Apple x ChatGPT: Coming Soon

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Jun 16, 2024

Hi all,

On this Father’s Day Sunday I am watching the US Open Golf tournament and just enjoying the day! The tournament is heating up and probably one of the best final rounds I’ve watched in awhile. By the time you read this, you may already know the winner. My dad is in Asia so I gave him a call over the weekend, but no real celebrations are happening in my world. What are you up to?

On the YouTube channel this week we released another edition of our “Portfolio Review” videos, and I will link that at the bottom of this newsletter for your enjoyment. It’s definitely a fun watch especially if you want to leave it on in the background (I won’t take any offense).

Have a great week ahead!

— Humphrey, Tim & Rickie

Market Report

Apple to Partner With OpenAI for ChatGPT on its Devices

Apple recently entered a partnership with OpenAI to integrate ChatGPT into its devices, including the iPhone, iPad, and Mac. The collaboration, unveiled at Apple's Worldwide Developers Conference, allows ChatGPT to enhance Siri and offer new writing tools.
Financial terms were not disclosed, but sources suggest the partnership is not expected to generate significant revenue initially.
- Apple is not paying OpenAI directly, noting that pushing OpenAI’s brand and technology to hundreds of millions of devices is of greater value.
This arrangement could potentially benefit Apple by increasing user engagement with its devices, while OpenAI may see increased subscriptions through Apple's payment platform.
Apple stock surged post WWDC due to the realization that AI may be integrated into all of Apple’s latest hardware devices, which means that future demand for newer devices and hardware is going to be high in order to take advantage of all the AI capabilities.

The Market Is Disregarding What the Fed Is Saying About Rates

Despite the Federal Reserve's warnings of prolonged high interest rates, traders are pouring money into stocks that benefit from lower borrowing costs, particularly in the technology sector, which saw $2.1 billion in inflows this week.
- This contrarian behavior has driven the S&P 500 Index to record highs, up more than 50% since October 2022.
Investors anticipate that when the Fed eventually cuts rates, it will spur strong equity returns, especially in sectors like financials, materials, and utilities.

The US Has Attracted a Third of Global Capital Flows Since Covid

According to the IMF, the US has captured nearly one-third of global investment flows since the pandemic began, up from 18% pre-pandemic.
- This surge has been driven by high US interest rates and tax incentives for renewable energy and semiconductor production.
Conversely, China has seen its share of global capital flows more than halve, with efforts to attract foreign investors showing limited success.

Musk Addresses Tesla Faithful In Annual Meeting, Mentioning $20 Trillion Opportunity

During Tesla's annual meeting, CEO Elon Musk expressed bold predictions about the company's future, highlighting the potential of its humanoid robot, Optimus.
Musk suggested that Optimus could eventually generate $1 trillion in annual profit, envisioning a $20 trillion market cap for Tesla based solely on the robot's success.
- Despite the ambitious projection, Musk admitted the bot won't go into limited production until next year and has a history of missing similar lofty targets.
In the automotive sector, Musk acknowledged the challenges ahead, noting that major manufacturers like General Motors and Ford are scaling back electric vehicle production.