# 687 – 😵 There’s no stopping Novo – The Average Joe

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    # 687 – 😵 There’s no stopping Novo

    victorlei

    May 3, 2024

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    Good morning. Tomorrow marks the start of the 150th Kentucky Derby. Long known as an excuse to wear a quirky hat and day-drink mint juleps, this year’s event has taken on a more somber tone after a dozen horses tragically died around the time of last year’s race partially due to unsafe breeding and doping. To prevent such tragedies, organizers are now using AI tools to monitor the health of this year’s horses. But if these issues persist, the future of this iconic race could be on its last legs.

    Tragedy also struck the S&P 500 in April — which saw its biggest drop since last September. Our latest survey on investor sentiment showed that 55.9% of investors felt bullish as we headed into May, down from 65.6% in the previous month.


    PARTNERED WITH PARADIGM PRESS

    Bitcoin’s Rise and Memecoins’ Moment — Is It Too Early To Declare The Return of Crypto?

    Bitcoin’s fourth halving event is now history. Spot bitcoin ETFs in the US have been given the green light. Bitcoin has surged nearly 110% over the past year, while memecoins are trading like it’s 2022 again. Still, it took two years of gut-wrenching pain to get here. Crypto, often dubbed the Wild West of investments, has taken a Mike Tyson-style KO punch right in the face — but the industry continues to get back up. Question is, how much more juice does the industry have?

    2024 marked a major milestone: The launch of spot bitcoin ETFs in the US opened doors for many investment advisors managing trillions in dollars combined, allowing them to delve into the world of crypto.

    • Last month, Cetera, a wealth management firm overseeing $190B in client assets, began allowing its advisers to allocate client assets to spot bitcoin ETFs.

    • This followed a decision in February by Carson Group, which manages $30B, to allow their advisors to invest. Other countries are also warming up to bitcoin.

    Hong Kong’s debut of its first spot Bitcoin and Ethereum ETFs this week is a testament to this trend. Australia is expected to follow suit with its first spot Bitcoin ETF approval later this year. And, of course, we just concluded the fourth bitcoin halving — a historically bullish event for the token’s price one year before and after the event. One year ago? One year later? TBD. But two weeks after the Apr. 22 event, bitcoin’s price has dipped nearly 10%.

    Why was the Bitcoin halving so uneventful?

    In previous cycles, bitcoin experienced significant surges post-halving: 5,000% between the first and second halving, 1,300% from 2016 to 2020, and 700% from 2020 to 2024. While the gains from the recent cycle were still far above the S&P 500’s performance during the same time, they were significantly lower than those of previous bull markets.

    The halving just isn’t what it used to be, and it’s possible that the returns in the coming cycles may yield even lower returns — that is, unless you venture into riskier parts of crypto.

    • In the 12-18 months following the halving, smaller alternative cryptocurrencies tend to outperform, leading to what is known as altcoin season.

    • The cycle goes like this: Bitcoin rises, followed by other large tokens like Ether and eventually smaller cryptocurrencies, including memecoins — a common occurrence in past cycles.

    And this year, it’s not just retail traders getting in on smaller tokens; several hedge funds have also warmed up to them. According to Bloomberg, popular hedge fund Pantera Capital’s Paul Veradittakit said, “Memecoin trading creates gigantic new market opportunities.” Pantera’s Portfolio Manager Cosmo Jiang added, “Memecoins initially started as clearly a joke” — but have evolved into culture coins that have surpassed $50B in market cap.

    The halving was just the beginning

    In the last two bull markets, at least 10 different cryptos returned 10x more than Bitcoin. With interest rate cuts still on the horizon, it may only be a matter of time before altcoins surge once more.

    James Altucher, a crypto millionaire, first started talking about Bitcoin on CNBC in 2013 when it was trading for about $100. He’s personally made gains as high as 7,000% in four years in the alternative crypto market. And he’s put together a list of the top 10 cryptos for investors to buy now.

    Get the report here.


    LARGECAP RECAP

    🍎 Apple throws money at investors despite a tough start to 2024

    Investors still include it among the Magnificent Seven, but Apple ($AAPL) has had a less-than-magnificent start to the year — with its stock down 8% year-to-date. Even with a national antitrust lawsuit, new EU regulations, and the end of its expensive self-driving car project, the company hopes to turn a page.

    • Despite a 4% revenue drop, Apple unveiled a record $110B buyback program — pushing shares to their best trading day of 2024.

    • It also raised its dividend by one cent following a 2.2% quarter-over-quarter increase in net income — bringing the dividend to $0.25 per share (0.57% annual yield).

    Problems remain: Investors had low expectations for Apple’s earnings, but the company’s hardware sales still missed estimates — with iPhone and iPad revenues declining 10% and 17%, respectively, in the quarter. However, higher service revenue and stronger-than-expected sales in China helped offset these losses. To undo its 2024 losses, CEO Tim Cook hinted that the answer could be AI-flavored, with the company gearing up to unveil a new lineup of iPads next week.

    💊 Novo Nordisk is still crushing it — but there’s an uphill battle ahead

    Danish drugmaker Novo Nordisk ($NVO) started the year on a runner’s high but without the running. That’s the power of its obesity drug, Wegovy, which saw its sales more than double — while sales of its diabetes drug Ozempic shot up by 42%. These successes have propelled Novo Nordisk’s shares to balloon by 260% since Wegovy’s 2021 launch — pushing its market capitalization over $570B, surpassing Denmark’s entire economy.

    • Thanks to strong sales and optimistic projections, Novo has become Europe’s most valuable company.

    • But getting there will be hard, as demand for the drug still far outstrips supply — despite a 5x increase in starter doses in the US since December.

    Scaling up: Less than a decade ago, Novo Nordisk’s shares were tanking — but since Ozempic changed everything in 2018, the company has had to massively expand its operations — and ambitions. It projects a billion potential patients and targeting a market worth ~$100B by 2032 — but with competition intensifying, especially from Eli Lilly’s ($LLY) Zepbound, Novo Nordisk has had to cut Wegovy prices, causing revenue to miss expectations. And as political pressure mounts, capitalizing on all this demand may come with growing pains.


    JOE’S MARKET PULSE

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    Markets & Economy

    Warren Buffett tempers expectations as Berkshire-Hathaway nears $1T valuation: It’s been a banner year for the conglomerate, with shares outpacing many tech titans. But at an upcoming annual meeting, Buffett is expected to keep the euphoria in check with a point he’s made before: “A high growth rate eventually forges its own anchor.” [Read]

    Where’s the pain from higher interest rates? While expected to crush the job market (as it did in the ‘70s), higher rates have surprisingly left employment intact, boosted stocks, and driven up home values. Rising credit card debt and auto loan delinquencies show that rates are causing pain, just not where we really thought. [Read]

    Sustainable funds took a beating in Q1: These funds saw $8.8B in net outflows last quarter — their sharpest downturn ever. Higher rates make long-term bets in environmental, social, and governance (ESG) a bit less attractive — and the politicization of the asset class hasn’t helped either. [Read]

    Business & Wealth

    Biden admin to expand national monuments in CA: Recognized under the Obama administration, the San Gabriel Mountains and the Berryessa Snow Mountain National Monuments will see further protection with an additional ~120K acres under Biden’s plan. [Read]

    Peloton’s ($PTON) CEO can’t outrace dismal earnings: CEO Barry McCarthy stepped down yesterday as the embattled fitness company laid off 15% of its workforce. Peloton aims to slash $200M in expenses by the end of 2025 on the heels of a $167.3M net loss in Q1. [Read]

    High-speed rail plans for Dallas-Houston route unveiled: Railway company Texas Central will work with Japanese bullet train experts to develop a rail link that cuts the travel time between Texas’s two biggest cities by 90 minutes. [Read]

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    CHART


    DIGIT OF THE DAY

    Maersk Predicts 4.5% Growth in Global Container Trade Amid Strong Demand And Rising Freight Costs

    Navigating choppy waters? Maersk knows the feeling. After a turbulent quarter marked by disruptions in global shipping routes and freight rates, A.P. Moller-Maersk foresees smoother sailing ahead. The company now anticipates global container trade to grow by 2.5-4.5% this year, with projections leaning towards the upper end of this range.

    • Maersk surpassed analysts’ expectations with $1.59B in EBITDA — but its ocean shipping business sustained a third consecutive quarterly loss due to Red Sea conflicts.

    • Nonetheless, robust demand and increased freight costs from longer routes have led the company to raise its minimum profit forecast to $4B.

    Global trade comeback: The World Trade Organization (WTO) recently predicted a promising rebound in global trade volumes for 2024 — forecasting a 2.6% growth following last year's slump, driven by easing inflation and normalized monetary policies. Despite potential disruptions from geopolitical tensions and trade fragmentation, the WTO remains optimistic, expecting trade volumes to further increase to 3.3% in 2025.


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