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26.04.2023
Diversification Inside Tech Sector: Taiwan Semiconductor

TMS is the most valuable semiconductor producer in the world. Its stock went down by 40% during the recent market correction, and rebounded slightly after a strong Q1 2023 earnings report. The company reported an operational margin at 45.5% as production of 5 nm and 7 nm chips is increasing. The company continues to generate profit despite decreasing demand for personal computers after surging during the pandemic in 2020-2021. Its financials are looking much stronger than its major peer Intel. In the worst-case scenario TSM’s operational margin is expected to decline to 40%, while Intel is expected to deliver a 39% operational margin with a negative net cash flow in Q1 2023. Taiwan Semiconductor is planning to spent between $32 billion to $36 billion on CAPEX this year, while Intel has cut CAPEX to $20 billion despite being 30% co-funded by the U.S. government.  On the negative side, the company is quite vulnerable to geopolitical risks as tensions between China and Taiwan are mounting. Although, it is hard to believe that Beijing will take the island by force, these threats could not be discounted. China is building its image as a global peacemaker while promoting its roadmap to establish peace between Russia and Ukraine, and the recent China-brokered agreement between Iran and Saudi Arabia. Economic ambitions of China are also a major hurdle for a military solution of the long-lasting conflict as the destruction of the chip production facilities of TSM will make such military operations pointless in the economic sense. In other words, TSM stocks may interest very optimistic investors that are seeking extra profit amid recovering demand for chips in the second half of` 2023.  

16.06.2022
Not Every Tech Stocks are Equally Strong: SAP

SAP stocks have lost 30% since the beginning of 2022. The German tech company develops enterprise software and solutions to manage business operations. For example, one of its services can be used  to manage all business travel financial activities and related spending. In other words, it is quite a routine company with  a stable and strong cash flow. Once SAP software is installed on a corporate level it is hard to do without it as it is deeply integrated into the business core processes. Moreover, SAP is restructuring its business model around its subscription base and this will allow for cash flows to be even more predictable and balanced through the financial year. Such a model is in favourable to Wall Streel investors.

The war in Ukraine has a 300-million-euro negative effect on SAP business, and it is only a marginal 1% of the overall revenue base for the company, while its dominance in the ERP segment is secure. The revenues added 11% year-on-year to 7.08 euros in Q1 2022. The revenues grew by 6% in  Q4 2021.

The company has made some successful M&A deals, acquiring Qualtrics, a cloud-based subscription software platform, that delivered +48% revenue in Q1 2022. This company had a gross margin above 90% in 2021 while SAP’s gross margin was at 70% for the same year.

SAP management promised to triple its cloud-based business by 2025, and boost revenues to 22 billion euros, while operational profit is forecasted to grow by 40% from the current 8.4 billion euros. This is a very extensive growth for the company that has a high P/E ratio at 17. The company may not perform very high growth rates as its younger tech sector peers, but it may certainly recover to new all-time highs in the long-term perspective. However, the sector may require several quarters to recover, and the recovery would be headed by such reliable companies as SAP with a low risk profile.

18.09.2023
Litecoin is Safely Recovering

Litecoin prices finished correction of September 16 and 17, when prices dropped by 0.8% and 2.7% respectively. Prices broke through the two-day resistance line, and they are successfully recovering. They may roll back a little to 63.58-63.95, where nice buy opportunities could be considered. The nearest target is located at 68.20, the high of August 31. The stop loss could be set slightly below 68.20, the low of September 14.

11.08.2022
Perspective Peers of Ethereum: Avalanche

Avalanche is ranked by Coinmarketcap at the 12th position by market cap with $7.8 billion, which is 4% less than Ethereum’s market cap. AVAX prices dropped by 82% of its peak values, allowing investors to buy it at early 2021 prices. Avalanche’s infrastructure consists of three logically isolated networks, each of these with their own processing, validators, and own set of rules.

This platform is often compared to the existing internet web infrastructure with core connection protocols like HTTP, surrounded by a huge number of networks to their apps. Avalanche allow for the creation of public and private systems as a blockchain or DAG (Directed Acyclic Graph) and for the use of different virtual machines for apps, including EVM engine (Ethereum Virtual Machine) that allows Enthereum network programs to be developed.

Avalanche includes C-chain to create smart contracts that are processed on an advanced EVM engine, P-Chain that coordinates validators that process transactions and also allows for the creation and management of new subnetworks, and X-Chain which is a directed acyclic graph regulating issuance and trade of cryptoassets. DAG systems record new transactions on top of the old ones, allowing for processing speed to be increased and for capacity substantially. It is quite different to other blockchains, where transactions are compiled in blocks in order to be processed.

The advantage of Avalanche is that it provides anyone with the opportunity to create his or her own isolated blockchain with its own set of parameters, including access to apps and the programming language with which it will work. Every subnetwork can process around 4,500 transactions per second compared to 14 processed by the Ethereum network.

04.08.2022
Ethereum’s Most Important Update

ETH is a native token for the Ethereum blockchain and is one of the two most reliable digital assets in the market along with Bitcoin. Ethereum is the first platform that became a hub for thousands of blockchain apps and other digital solutions. The recovery of ETH prices to November 2021 peaks at $4,900 would bring investors 190% profit.

Second layer solutions (Layer2) were introduced to improve stability and effectiveness of the Ethereum blockchain. These are blockchain network add-ons that are added on top of the primary blockchain. The most popular add-ons are Arbitrum, Loopring, Immutable X, and Polygon that have recently partnered with Meta (Facebook owner). In other words, the Ethereum blockchain network has a much broader use than the native blockchain itself.

Ethereum developers promise to release a new Proof-of-Stake (PoS) consensus protocol in late 2022. This protocol will allow miners to stake tokens to a special deposit to mine blocks. Some networks within the Ethereum blockchain have moved to PoS protocol this summer, while others are expected to move to this protocol in the middle of September.  This move will allow for the increase of processing capacity of the network to almost 100,000 transactions a second from the existing 30 transactions and lower commissions. This would also allow for ETH to switch to the deflation model when coins are algorithmically burned, while some coins would be removed from circulation as they would be blocked by staking - more than 13 million ETH or 10% of overall coins in circulation are blocked by staking. The problem is that coins are blocked for a long period of time and cannot be sold or exchanged for fiat currency.

Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
Litecoin May Dive Below the Support at $100

Litecoin (LTC) has declined by 8.8% this week, trading at $104.18, underperforming the broader cryptocurrency market as Bitcoin (BTC) falls by 3.3% to $94,705. Litecoin’s weakness has been highlighted by its drop to a weekly low of $97.06, breaching the key support level at $100.00.

Further downside pressure on Litecoin could emerge if Bitcoin falls below its critical support at $89,000-$91,000, with a potential slide to $80,000. Such a move would likely exacerbate selling in Litecoin, dragging prices lower.

From a fundamental perspective, there is little to support Litecoin at present. While the network recently achieved a milestone of 300 million transactions, the number of active wallets has declined by 40,000 in recent days. This decline in user activity reflects waning network engagement, which poses a negative outlook for the altcoin.

1012
Dollar Strength Is a Given

The very first slice of statistical data on business activity from the United States this year reaffirmed an almost clear irrelevance and even potential hurtfulness of any immediate steps towards further lowering interest rates on U.S. Dollar-nominated loans from a purely economic point of view. The ISM Manufacturing PMI (Purchasing Managers Index), based on polls compiled from executives in over 400 industrial companies in late December, came out at 49.3 points vs 48.4 a month ago and 48.2 in average analyst estimates. This showed that a slowdown was occurring at a slower or even insignificant pace, keeping inflation risks on the table, especially when the price component increased from 50.3 to 52.5 with a similar rate of increase in new orders. Meanwhile, non-manufacturing PMI came out at 54.1 on Tuesday, compared to 53.5 in analyst polls and 52.1 a month ago, with a contribution of business activity components even jumped to a surprising 58.2 against declining from 57.2 in November to only 53.7 in December.

In other words, the economy is not cooling, and is rather in a positive acceleration, which in turn may lead to a recovery in wage rises and therefore to higher demand pressure, which may be reflected soon in higher producer purchase and output prices. Doubts of the major U.S. financial regulator are understandable at this point after its triple rate cut from 5.5% to 4.5% in 2024. The Federal Reserve (Fed) will now pay closer attention not only to consumer inflation measures, but also to producer prices (PPI), which is just going to be released on coming Tuesday, January 14. And so, this will become the next reference point in the further U.S. Dollar’s trajectory. The Greenback index (DX) is picking up steam since reaching a new record high for the last two years at 109.35, with its temporary pullbacks being limited by a 107.50 support area that previously served as a strong multi-month technical resistance.

In this context, the British Pound (GBPUSD) updated its lows since November 2023 to touch 1.2237 on January 9, EURUSD feels quite comfortable within a range between 1.02 and 1.0450, which corresponds to its 2-year bottom, and having a bias towards a possible further decline. The Aussie (AUDUSD) is one-step away from taking the path for a breakthrough to a quite unknown territory of its 5-year lows that were last time recorded when the initial outbreak of the Covid-19 happened.

A varying extent of the American Dollar strength is surely data dependent as the market community is eagerly waiting for the U.S. job data later today. The average expectations on new Nonfarm Payrolls is just a bit above 150,000 vs 227,000 in early December 2024 and nearly 160,000 for the previous four months on average. However, any value close to 150,000, plus or minus 20,000, or any higher number, may be considered as another positive sign for the Greenback, following the ADP national employment report which contained only 122,000 on Wednesday. The oppressive nature of average hourly wage in its dynamics, +0.4% each time from September to December, also matters.

The protective quality of investing more funds into the U.S. Dollar and U.S. bonds against tariff threats is switched on anyway, based on more than a 95% chance for the Fed to keep rates on pause at its January 29 meeting, according to CME's FedWatch tool. Federal Reserve officials never go against a well-established market consensus, when it is almost unanimous, for not to rock the boat of relative market trend stability. The central bankers' reluctance to shift the Fed fund rates lower before mid-March, if not early May, continues to play in favour of short-term speculative transactions on the foreign exchange market, bearing in mind all the listed currency instruments. Some intraday volatility may take place, especially in the case of appearing an abnormal two-digit non-farm value, but not a change in overall direction.

1586
B
Smiling Facebook I Can See

Meta Platforms (META) revisited the area near its all-time highs after its leading founder Mark Zuckerberg’s most encouraging announcement that his media giant is embarking on its journey to restore the right to free expression of opinion. When wearing an extremely rare Swiss watch with an exclusive Greubel Forsey "Hand Made 1" writing on his left wrist (worth about $900,000, according to Bloomberg), he shed some light on the social platform owner's decision to end its previous thorough and boring automatized fact checking procedures in a Facebook video this Tuesday. "We will allow more speech by lifting restrictions on some topics that are part of mainstream discourse and focusing our enforcement on illegal and high-severity violation," he, in particular, said, while claiming "a more personalized approach" to political content, so that "people who want to see more of it in their feeds can". In an official article headed "More Speech and Fewer Mistakes", Meta noted later that "on platforms where billions of people can have a voice, all the good, bad and ugly is on display... but that’s free expression".

Since 2019, Meta developed growingly complex systems to manage content in response to "societal and political pressure" but now they have become ready to admit "this approach has gone too far". "What started as a movement to be more inclusive has increasingly been used to shut down opinions and shut out people with different ideas", is one of Mark Zuckerberg's actual quotes, as one more of his sentences said "we have reached the point that there are just too many mistakes and too much censorship", so that "it's time to get back to our roots". Starting in the U.S., the largest social community in the world (more than 3 billion users) would change its algorithm, moving to a so-called "Community Notes" mode to personally complain about unacceptable and intolerable posts or remarks on the platform.

This happened in the very first regular trading week of January, and so the initial and enthusiastic bullish wave up to $631.55 per share was quickly offset by an immediate technical recovery to $605 and below. Yet, the Wall Street crowd bought up the dips without shelving. There's not a doubt in my mind that postponed and more lasting effects are all still ahead, since this is a real revolution in adjusting Facebook and Instagram closer to the standards, which were recently refounded by the former Twitter, now X. The shift was clearly launched ahead of the president-elect Trump's inauguration, as the key MMA figure Dana White, who was an important part of Trump's election campaign, was newly appointed to Meta's board. Another Republican policy executive Joel Kaplan has become a head of the global policy department at Meta. Zuckerberg flew down to Trump's Mar-a-Lago place in November and later donated $1 million to his inaugural fund, blaming the present Democratic administration for increased censorship pressure that prompted a global trend towards increased regulation. I believe this is a time for reckoning, which can create an additionally positive momentum for the stock's further rising.

My personal target price for Meta stock is well above $750, as I already assessed the company as very promising before the announced changes in policy. More suitable textual and visual stuff without artificial limitations on free discussion will certainly attract more advertisers, also encouraging a large number of former users to return for posting and reading. It is well known that many temporary bans of users were even too far from being based on divisive political considerations or other most controversial topics like the race card, national conflicts or vaccinations. I personally know of some most ridiculous cases like Christmas cards featuring a Madonna nursing a baby being removed, and users were banned, or art posts with ancient Greek sculptures that included bare chests of statues as another good and strange example. Sometimes quite harmless messages were flagged as hate speech by stupid algorithms. Of course, many people were offended because of this kind of attitude, and they have gone away, but now some of them may try to restore their relationship with Facebook and Instagram. As a result, Meta will be able to raise even more money, adding additional revenue and profits to its records of 2024. Artificial intelligence recommendations and targeted advertising will only help in doing business.

We'll see if there are many taboo topics. But I'm an optimist, looking forward to a flurry of memes about the "great state of Canada", Greenland, all that hyping trolling of Trump and Musk and other current agenda. I don't know if our world is starting to return to a more or less normal normality, but Meta seems to have decided to repaint its way of mirroring the real world into colours that can better match the full spectrum of customers' views. I saw it was good. And here is my final piece of The Rolling Stones styled ode. Please sing it mentally in Mick Jagger's voice:

Smiling Facebook I can see,

And it’s for me, I sit and watch as tears go Bu-u-u-uy...

957
Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
VeChain Is Suffering on Rising Borrowing Costs

VeChain (VET) has fallen 12.7% this week, trading at $0.0445, underperforming the broader cryptocurrency market. Bitcoin (BTC), the leading cryptocurrency, has declined by 5.6% to $93,220, with bearish momentum building as it approaches key support at $89,000-$91,000. This decline is largely attributed to tightening monetary conditions in the United States, which continue to weigh on risk assets. Investor confidence is further shaken by significant net outflows from spot BTC-ETFs, which lost $583 million on Wednesday, marking the second-largest single-day outflow on record.

If BTC falls below the critical support level of $89,000-$91,000, VeChain is likely to extend its losses, with prices potentially declining another 10% to $0.0400. A sustained drop in BTC could push VET even lower, towards $0.0300. Conversely, a strong rebound in BTC prices to the $100,000 level could drive VET back up to $0.0500, representing a recovery of approximately 12% from current levels.

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