Bank of Japan makes history

Tickergeek market update:

Today’s big headlines:

• Bank of Japan makes history

• Nvidia just blew away their competition

• Popular ETF “SCHD” ditches its winners

• Walmart the software giant?

Bank of Japan makes history💴

What’s happening? In an unprecedented move, the Bank of Japan (BoJ) has put an end to negative rates, marking the first interest rate hike in 17 years. This decision also signifies the termination of their yield curve control policy.

Impact on the Yen: The value of the Yen has seen a significant shift. On March 11th, one US Dollar was equivalent to approximately ¥146.74. Fast forward to today, and that figure has escalated to ¥150.60, marking a nearly 2.63% decrease in value within a mere week. This fluctuation is substantial for any major currency.

Market Reaction: The reaction of the Nikkei 225, the Japanese index, to this news is yet to be determined. However, the US market is already showing signs of unease following the Federal Reserve’s meeting on Wednesday. The S&P 500 opened the day down by 0.32%, and the Nasdaq followed suit, opening down by 0.83%. Both indeces reversed course and rallied later throughout the day.

Federal Reserve’s Anticipated Move: It is widely anticipated that the Federal Reserve will maintain interest rates at their current level for an extended period. This strategy aims to prevent a recurrence of the circumstances witnessed under the tenure of former Federal Reserve Chairman, Paul Volker.

Nvidia just blew away their competition👨‍💻

What’s happening? Nvidia, in a bid to fortify its position as the market leader in the GPU/AI chips arena, hosted their GTC Artificial Intelligence Conference on Monday. The event was marked by the unveiling of their new line of “superchips”.

CEO Jensen Huang made a compelling statement, “We need bigger GPUs. So ladies and gentlemen, I would like to introduce you to a very, very big GPU.”

What did they announce? To provide some context, Nvidia’s current flagship GPU, the H100, launched in 2022, has outperformed anything that competitors AMD and Intel have brought to the table. With this backdrop, it was a moment of awe when Huang took center stage to reveal their latest series of “Blackwell” GPUs.

These new “Superchips” are a technological marvel, boasting four times the speed of the previous generation in training AI models, and delivering an impressive twenty-five times the energy efficiency.

Market Response: Despite this landmark achievement, the stock market’s reaction has been overshadowed by concerns surrounding the upcoming Federal Reserve meeting on Wednesday. Nvidia’s stock opened down by over 3%.

Additional Announcements: Nvidia also unveiled Project Gr00T, a platform dedicated to training humanoid robots. Despite the name, there is no connection to the Guardians of the Galaxy character, Groot.

Popular ETF “SCHD” ditches its winners🏅

What’s happening? The widely favored ETF among retail investors, “SCHD”, has recently undergone its annual rebalancing. This year’s strategy pivots towards dividend safety over dividend growth, leading to the removal of several high-profile names from their holdings. As a result of these modifications, the ETF has seen improvements in its free cash flow to total debt, return on equity, and dividend payout ratios.

Portfolio Changes: The rebalancing resulted in the removal of 23 companies and the addition of an equal number. Notable removals include Broadcom (AVGO), a significant 49% holding in the ETF, Merck & Co (MRK) with a 4.3% holding, Automatic Data Processing (ADP) with a 2.9% holding, and Kellogg (K). In contrast, Bristol-Myers Squibb (BMY) now constitutes a 4% holding, while both Hershey (HSY) and Skyworks Solutions (SWKS) have been introduced as sub 2% positions.

Audience transition: With these changes, SCHD may now be more attractive to traditional “dividend investors”. However, the question remains: how will this rebalancing affect future returns?

Walmart the software giant?🚚

What happened? Retail behemoth Walmart is now offering its AI-driven route optimization software to third parties. The software, which has been a resounding success among their employees and drivers, takes into account various factors during its route planning process, such as traffic conditions, delivery times, vehicle capacities, and customer locations. This comprehensive approach can lead to reductions in travel time, emissions, and fuel consumption.

Potential Benefits for Walmart: The decision to license this software to third parties was a strategic one. Walmart has indicated that they have a robust pipeline of potential clients who could greatly benefit from its implementation. The potential revenue this could generate for the company is yet to be determined.

AI’s Impact on Business: The recent news of Google and Apple potentially collaborating to integrate Google’s Gemini into the iPhone, coupled with Walmart’s licensing of AI-driven software, underscores the increasing influence of AI on the financial performance of businesses. This trend is becoming increasingly evident across various sectors.

Additional market-moving events🌎

• Unilever’s spinoff: Unilever (UL) plans to spin off its ice cream business, including brand names such as Magnum and Ben and Jerry’s. Additionally, the company plans to reduce its headcount by 5.9% in an effort to cut costs.

• Chipotle stock split: Yesterday Chipotle (CMG) announced a 50-for-1 stock split, send shares up 4.88% in after hours trading.

• Wegovy approved for heart health: Novo-Nordisk’s blockbuster weight loss drug Wegovy, is now approved for heart health in the US. With a monthly price tag of $1,350, having more use cases for the drug can only be benefitial for the business.

• Elon’s ketamine confession: Elon Musk has recently cancelled a deal X had agreed with former CNN anchor Don Lemon, after a rather heated interview. Musk also acknowledged that he has a prescription for the dissociative anesthetic ketamine to “treat a negative chemical state in my brain, like depression”

• Microsoft’s AI Unit has a new lead: Microsoft hires Mustafa Suleyman, the co-founder of the Google-led AI unit “Deepmind“, as the head of their new AI unit.

• Crypto product incoming: Crypto hardware maker Ledger, have announced an ipod-inspired crypto cold-storage wallet which will be released in May of this year.

• Hybrid car sales surge: U.S. sales of hybrids grew five times faster than EV sales in February, Morgan Stanley said. Prompting many auto makers to focus on increasing production of hybrids over EVs, given the cooling EV demand.

• Bitcoin halving is fast approaching: The Bitcoin halving is so close we can almost taste it. The halving is estimated to take place in 32 days time making it the 20th of April. The question is, what will Bitcoin do between now and then, after taking its foot of the gas in recent weeks.

Notable earnings this week💵

• Micron Technology (MU) will report on Wednesday after hours. Analysts estimate $5.33B in revenue (+44.33% YoY) and $-0.26 in earnings per share.

• Accenture (ACN) will report Thursday, in pre-market hours. Analysts estimate $15.83B in revenue (+0.10% YoY) and $2.66 in earnings per share (-1.12% YoY).

• Nike (NKE) will report Thursday after hours. Analysts estimate $12.28B in revenue (-0.89% YoY) and $0.74 in earnings per share (-6.33% YoY).

• FedEx (FDX) will report Thursday after hours. Analysts estimate $22.05B in revenue (-0.54% YoY) and $3.53 in earnings per share (+3.52% YoY).

• Lululemon Athletica (LULU) will report Thursday after hours. Analysts estimate $3.19B in revenue (+15.08% YoY) and $5.00 in earnings per share (+13.64% YoY).

• FactSet Research Systems (FDS) will report Thursday, in pre-market hours. Analysts estimate $546.75M in revenue (+6.15% YoY) and $3.88 in earnings per share (+2.11% YoY).

Our selections performance👾

Last week Monday, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500.

Here’s how the two stocks have performed since then:

• Evolution AB: 1,375.60 SEK (📈+4.80%)

• Hims & Hers Health: $15.66 (📈+8.22%)

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