November Update
November 2024 was nothing short of extraordinary, a month marked by high drama and pivotal developments across politics, markets, and pop culture. From Mike Tyson’s surprising return to the ring at age 58, to Donald Trump’s political comeback and the S&P 500 crossing the 6,000 marks for the first time, the month underscored the unpredictable nature of both the markets and society at large. On the investment front, the GSP Global Growth Fund celebrated its best month since inception, bolstered by the fund’s highest-conviction stock picks and active downside risk measures.
Meanwhile, a crypto industry chief paid a staggering US$6 million for a banana taped to a wall at an art auction, only to proceed with the most unexpected twist: he ate the banana, adding another chapter to the ever-strange world of cryptocurrencies. Is this a sign of the top?
Source: Financial Times
U.S. Political Shift: The Red Sweep
Donald Trump achieved a significant political victory, not only securing the presidency and popular vote but also enabling a Republican-controlled Senate and House of Representatives. This consolidated control offers Trump a unified government, which could expedite his pro-business policies and agenda. The GOP's success in the elections, coupled with a broader mandate, positions Trump to shape policies impacting the economy, tech regulation, and corporate strategies going forward.
Source: Michel A.Arouet
Policy Implications:
Tax Reform: Renewed emphasis on corporate and individual tax cuts could stimulate capital markets but might elevate long-term fiscal deficits.
Deregulation: Pro-business policies targeting energy, tech, and financial sectors are expected to ease operational hurdles, benefiting large corporations.
Trade and Manufacturing: Trump is expected to use tariffs as a strategic tool to bolster U.S.-based manufacturing by limiting foreign competition. While this protectionist approach could strengthen domestic industries, it also risks provoking trade conflicts with other nations. The overall goal is to prioritize U.S. manufacturing growth, which may come at the cost of global trade relations but could ultimately support American industries in the long run.
Market Beneficiaries:
Elon Musk - Tesla: Musk, along with Tesla and SpaceX, stands to benefit significantly from Trump’s deregulatory policies, particularly as they relate to electric vehicles and autonomous driving. Policies easing restrictions on Full Self-Driving (FSD) could directly support Tesla’s EV and robotaxi verticals. Investors are also anticipating favorable regulatory treatment for both Tesla and Musk's ventures, including SpaceX and xAI, boosting market confidence and driving post-election gains.
Defense, Energy, and Infrastructure: Companies in these sectors are poised to benefit from increased spending and policy alignment with Republican priorities.
Threat to Democracy? No, only Bureaucracy
Following his presidential election win, Donald Trump has appointed Elon Musk and Vivek Ramaswamy to lead a newly established "Department of Government Efficiency" (DOGE). This initiative aims to streamline government operations by reducing rules, cutting bureaucracy, and slashing spending. The two entrepreneurs will oversee efforts to dismantle government inefficiencies and restructure agencies, providing expert guidance from outside the typical government framework.
This announcement comes at a critical time for the U.S., as the federal government faces significant financial strains. By late 2024, the national debt has surpassed $35 trillion, contributing to record-high interest payment of US$882 Billion in fiscal year 2024—an increase of 30% compared to the previous year. These interest payments now consume a large portion of the federal budget, even surpassing spending on national defense, which stands at approximately $874billion.
Given the growing fiscal pressures, change is urgent. The current approach of printing more money to manage the debt only exacerbates the problem, creating a cycle where the burden of debt compounds over time. Without reform, the financial situation risks spiralling further out of control. Currently there’s over a US$2T hole in the budget that needs to be narrowed, in addition to reducing the debt, and improving growth.
In fact, the last time the federal government had a budget surplus was during the Clinton administration when Republicans held the majority in Congress.
Source: Federal Government Budget Surplus—Shortfall 1966-2024 MJP
S&P Hits 6,000 for the first ever
Here's how long it took to reach each 1k+ milestone:
5,000 to 6,000 → 9months
4,000 to 5,000 → 2yrs, 10mos, and 2wks
3,000 to 4,000 → 1yrs, 8mos, 3wks and 3d
2,000 to 3,000 → 4yrs, 10mos, 3wks and 1d
1,000 to 2,000 → 16yrs, 6mos, and 4wks
Now, how long do you think it will take for the S&P 500 to reach $7,000?
Where to from here?
Goldman Sachs has predicated on continued US economic expansion, earnings growth of 11% in 2025 and 7% in 2026, and a forward P/E multiple of 21.5x at the end of next year, a 1% compression from the current P/E of 21.7x. They believe the ‘Magnificent 7’ stocks (AMZN, AAPL, GOOGL, META, MSFT, NVDA, and TSLA) collectively will outperform the S&P 493 in 2025, but by roughly 7 pp, the slimmest margin in seven years and down from 63 pp in 2023 and 22 pp YTD. Narrowing relative EPS growth will drive the narrowing performance gap. They also made note that M&A activity should pick up, forecasting a 25% year/year increase in the number of completed mergers in 2025. They also mentioned an improving small business operating environment will lift the earnings and valuation of stocks with revenues tied to that spending, with expectations that business optimism will surge in coming months.
Goldman Sachs, Morgan Stanley, and JPMorgan have projected that the S&P 500 index will rise to 6,500 by the end of 2025, representing an approximate 7% price increase from November levels. Wells Fargo stands out with the most optimistic forecast, predicting a 16% gain from November's closing levels.
Source: Analyst Notes – Yahoo Finance
Company Developments
Intel CEO Ousted Amid Mounting Challenges
Intel’s board lost patience with CEO Pat Gelsinger, forcing his departure after failing to reverse the company's declining fortunes. Gelsinger's tenure, starting in 2021, was marked by ambitious investments in foundry services to challenge TSMC and NVIDIA in cutting-edge chipmaking. However, these moves fell short in the rapidly growing AI market, where NVIDIA emerged as the dominant player.
Challenges Under Gelsinger:
Foundry Focus vs. AI Growth: Gelsinger prioritized rebuilding Intel’s manufacturing leadership, but this strategy seemed to sideline the exploding AI sector, leaving the company struggling to compete in GPU innovation.
Market Dynamics: Customers like Apple shifted to in-house chip designs, eroding Intel’s client base. Meanwhile, the anticipated PC refresh cycle lagged, adding to Intel’s revenue pressures.
Performance Metrics:
NVIDIA eclipsed Intel, taking its spot on the Dow Jones Industrial Average and capturing significant market share in AI-centric GPUs.
Under Gelsinger, Intel’s market cap plummeted by nearly 60%, while NVIDIA surged over 900%, cementing its role as the innovation leader.
Internal and External Pressures: Gelsinger’s deep passion for Intel—having started as an intern, rising to CTO, and eventually returning as CEO—wasn’t enough to undo the missteps of previous leadership. The company now faces significant restructuring, with thousands of job cuts looming. Adding to the turmoil, the new Republican administration appears less supportive of the Chips Act, which had previously funneled billions into Intel’s U.S. manufacturing ambitions.
Future Outlook: As interim leaders step in, Intel faces pressing questions:
Can the company regain its innovative edge and reposition itself as a leader in both AI and traditional chip markets?
Should Intel scale back its ambitions to focus on profitable niches, or can it rise again as a tech icon under new strategic leadership?
Source: LSEG Datastream
xAI Secures Game-Changing Technology
Elon Musk’s xAI, an artificial intelligence company, has secured a major delivery of NVIDIA’s Blackwell GB200 GPUs, marking a strategic step in its push to lead in generative AI. By mid-2025, xAI plans to deploy a massive 300,000-unit supercomputer powered by NVIDIA’s Blackwell B200 GPUs, aiming to enhance its AI model training capabilities. This particular order amounts to over US $10 billion, but the GPUs individually are priced between $60,000 and $70,000. Musk stated that this GPU cluster will significantly enhance xAI's capabilities, especially for AI training tasks, as the Blackwell B200 chips offer up to 4x the training performance and 30x the inference performance of their predecessor, the Hopper H100. This move aligns with NVIDIA's robust earnings growth, driven by surging demand for AI hardware, forecasting billions in AI server sales in 2025.