January 11, 2025

 

The S&P 500 declined 1.9% this week. Investors were spooked by a better than expected jobs report, which reduces the odds of more Fed rate cuts. The Bloomberg Aggregate Bond Index fell 0.9% as interest rates rose. Meanwhile, gold rallied 1.9% and Bitcoin fell 3.8%.  

The BLS reported that 256,000 new jobs were created in December, reducing the unemployment rate to 4.1%. Jobs statistics have been noisy and subject to large revisions ever since the pandemic, so it's hard to tell if the labor market is truly as strong as it appears. The ISM services report for December showed continued expansion, but the prices paid index jumped considerably, which implies rising inflation pressure. 5 Things has been steadfastly in the higher-for-longer inflation camp and we maintain that outlook.   

 

 

 

 

The LA Fire Will Impact the Economics of Living in California

 

 

The recent wildfires in Los Angeles County are projected to be among the costliest natural disasters in US history, with estimated economic losses between $135 billion and $150 billion.

Southern California residents are used to fire threats, but not in densely populated areas. This fire is different. Many homes in Pacific Palisades and Malibu are in ruins, and the fire is threatening the homes of many Hollywood stars and executives living in Brentwood and Bel Aire. These are some of the most expensive property zones in the entire world.

This disaster will significantly impact the economics of living in California. The destruction of over 12,000 structures and the displacement of thousands of residents will lead to a surge in demand for housing, driving up real estate prices and rental rates. Moreover, the cost of rebuilding homes and infrastructure will strain local government budgets and may require higher taxes. Insurance premiums are expected to rise as insurers grapple with the costs of claims, which could make homeownership even more expensive and less accessible. 

Our prayers go out to the victims and all the brave fire fighters. 

 

 

 

Takeaways From Zuck's Interview With Rogan  

 

 

In a recent interview with Joe Rogan, Meta CEO Mark Zuckerberg discussed several key topics related to his company's future direction and content moderation policies. Zuckerberg defended Meta's decision to scale back content moderation, replacing fact-checkers with a community notes program similar to X. He emphasized the importance of free expression and criticized the Biden administration for pressuring Meta to censor COVID-19 related content. He expressed optimism about the incoming Trump administration, highlighting the need for the US government to defend American tech companies abroad. 

Based on the interview and our research, we think several tech industry trends are likely to become more apparent during the next Trump administration:

Deregulation of AI. Expect a shift towards a more deregulatory approach to AI, with fewer constraints on AI development. This could create new opportunities for AI startups while raising concerns about safety and bias in AI systems.

Content Moderation Changes. With Meta scaling back its content moderation policies, other tech companies might follow suit. This could lead to a more open environment for free expression but also increase the spread of misinformation.

Trade and Supply Chain Adjustments. The administration's focus on tariffs and reshoring operations could reshape global supply chains for technology companies, particularly in the semiconductor industry.

Antitrust Regulation. The Trump administration may take a less aggressive stance on antitrust regulation, likely benefiting major tech players like Google, Amazon, and Meta.

 

 

 

Why Trump Wants To Acquire Greenland

 

 

Not a lot of people live in Greenland, but that doesn't mean it's not important.

President-elect Trump values Greenland for several strategic reasons. First, Greenland's geographic location between North America, Europe, and Russia makes it a critical point for monitoring and controlling Arctic shipping routes, which are becoming increasingly accessible due to melting sea ice. Second, Greenland is rich in natural resources such as oil, natural gas, and rare earth elements. Trump believes that securing Greenland would improve America's ability to protect its interests in the Arctic region and counter the influence of other global powers, such as China and Russia.

Bottom-line: even though only 56,000 people live there, Greenland is an immensely valuable piece of real estate.  

 

 

 

Constellation Energy Soars 25%

 

 

Constellation Energy (CEG) reached an agreement to buy Calpine, a move that creates the nation’s largest clean-energy provider. Constellation is the largest operator of nuclear power plants in the US. Buying Calpine expands Constellation's natural gas portfolio significantly, because Calpine is America's largest electricity generator from natural gas. Normally, a stock falls when a company announces an acquisition. In this case, Wall Street went bananas and bid the stock up 25%. The bullish sentiment is because Constellation now has a much more diversified energy portfolio that will be in high demand by datacenters powering AI. Nuclear and natural gas are relatively clean sources of energy that also offer baseload generation capacity at economical prices. Silverlight managed portfolios are long CEG and we applaud this deal. 

 

 

 

The Sound of Silence is Healthy

 

 

Life on earth used to be a lot more quiet. Humans have increased the world's loudness fourfold. 

The human species evolved in a less noisy environment, which is why prolonged exposure to excess noise can tax our health. Silence, on the other hand, offers numerous health benefits. Spending time in silence can lower blood pressure, improve concentration, and calm racing thoughts. It also stimulates brain growth, reduces stress, and encourages mindfulness. By allowing our minds to rest, silence helps us process thoughts and emotions more effectively, leading to greater self-awareness and mental clarity. Embracing moments of silence can be a powerful tool for enhancing both physical and mental well-being.

Here are some ideas to bring more silence into your daily routine: morning meditation, nature walks, mindful breathing, technology detox, and quiet activities like reading, drawing, or journaling.

 

 

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This material is not intended to be relied upon as a forecast, research or investment advice. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and non-proprietary sources deemed by Silverlight Asset Management LLC to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Silverlight Asset Management LLC, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this post is at the sole discretion of the reader.​​