Football, Inflation & Big Tech, Apple’s AI Unveiling and… a French Gamble
Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.?
Our three stories this week:
Adrian (Portfolio Manager), and the rest of the Sidekick team.?
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
?? Sidekick has raised ￡8.5m
Before we get into the Market Pulse stories this week, we first wanted to share some exciting news - we've just announced that we've raised ￡8.5m to accelerate our plans and support our mission to unlock the financial advantages of the ultra-wealthy for everyone.
The equity round was co-led by Pact VC and TheVentureCity and supported by MS&AD, Blackwood, and 1818, alongside our existing investors Octopus Ventures, Seedcamp, and Semantic Ventures. Columbia Lake Partners has separately provided us with ￡4m of debt financing to scale up our portfolio line of credit product.
We've achieved a lot already since launch, but this additional funding will help us grow the team further, accelerate the release of lots more products this year, and lay the foundations for our international expansion.
To become a client, and join us on the journey, you can download the app via the link below.
1) Football, Inflation & Big Tech
Gary Lineker famously described football as a simple game: “Twenty-two men chase a ball for 90 minutes and at the end, the Germans always win.[1]” It’s hard not to see the analogy with capital markets these days: there’s a lot of conflicting macro data, it pulls markets in all different directions, and in the end, Big Tech stocks win[2].
Wednesday was a double whammy day that started with the announcement of US inflation figures. They were lower than expected, sending bond yields and other securities related to them downwards along with the US Dollar. At the same time, Gold soared. A few hours later, however, a hawkish Federal Open Market Committee meeting sent everything in reverse, although yields still ended the day lower.
While recent economic data—lower inflation, strong job growth—hints at a healthy US economy, the Federal Reserve remains cautiously optimistic, acknowledging the potential for rapid shifts.
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2) Apple’s AI Unveiling
Apple's venture into artificial intelligence, dubbed "Apple Intelligence," has drawn mixed reactions, with the stock initially dipping before rallying 7% on Tuesday. While the new AI features may seem similar to existing offerings from competitors like Google, their seamless integration with Apple's other products is what sets them apart.
Leading the charge was a revamped Siri, now equipped with enhanced text and image generation capabilities. These features will be exclusively available on iPhone 15 Pro and newer models, potentially incentivising users to upgrade and drive a stronger iPhone 16 cycle.
Meanwhile, the anticipated strategic partnership with OpenAI could have initial revenue implications. While the financial details remain unclear, a revenue-sharing model could lead to short-term dilution as users shift from traditional, more profitable search.
Some investors have also raised concerns about increased capital expenditure due to Apple's Private Cloud Compute (PCC) initiative. However, the company's flexibility in potentially utilising third-party data centres could mitigate this risk.
3) A French Gamble
The funny thing about capital markets is that there’s an indicator for almost anything. We've previously discussed the VIX, or "fear index," but chances are you haven’t heard of the OATS spread. This intriguing indicator measures the difference between interest rates on French and German government bonds. Its fluctuations reveal not only the relationship between these two economic powerhouses but also, some argue, the overall stability of the European Union.
Like the VIX, the OATS spread is typically calm and uneventful. However, when it surges unexpectedly like it did this week, investors should take notice.?
An S&P Global downgrade on May 31st sparked the initial volatility in the OATS spread, which persisted despite a subsequent European Central Bank rate cut. But the situation intensified after French President Macron's unexpected call for snap legislative elections, triggered by substantial gains by the far-right Rassemblement National in European elections. By Tuesday, rumours of Macron's resignation added further fuel to market instability.
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References
Notices
Please remember, investing should be viewed as longer term. Your capital is at risk — the value of investments can go up and down, and you may get back less than you put in.
Helping FIs to unlock value from transaction data and AI | fintech nerd, retired pro cyclist & SW engineer
9 个月Congrats on the fundraise! As for this weeks equities… what about Adobe? ??