large-scale use of many critical technologies that are only just now being adopted by others such as their rack-scale liquid cooled architectures and multi-datacenter training.

--------------

Optical interconnection between datacenters need to be upgraded.

 

[DevilPlate]

Yeah I am bear also cos more than 70% cash lol. But I keep buying mostly also, but at a slow rate.

U are doomsday big bear
which means u believe 70% chance of a market crash coming

 

[d5dude]

Actually from what i gather, most Bears still long in the market….it is js that they hold more cash/gold.

Imo, if u hold more than 30% in cash/Tbills/SSB and equivalent…..u are a bear liao.
I am a bear currently

30% cash/tbills/SSB is like 70/30, your allocation to stocks is actually quite high, IIRC you are quite old right?

I'm currently at 55/45 because I follow a fixed formula of 105 - age, according to you I should be very bearish but thats not how it works.

Allocation to risk should be according to age, risk tolerance, etc. Most people will do very poorly over the long run if they try to time the market. Just look at the performance of global macro funds over the last few decades, 99% of them have performed very poorly, you cant predict what the market will do even if you are able to predict the macro environment.

 

[twosix]

fyi...

 

[stanlawj]

Why still go long if you are so sure that the "people behind Kamala" controls a 55T market and is now going to crash it? Quickly go buy puts and max short ES/NQ, maybe you will become more famous than Michael Burry or Steve Eisman very soon.

Fed swap lines. When the Yenmageddon causes a severe market correction and reports of liquidity stress comes in, Fed will re-open a swap line for BoJ to get USD liquidity so that they don't have to do firesale of their UST or US stocks.

Bull market forever and ever. In the middle will be a scary drop.

30% cash/tbills/SSB is like 70/30, your allocation to stocks is actually quite high, IIRC you are quite old right?

I'm currently at 55/45 because I follow a fixed formula of 105 - age, according to you I should be very bearish but thats not how it works.

Allocation to risk should be according to age, risk tolerance, etc. Most people will do very poorly over the long run if they try to time the market. Just look at the performance of global macro funds over the last few decades, 99% of them have performed very poorly, you cant predict what the market will do even if you are able to predict the macro environment.

So one needs to have enough liquidity to ride out any drops and also take advantage of the drops to buy.

fyi...

This is Frequentist statistical reasoning. Look at frequency of past event and use it to assign probability for the future.
So if you flip a coin and it comes out heads 10 times, and tails 4 times, you bet that the coin will come out as head the next time (and lose money).
(Opposite of frequentist is Bayesian).

 

[d5dude]

Fed swap lines. When the Yenmageddon causes a severe market correction and reports of liquidity stress comes in, Fed will re-open a swap line for BoJ to get USD liquidity so that they don't have to do firesale of their UST or US stocks.

Bull market forever and ever. In the middle will be a scary drop.

Yen carry trade unwind = Yen up/dollar down. Why'd the BOJ need any dollar liquidity when they can have all they want from the market? Also I'm not sure what this has to do with you being bearish and long stocks at the same time. You'd have cognitive dissonance if you truly believed that a market crash is coming, its either that or you just dun have any conviction in your crash call, maybe deep down you know you are just like everyone else i.e "nobody knows anything but since stocks go up 80% of the time I should just be long".

So one needs to have enough liquidity to ride out any drops and also take advantage of the drops to buy.

I actually hold very little cash now, most of the non-equity portion are in bonds, which have done very well recently. Holding cash only makes sense if one is trading very frequently, for everyone else its usually a bad idea to hold cash instead of bonds unless yields get really low.

 

[stanlawj]

Yen carry trade unwind = Yen up/dollar down. Why'd the BOJ need any dollar liquidity when they can have all they want from the market?

Systemic risk, margin call etc. when JPY-denominated loans go up in value. Not BoJ, but some other Japanese biggie that can topple the Japanese financial system. Imagine if that biggie invested in US Private Equity or CLO with leverage and cannot get out.

 

[d5dude]

Systemic risk, margin call etc. when JPY-denominated loans go up in value. Not BoJ, but some other Japanese biggie that can topple the Japanese financial system. Imagine if that biggie invested in US Private Equity or CLO with leverage and cannot get out.

And how would a dollar swap line help? Yen carry trade unwind is a margin call in Yen. Dollar swap lines create more dollars, they dun create more Yen.

 

[stanlawj]

And how would a dollar swap line help? Yen carry trade unwind is a margin call in Yen. Dollar swap lines create more dollars, they dun create more Yen.

See who blinks first. Firesale doesn't have to start in Japan first. It can start in US first.

 

[d5dude]

See who blinks first. Firesale doesn't have to start in Japan first. It can start in US first.

Since when did anyone assume the crash is going to start in Japan? You were talking about how people are borrowing large amounts of Yen to buy US assets, and how this trade unwinding can be cured with dollar swap lines. The bottom line is dollar swap lines are useless for this because it doesnt create Yen liquidity.

Anyway this conspiracy theory of how the Yen carry trade is supporting a 55T market is just ludicrous, I doubt the Yen carry trade even amounts to 1T, and that includes all sorts of products, not just equities.

Ultimately earnings is what will determine stock prices over the long run, I think the biggest risk to US equities is that AI disappoints over the next couple of years. I said I was long term super bullish on AI last year, but no way could I have predicted that Nvidia was going to 10x in a year, this is yet another example of how markets tend to surprise everyone in the short run.