Charts Of The Month - Feb 2024

Welcome to the Enhanced Value Fund (EVF) newsletter! With Charts of the Month, we’ll be providing you with occasional updates on EVF and sharing interesting charts that have caught our attention in recent weeks.

2024 is a presidential election year: on Tuesday, 5 November 2024 the US will decide who will become the Chief of the biggest democracy in the World. Among many qualities, the two main running candidates do not lack experience…

Media update

We had a 15 min discussion with IBKR to discuss Everything Energy, the link to the 15 minutes conversation with Guillaume Roux-Chabert is here, and you can find the YouTube episode here.

Market insights - Tech

2024 started strong for markets! We should say for the US Markets… Or I should say for the Nasdaq… Well let me just say the truth: for NVIDIA

Just to put things in perspective, NVIDIA is now worth more that the S&P Energy sector (at time of writing, NVIDIA past USD 2T mark…)

On NVIDIA: if your flagship product (H100 processor), sells for 10 to 30 times what is cost you to produce it, and volume demand mushrooms, then you deserve a premium price to your company’s shares: well done to the team!

But remember, NVIDIA just design the Chips, Taiwan produces them, at least the most advanced one

In the Magnificent 7 league (or Mag 6 now that Tesla has fallen behind, more on this later), it’s interesting to see how Meta is charging ahead of Google. While Meta below USD 100 per share had been an irresistible temptation for Enhanced Value Fund, now at close to 500 seems fairly valued…

Tesla has dropped off the Mag 7 league for a couple of reasons:

#1: resale price for Teslas doesn’t look great…

#2: things don’t look great for EVs in general

“Now do Alibaba” was heard in the background: the chart below shows BABA cashflows (orange bars, growing) against its stock price (white line, declining).

Go figure.

Market insights - Global Markets

Tu us, utilities and energy here look interesting, and money are outflowing…

It didn’t take long for the rates market to flip to no cuts for the FED in 2Q 2024

Goldman sees less tight financial conditions, in spite of headlines rates above 5%…

Foreign investors are flooding into US equities

Passive (ETFs) is gaining share vs active (Funds) investing

Profit margins don’t look great for the S&P500

Nor does consumer credit in the US

Germany looks ugly, too

Of course energy bills are part of the reason

But employment surprisingly positive in Germany

Source: Bloomberg

Usually, high debt to GDP translate into higher bong yields: not for Japan

And as we wrote several times, Buffett did it well with his JPN bet

If you want to invest in single stocks in Japan, I would start here:

Friendly reminder on putting things in perspective:

Within EM, India has been a winning bet vs China in the last 3 years:

But China still is a powerhouse, look at manufacturing

Or EVs…

Sure thing labor is not cheap anymore in China

Market insights - Commodities, Shipping and climate change

Friendly reminder: fossil fuels are still mainstream

Energy mix in Europe looks good

Heat pump installation slowed down

Let’s look at crude oil inventories…

Oil production in the US has been on a “tired” curve for years

China airline industry is roaring back

Food prices down, Agricultural commodities up…

After the Olive Oil chart we posted, Cocoa is going NVIDIA, have your latest chocolate bar before will become a luxury item

Bitcoin ETFs inflows, Gold ETCs outflows

On shipping, the issue with Suez Canal transit persists, volume going down

Not a lot of spare capacity, in general

A bit of random stuff

The good news on shipping: IMO 2020, the regulation to restrict which fuel ship can use, did wonders to emissions

When your product is brilliant, you don’t have to innovate!

Finally, please don’t take it personally, but we need to make more babies!

Thank you for making it so far, if you have any comment or suggestion, make sure you send them in!

The Enhanced Value Fund (EVF) Team

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