AI warnings knock Nasdaq futures, pressure tech stocks
Market Scorecard
US markets closed in the green yesterday, notwithstanding a negative start. According to data out, private companies in the US hired faster than expected in September. Most of the market's big up days come on the heels of significant losses, which is why equity investors need to be brave. Sit on your hands, suck up the hard times, and you'll enjoy the big gains.
In company news, Palantir was awarded an $823 million contract to deliver a system to the US Army which will gather and analyse intelligence data. Elsewhere, hackers hit Amazon's (NASDAQ:AMZN) Twitch service yesterday, exposing information on payouts to content creators and an unreleased game studio product.
All in all, the JSE All-share was down 0.86%, the S&P 500 was up 0.41%, and the Nasdaq was up 0.47%.
One Thing, From Paul
Journalist Trung Phan, who writes for The Hustle, dropped a great thread about Netflix's (NASDAQ:NFLX) thumbnail technology yesterday. Thumbnails are the little images that promote each show when you log in to your Netflix account. They visually suggest what you should watch next.
According to him, a Netflix user will only browse for 90 seconds and leave if they find nothing appealing. So, good thumbnail artwork is actually Netflix's most effective lever to influence a viewer's choice. Their research reveals that we only look at each little picture for less than 2 seconds, so the company spends a huge amount of money and effort to optimise them.
Netflix applies machine learning tools to select a thumbnail image for every show, for you personally, based on your recent watch history. They know what will turn you on.
Holy cow! No wonder this company's shares are trading at a new all-time high. I feel especially proud of the fact that Vestact started buying Netflix shares for customers exactly one decade ago, when they traded at $10.74 each. They are now at $639.10 per share. That's a big winner! What's more, this stock is still a strong buy today.
Byron's Beats
The worst thing about hospitals is staying in them. The food, the smell, the awful wake-up times. No one likes it. Discovery (JO:DSBPp) has a solution. They will offer a hospital in your own home from January.
Members will be able to stay at home for a range of procedures. Medicines and meals can be delivered, and Discovery will install all the required equipment in your home. These devices can keep track of vitals and will be monitored remotely. Doctors will then do daily rounds by video call.
Hopefully I do not ever need this but if I do, I will certainly select the home option. It also alleviates pressure on hospitals when they are at full capacity. I suppose that the hospital groups might not be so pleased because they make a lot of money from overnight "guests". Well done to Discovery for staying ahead of the curve when it comes to healthcare.
Michael's Musings
The hyperloop is an exciting new transport technology where shuttles are shot through pressurised tubes at high speeds. The goal is to have the convenience of using a train but with the speed of an aeroplane. The technology is also expected to reduce carbon emissions, something that makes politicians salivate.
There are two types of hyperloops currently in testing. The first is where magnetic tracks propel the shuttles, and the second is where the shuttle moves itself. In the first instance, it is expected to cost EUR40 million to EUR100 million per km of track and in the second, it will cost between EUR20 million and EUR40 million per km. The cheaper track version requires more expensive shuttles, obviously. According to my basic "research" on Google (NASDAQ:GOOGL), a four-lane road costs around $1.5 million per km, which is significantly less.
Given the capital costs of setting up hyperloop infrastructure, my guess is that Europe will be the first to build a significant network. They are a developed economy and their capital cities are close to each other. Zeleros, a company competing to get a contract to build the hyperloop, estimates it will cost between EUR370 billion and EUR740 billion to develop a decent system in Europe. They estimate annual revenues of EUR57 billion, and a saving of 1 319 million tonnes of CO2 emissions.
I'm excited about the prospect of riding the hyperloop one day.
Bright's Banter
Salesforce (NYSE:CRM) is reportedly getting into the streaming business. They want to produce a variety of inspirational videos for business people. Like what you get when you type "inspirational videos" into YouTube?
Salesforce+ can be streamed through the Salesforce website, and you can find interviews with business owners, entrepreneurs, and other executives. Sounds like a "Masters In Business"-style podcast? The interviewees tell stories about personal journeys, corporate pivots, purpose-driven capitalism etc.
The most popular content right now are the 60-minute episodes of Leading Through Change, which focuses on "how business leaders are navigating the Covid-19 pandemic". I am not surprised to see another tech company building its own media repository, this is what everyone is currently doing. But to call it "streaming" seems a stretch?
Signing Off
Asian markets are up strongly this morning, finally. The MSCI Asia-Pacific index is having one of its best days since August. The Hong Kong market saw a big jump as technology shares bounced from record lows. Tencent (HK:0700) is up 4.5%, hallelujah!
The Rand is trading at R15 to the US Dollar. US futures are also higher in early trade, on news that squabbling US senators have agreed a plan to raise the debt ceiling. Keep holding onto hope.
