TheBRRR’s Thoughts 

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As November draws to a close, we find ourselves at the intersection of markets, innovation, and the relentless dance between central planning and free enterprise. The Federal Reserve's latest inflation data signals that the economy might finally be catching its breath, but don’t be fooled—persistent housing costs and a dwindling savings rate reveal the cracks in a monetary system addicted to intervention.

Traders betting on a December rate cut may be in for another rollercoaster, but sharp investors know the best opportunities lie in navigating these unpredictable waters.

Meanwhile, Wall Street’s golden child, Apple, stumbles in the face of global competition. Despite hyped promises of an AI-fueled "upgrade supercycle," the iPhone 16 has barely moved the needle. As Android rivals like Huawei storm ahead with cost-efficient innovation, it’s clear that Apple's premium pricing and reliance on stock buybacks can’t replace the value proposition that free market competition delivers.

And finally, Marc Andreessen’s blunt revelations about a troubling AI control agenda underscore the dangers of centralized planning. The Biden administration’s push for a monopolized AI ecosystem is a chilling reminder of the economic stagnation that follows when innovation is shackled by bureaucracy. It’s no wonder even Silicon Valley titans are throwing their weight behind more market-friendly alternatives.

Andreessen Reveals Biden Meeting Details

Synopsis:

Marc Andreessen, billionaire co-founder of Andreessen Horowitz and lifelong democrat, revealed in a podcast with Joe Rogan that a meeting with Biden administration officials about AI regulation spurred his endorsement of Donald Trump.

The administration's plans, described as resembling authoritarian control akin to China, aimed to limit AI development to a few government-controlled entities. Andreessen also highlighted the government’s expansion of "Operation Choke Point," impacting political opponents, tech founders, and crypto innovators.

The Details:

• Biden Administration AI Regulation: Officials reportedly outlined plans for regulatory capture, centralizing control over AI development by limiting it to 2-3 government-monitored corporations.

• Discouragement of Startups: The government allegedly warned against founding new AI companies, indicating no pathway for their success under these policies.

• "Operation Choke Point": Initially targeting gun and cannabis businesses, this policy has expanded under Biden to debank and dismantle tech and crypto startups without due process.

• Debanking Allegations: Claims surfaced that 30 tech founders were secretly debanked, with no explanations or appeals allowed.

• National Security Concerns: 90% of U.S. military drones reportedly come from China, with American manufacturing stifled by FAA regulations.

• AI and Censorship: Andreessen warned AI could become a "control layer" for societal functions, intensifying censorship beyond the social media era.

• Polarization in Silicon Valley: Tech circles are reportedly splitting politically, with some aligning with New York Times narratives and others opposing government overreach.

Why It Matters:

• Investors and AI Regulation: Strict government control over AI could hinder innovation and limit opportunities in this lucrative sector. Tech and crypto investors should monitor regulatory developments closely.

• Impact on Startups and Funding: The discouragement of startups could shrink venture opportunities and centralize innovation within a few large players, reducing diversity in tech investment.

• Geopolitical and National Security Risks: Over-reliance on Chinese-made technology may raise concerns for defense contractors and investors in critical infrastructure.

Joe Rogan YouTube

October Inflation Report Meets Market Expectations

Synopsis:

The Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, rose by 0.2% in October and hit a 12-month inflation rate of 2.3%, aligning with expectations. Core inflation, excluding food and energy, increased by 0.3% month-over-month, reaching 2.8% annually. Consumer spending grew 0.4%, and personal income jumped 0.6%, significantly above forecasts, despite a decline in the savings rate to 4.4%.

The Details:

• Inflation Metrics:

  • Headline PCE Inflation: +0.2% MoM, 2.3% YoY (vs. 2.1% in September).

  • Core PCE Inflation: +0.3% MoM, 2.8% YoY, driven by service price increases (+0.4%) while goods prices declined (-0.1%).

  • Housing costs rose 0.4%, maintaining upward pressure on inflation.

• Consumer Behavior:

  • Personal spending rose by 0.4%, while personal income surged by 0.6%, doubling the expected 0.3%.

  • The savings rate fell to 4.4%, tied for its lowest since January 2023.

• Market Reaction:

  • Dow Jones Industrial Average rose modestly by 100 points, while S&P 500 and Nasdaq Composite dipped.

  • Treasury yields declined, and the market priced in a 66% chance of another Federal Reserve rate cut in December.

• Federal Reserve Context:

  • Inflation remains above the Fed's 2% target, although it has dropped from its June 2022 peak of 7.2%.

  • Recent rate cuts in September and November totaled 75 basis points, reflecting a gradual policy adjustment toward lower interest rates.

Why It Matters:

• Economic Indicators: The slight rise in core inflation underscores ongoing challenges in achieving the Fed’s 2% target, especially with housing-related costs persisting.

• Consumer Resilience: Growth in spending and income reflects economic strength but raises questions about sustainability, given low savings rates.

• Investment Implications: Prospects of further rate cuts support equities but create uncertainty in bond markets. Real estate and consumer discretionary sectors may face continued inflationary pressures.

Key Bullet Points:

• PCE Inflation (October): +2.3% YoY, +0.2% MoM.

• Core Inflation: +2.8% YoY, +0.3% MoM.

• Spending & Income: Personal income +0.6% MoM; spending +0.4% MoM.

• Savings Rate: Dropped to 4.4%.

• Market Odds: 66% probability of Fed rate cut in December.

CNBC

Apple’s Empty AI Promise Falling Flat as iPhone 16 Underperforms

Synopsis:

Apple's iPhone 16, anticipated to drive a significant AI-driven upgrade cycle, has underperformed in the market. Despite global smartphone shipments projected to grow by 6.2% in 2024, Apple's shipments are expected to increase by only 0.4%. This shortfall is attributed to intensified competition from Android manufacturers, particularly in China, and the higher price point of Apple's devices.

The Details:

• Global Smartphone Market Dynamics:

  • 2024 global smartphone shipments are forecasted to rise by 6.2%, reaching approximately 1.24 billion units.

  • Apple's shipment growth is projected at a modest 0.4%, indicating a loss of market share to competitors.

• AI Integration and Consumer Response:

  • The iPhone 16's AI capabilities, including Apple Intelligence, were expected to catalyze a major upgrade cycle.

  • However, consumer demand has not met expectations, with reports indicating that AI features have yet to significantly impact purchasing decisions.

• Competitive Landscape:

  • Android-based competitors, offering devices at lower price points (around $300), have gained traction, especially in price-sensitive markets like China.

  • Huawei's Mate 70 series, devoid of U.S. hardware and featuring unique innovations, has further eroded Apple's market position.

• Market Performance:

  • Despite sluggish sales, Apple's stock has risen by 22% year-to-date, reaching record highs, partly due to aggressive stock buybacks.

  • Analysts, such as those from Goldman Sachs, maintain a "Buy" rating with a 12-month price target of $286.

Why It Matters:

• Investor Considerations: The disparity between Apple's stock performance and its market share decline raises concerns about the sustainability of its growth strategy.

• Competitive Pressures: The success of cost-effective Android devices underscores the need for Apple to reassess its pricing and innovation strategies to maintain competitiveness.

• Market Dynamics: The anticipated AI-driven upgrade cycle has not materialized, suggesting that consumers may prioritize affordability and practical features over advanced AI capabilities.

Key Bullet Points:

• Global Smartphone Shipment Growth (2024): +6.2% overall; Apple at +0.4%.

• iPhone 16 AI Features: Failed to significantly boost consumer demand.

• Competitive Pricing: Android devices at ~$300 vs. iPhone at ~$1,000.

• Stock Performance: Apple shares up 22% YTD; analysts maintain optimistic outlooks.

Additional Insights:

• Consumer Behavior: The lukewarm reception of AI features in smartphones suggests that consumers may not yet perceive these advancements as essential, highlighting a potential gap between technological innovation and user priorities.

• Strategic Implications: Apple may need to explore strategies beyond AI enhancements, such as pricing adjustments or feature diversification, to reinvigorate its market position and appeal to a broader consumer base.

Zerohedge

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll