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Is the bear market over?

Jul 31, 2022

Good morning!

‍The markets are giving back a bit but, to a point I have made loudly and at the risk of sounding like a broken record, Tech is leading the charge.

Here’s my playbook.

Is the Bear over?

The incomparable Stuart Varney put it to me directly this morning ahead of the bell, is the bear over? Here’s my take. (Watch)

And yes in case you’re wondering after watching, I did buy a few bigger chunks of my favourite tech just after getting off the air.

My thoughts on Nikola & Romeo

Nikola – the electric semitruck maker accused of fraud for hyping glamorous-looking trucks coasting downhill in hype videos instead of actually working models – is apparently buying struggling California-based battery maker Romeo for $144m in an all-stock deal. (Read)

I had to check twice when I saw the report break. Like many, I’d mentally written off both companies a long time ago and did a double take to make sure we weren’t talking about Alfa Romeo.

The relationship isn’t new. Romeo has supplied Nikola with batteries for prototyping so the move will simply bring that capacity in-house… pun intended.

Nikola’s founder, Trevor Milton still faces fraud charges and remains the company’s largest shareholder. Perhaps not coincidentally, he recently blocked a move that would have helped raise much-needed funding. Romeo is a SPAC darling and at about $0.75 cents doesn’t strike me as worth the paper.

There’s simply better hunting out there.

Tesla is clearly at the top of the food chain as are two up-and-coming EV choices I profiled in the February 2022 issue of One Bar Ahead™. (Learn More)

Why Google’s “simplicity sprint” worries me

A “sprint” is techspeak for a period of time when a software team works to accomplish specific goals. For lack of a better term, it’s a framework for project management that combines group brainstorming with a hackathon-like time limit.

The idea is to develop super creative, super effective solutions quickly.

This worries me for two reasons.

First, the fact that CEO Sundar Pichai must tell tech employees to “sprint” at a tech company that for all practical purposes helped coin the term suggests to me that Google is oozing MBAs, not innovation.

And second, Google has 174,000 employees, so this begs the question of just how bloated it really has become?

Still, I wanna build a position.

Pichai doesn’t mess around which is why I think we’ll see layoffs and a whole lot more in the next six months. And that would be great for shares even if we have to put up with some selling first.

The best new medicines will come from tech companies

Speaking of Google, the company’s DeepMind AI Lab has just achieved what could be a significant breakthrough in the medical world.

Let me explain.

One of the most significant challenges we face when it comes to developing effective medical treatments is modelling proteins. In the past, this required lots of trial and error, x-rays, computer simulations and more. Tens of thousands of hours just to get a look at a single protein.

A year ago, Google open-sourced an AI system called AlphaFold so that scientists could predict and share the 3D structure of proteins using just its 1D amino sequence as a starter.

Proteins, so you understand the significance here, are the fundamental building blocks for every biological process in every living thing on the planet.

A year later, the company is releasing the predicted protein structures for more than 200 million structures which is a catalogue of nearly all proteins known to science. And, up from just 1 million known structures when it started. (Read)

AlphaFold has been accessed by more than 500,000 researchers doing work on everything from plastic pollution to antibiotic resistance.

Data and programs like this one will mean that new medicines are increasingly designed, discovered, and produced by tech companies. (Read)

Anybody investing in traditional pharma start-ups better rethink what they’re hoping to accomplish. Or, simply take their money to Las Vegas.

The most vulnerable real estate markets

I’ve long maintained that the most sensitive real estate markets are those impacted by debt, not supply and demand. Now, it would appear that there’s some research to bear me out.

A new study from Redfin found that 98 US metros are most susceptible to a real estate correction if the US falls into a recession. (Read)

Perhaps not surprisingly, California, Florida and Idaho markets top the list.