Hello everyone, welcome to “The Way of Finance”! Let’s start today’s episode with a news about Li Ka-shing.
Focus today: Experts in the stock market and finance predict Trump’s victory due to the surge in money flow. Non-farm payroll data far exceeds expectations, suggesting the Fed may pause rate cuts. Li Ka-shing sells luxury properties in Beijing at a discount of 30%. How long can the leading stocks in the US market, the “Silicon Valley Six Giants”, continue to rise? Automated refund legislation for airline tickets goes into effect, providing more peace of mind for ticket buyers.
According to mainland Chinese media reports, Li Ka-shing’s company, “Cheung Kong Industries,” recently offered a 30% discount on the luxury residential project “Yu Cui Yuan” located in the East Fourth Ring Road of Beijing, selling at a price of 76,000 yuan per square meter, lower than nearby second-hand properties, sparking heated discussions among netizens. Many netizens believe: the old man still has a keen eye; indicating the overall trend is still downward, making now a good time to sell.
Reports quoted sales staff at the “Yu Cui Yuan” sales office as saying that on last Friday around 6 pm, 50 discounted housing units were put on the market, and by late at night, they were all sold out with prices ranging from 75,000 to 79,000 yuan per square meter.
Furthermore, real estate agents mentioned that “Yu Cui Yuan” is expected to be completed by the end of this year. The prices of nearby second-hand properties are all above 80,000 yuan per square meter. It seems that Li Ka-shing does not have much confidence in the Chinese real estate market rebounding, thus deciding to sell off this property quickly to recoup funds.
The news of “Li Ka-shing selling luxury properties at a discount” immediately became a hot topic online, with some netizens joking: Li Ka-shing’s judgments are still reliable. Back in the day, Wang Jianlin and Xu Jiaying were so ambitious, overshadowing Li Ka-shing, but where are those people now?
Some official media criticized Li Ka-shing as the biggest capital outflow artist in Hong Kong.
ADP employment data, also known as “small non-farm,” refers to the advance prediction data of the US non-farm employment population.
According to the latest ADP employment data released, in October, US companies hired employees at the fastest pace in over a year, indicating a significant demand for labor in American businesses. Based on the latest ADP data, the number of private sector employees in the US exceeded expectations in October, increasing by a substantial 233,000 people.
This indicates that despite being hit hard by two hurricanes in the southeast of the US and a massive strike by thousands of Boeing workers in the past month, the US labor market remains robust.
ADP employment data plays a significant predictive role in financial markets. ADP employment data, similar to the official US non-farm employment data, has a substantial impact on forex, gold, crude oil trading, and global stock markets.
After the latest ADP employment data was released, some traders started betting that the Fed may announce a pause in rate cuts in December, with some even betting on a possible pause in November.
Regarding recent economic data, retail sales continue to increase month-on-month, non-farm payroll data surpasses expectations, low unemployment rates, and higher than expected GDP growth, coupled with steady inflation decline in the US, paint a picture that perfectly aligns with the soft landing scenario envisaged by the Fed for the US economy.
As a result, many economists suggest that strong economic data could prompt the Fed to pause the rate cuts process over the next two months.
Jeremy Siegel, an American economist and professor at the Wharton School, recently stated that the Fed may maintain interest rates unchanged in the next week’s meeting.
Intel continues to face challenges. Intel announced its latest quarterly financial report after the US stock market closed on October 31. Wall Street expects Intel’s revenue to decline by 8% to $13.02 billion.
This has raised doubts among investors about the strategy of CEO Pat Gelsinger in revitalizing the troubled chip giant. Pat Gelsinger, who took on the role of CEO at Intel in 2021, has announced layoff plans, suspended dividends, and reached a new chip manufacturing agreement with its largest customer, Amazon.
However, these actions have failed to appease investors, with Intel’s stock falling by over 50% this year, and its market value dropping below $100 billion. Since September, half of the 31 analysts have lowered their revenue expectations for Intel. Some investors believe that the market’s pessimistic expectations have put the company in a position where it cannot afford to deliver worse reports.
This Halloween, Intel’s investors are destined to feel a sense of irreversible decline and restlessness.
With the US presidential election looming, both presidential candidates, Trump and He Jinli, are increasingly emphasizing economic issues, as opinion polls indicate that the economy is one of the top concerns for voters. However, some economists argue that the economic policies of the two candidates are more similar than people imagine.
Democratic Vice President and Presidential Candidate He Jinli said: “The American people face a choice between two very different economic paths.”
Despite efforts by Democratic presidential candidate He Jinli and Republican candidate Trump to create entirely different images, many economists see significant similarities in their economic policies.
Mark Weinstock, Associate Professor of Economics at Pace University, said: “In many ways, the economic policies of the two candidates are more similar than people imagine. Both candidates’ plans include significant budget expenditures in military and defense, both are protectionists, both support increasing tariffs, the difference lies only in degree.”
According to a joint survey by the Associated Press and the National Opinion Research Center at the University of Chicago, Trump and He Jinli do not have a clear advantage in economic issues among voters. Many policies of both candidates are indeed similar, emphasizing the need to ensure the development of the US economy, increasing tariffs on China, and also advocating for a tax reduction image.
Mark Weinstock, Associate Professor of Economics at Pace University, stated: “Of course, tariffs are a tax that limits imports of certain goods in this way, but this also leads to domestic producers raising prices. So we can expect the prices of many goods to rise, however, Trump’s strategy should bring more manufacturing and economic activity back to the US.”
Former US President and Republican Presidential Candidate Trump said: “This new American industrialism will create millions of jobs, significantly raise wages for American workers, and make America a manufacturing powerhouse as it was many years ago.”
Economists believe the key difference between Trump and He Jinli’s economic policies lies in tax cuts and housing policy.
Mark Weinstock, Associate Professor of Economics at Pace University, said: “I believe the biggest difference lies in housing and taxes. Specifically, He Jinli’s plan is interesting because she wants to provide $25,000 in assistance for first-time homebuyers for down payments.”
Mark Weinstock, Associate Professor of Economics at Pace University, added: “Another significant difference between the two candidates is undoubtedly in taxes. The extent of Trump’s tax cuts will far exceed He Jinli’s, which will increase national debt but also stimulate the economy, potentially leading to faster economic growth.”
Despite varying degrees, both Trump and He Jinli have proposed tax-cut plans, and once tax cuts are implemented, increasing fiscal deficits are likely unavoidable.
Jeremy Siegel, Chief Economist at WisdomTree, said: “I believe both candidates have disappointing policies in terms of economic analysis. For example, who can cut more taxes without seriously discussing the deficit situation?”
Prabal Dey, Professor of Economics at the City University of New York’s Graduate Center, said: “Neither of them has a good plan to tackle national debt.”
Prabal Dey, Professor of Economics at the City University of New York’s Graduate Center, also added: “Both will cause deficits and increase debt, but He Jinli’s policy would create relatively fewer deficits compared to Trump’s policy.”
Currently, all of Trump and He Jinli’s economic policies are still just proposals, and how many of them can actually be implemented remains uncertain.
Nevertheless, some economists believe that based on the market trends in the days leading up to the election, the likely outcome of the election could see Trump returning to the White House.
Jeremy Siegel, Chief Economist at WisdomTree, said: “I think the current market expects Trump to win, and Trump’s victory is generally seen as being more favorable for the stock market.”
Starting from this Monday (October 28), a regulation concerning the rights of airline passengers regarding automatic refunds officially goes into effect in the US. The regulation requires US airline companies to provide cash refunds to passengers if flights are canceled or experience significant delays.
On October 28, US Transportation Secretary Pete Buttigieg announced on X platform: Today, our automatic refund regulations are fully effective, and airline companies must provide prompt cash refunds without passengers having to request them.
This new regulation lays out the conditions under which passengers are entitled to automatic refunds for flight cancellations, delays, and luggage delays:
If a flight is canceled or significantly delayed, with domestic flight delays exceeding 3 hours and international flights exceeding 6 hours, and if passengers have not boarded the delayed flight or rebooked tickets, then airline companies must automatically refund passengers within 20 days, in cash instead of issuing vouchers as is common.
If passengers’ checked luggage is delayed, with domestic flight delays exceeding 12 hours and international flight delays ranging from 15 to 30 hours depending on the flight mileage, airline companies are required to refund passengers’ luggage fees.
If passengers do not receive prepaid services they have booked, such as Wi-Fi or seat selection, airline companies must refund the prepaid service fees to passengers.
US Transportation Secretary Pete Buttigieg stated: “You can get a refund, and you can receive a refund without requesting it.”
The US Department of Transportation first proposed the “Automatic Refund Regulation” in April this year, which initially faced opposition from airline companies. However, lobbying groups serving US airline companies have since released statements supporting the automatic refund regulation and have committed to providing refunds to passengers if they are unwilling to rebook tickets.
US Transportation Secretary Pete Buttigieg stated: “When airlines know that any passengers impacted by canceled flights have the right to get their money back, these airlines are more motivated to make investments and create realistic schedules to prevent passengers from having to go through these situations.”
US Senator Maria Cantwell said: “Airlines need to realize that consumers cannot always be constrained by policies.”
US Senator Maria Cantwell added: “The market has been distorted by these policies, and airlines have had too much power over consumers.”
With the peak travel season approaching towards the end of the year, the implementation of this new regulation will provide passengers with more peace of mind while traveling. In case of flight cancellations or delays, passengers can confidently wait for airlines to refund ticket costs within 20 days. If tickets were purchased using a credit card, refunds can be received in just 7 working days.
Having some savings for emergencies, known as “emergency savings,” is a critical aspect of personal finance that many people have overlooked for a long time and is considered a fatal weakness by financial experts. So, what is “emergency savings,” and are you prepared?
Emergency savings, as the name suggests, is a reserve fund set up to address unexpected or emergency situations. However, with rising prices and increased living costs, many Americans are finding it difficult to maintain basic living expenses, leaving little income for savings. Yet, without emergency savings, any unforeseen expenses could lead to debt and even more long-term issues.
The Chief Financial Analyst at Bankrate said: “Emergency savings have long been a fatal problem in personal finance for many Americans.”
A survey by the American consumer financial services company Bankrate found that over 60% of Americans believe they do not have enough emergency savings. Additionally, the majority of Americans do not have enough money to cover long-term unforeseen expenses. So, what exactly are considered “long-term unforeseen expenses”?
The Chief Financial Analyst at Bankrate mentioned: “For most people, an ideal emergency fund should be enough to cover expenses for 6 months, but only about 28% of American households have a buffer fund of this size.”
Experts suggest setting up emergency savings can follow a few simple steps: create a budget, determine savings goals based on the budget, set up direct deposits as emergency savings. Any unexpected income can be stored in the emergency savings account to meet savings targets quickly.
For those who live paycheck to paycheck or lack a stable income source, the simplest way to build emergency savings is to control expenses or set aside any tax refunds as emergency savings. Additionally, experts recommend that even after achieving the emergency fund savings goal, continue to deposit extra funds into emergency savings. After all, having more savings on hand can be beneficial in case of emergencies.
If you haven’t prepared your emergency savings yet, you can start taking action now.
Lastly, to wrap up today’s episode, let’s discuss the potential challenges that may arise for the Silicon Valley tech giants following the Nasdaq hitting a new high.
The recent US stock market boom over the past two years has two distinct characteristics: AI and concentration at the top.
First, let’s talk about “concentration at the top.” This year, about half of the market value increase in the entire US stock market was contributed by a small handful of tech giants, known as the “Silicon Valley Six Giants”: Apple, Microsoft, Nvidia with market values over $3 trillion; Google with a market value over $2 trillion; Amazon and Meta with market values over $1 trillion.
The total market value of these “six giants” is nearly $16 trillion. The total market value of the S&P 500 component stocks is approximately $46 trillion, and the total market value of the entire US stock market is around $56 trillion. This means that the “six giants” occupy 34% of the S&P 500 market value and 28% of the total US stock market value!
The above calculation even overlooks Taiwan Semiconductor Manufacturing Company (TSMC) with a market value of $1 trillion, and Broadcom and Tesla with market values of $800 billion. If we expand the “six giants” to a “nine giants” or even a “ten giants,” their share of the total market value becomes even higher. Such high concentration at the top is not only unprecedented in the history of the US stock market but also rare in the history of major global capital markets.
Now, let’s address Artificial Intelligence (AI). The most eye-catching new member this year in the “trillion-dollar market value club” is Nvidia. If it were not for the power of the AI computing industrial chain companies, with Nvidia as a representative, this round of the US stock market boom would not have been so impressive. In fact, the capital market believes that all tech giants will benefit in some way from generative AI. Just the extent might differ.
Microsoft is an important external investor in OpenAI, with its Azure cloud services experiencing immediate results. Office subscription services and Teams have also gained positive impacts.
Apple has turned the iPhone 16 into its first AI phone, seen by the market as the biggest beneficiary of on-device AI, making it the best-performing technology giant in the last half year.
Meta operates a powerful open-source AI ecosystem, and its advertising business has received some level of AI assistance.
While Google has relinquished its throne in generative AI development, its fundamental, large models and applications are still rapidly improving.
Although Amazon has significantly closed the gap with Microsoft, it remains the world’s largest cloud computing platform and is aggressively expanding computing capabilities, in addition to increasing investments in large models and application ends.
Looking back at the various information technology revolutions over the past half-century, including the PC revolution of the 1970s-1980s, the internet revolution of the 1990s-2000s, and the mobile internet revolution from the 2010s to the present, each has been transformative, leading to a reshuffling of the market. People are seeking to break into the ranks of tech giants, indicating that existing giants are poised to fall. Just look at IBM and Intel’s financial performance over the past decade and you’ll likely agree with this point.
When it comes to generative AI applications, Google cannot be left out. Facing the challenge of CHAT-GPT, if Google cannot reclaim its leading edge in foundational large model technology, the decay of its core search business is only a matter of time.
Seeing this, many experts excitedly state: Artificial Intelligence is the core issue of the next industrial revolution.
However, I must say: not necessarily. The development of the times has its inherent laws and divine will. The impact of AI on human morals and social ethics is enormous.
Recently, you may have seen the news about a 14-year-old boy in Florida who, fascinated by an AI chatbot named “Danni” and hoping to be with “her,” chose to commit suicide with hints from this AI chatbot. This tragic event caused a massive uproar, highlighting the potential psychological harm AI could pose to minors.
There have been extensive discussions on the topic of Artificial Intelligence, but due to time constraints, we cannot delve into it further. However, without a doubt, if something violates the moral norms set by God for humans and harms the meaning of human existence, then it is likely that God will not stand by and let it develop unchecked.
Therefore, whether the tech giants of Silicon Valley and the AI industry can dominate the world as they hope, we will have to wait and see. Well, that’s it for today’s program. Thank you very much for watching.
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