By LomaPari2021 @Adobe Stock
While LA smolders and residents worry about the Santa Ana winds rekindling destruction in LALA Land, Andy Kessler has worries of his own: smoldering questions in the WSJ:
Something Rotten at Apple?
Little growth, and earnings per share basically flat since 2021 even with stock buybacks lowering share count.
Estimates suggest iPhone unit sales are back where they were in 2015, while iPad unit sales have declined by almost half since 2013. The Apple Vision Pro augmented-reality headsets are a bust. Remember, growth stocks are highly valued on, well, growth.
Even more plaguing, Apple behind in AI.
Siri, like Amazon’s Alexa, could have won the AI chatbot battle but is now a reminder of what could have been. A conversational Siri isn’t expected until the spring of 2026. Every year, Google pays Apple around $20 billion to be the default search engine on iPhones, iPads and Macs. That could go away with the Justice Department’s antitrust remedies for Google. Yet Apple stock is near record highs. Sure, many companies aren’t trading on real-world fundamentals—I’m looking at you, Tesla—but they will.
Is Google Threatened?
The good news is Google may save $20 billion a year in Apple payments. But Google’s problems are more structural: AI search could easily eat into Google’s almost $200 billion worldwide search revenue and its 90% market share. Softening the blow, Google does include verbiage from its own Gemini AI on top of its web search results. Still, this is a big change.
Ozempic: Pay for Itself?
GLP-1 drugs look to be the new aspirin. It’s hard to find diseases they don’t affect. So far, they’ve helped treat type 2 diabetes, obesity, stroke, heart attack, sleep apnea, kidney disease and substance addiction. And there are hints these drugs may reduce the risks of colorectal, pancreatic and endometrial cancer. Wow.
In December, a preliminary Cornell College of Business paper reported that GLP-1-using households spend 6% less on groceries within six months, while spending on chips, sweet bakery goods and cookies dropped up to 11%. These drugs are still expensive, and saving on Pringles won’t pay for them, not yet. But they’ll surely change long-term healthcare spending.
AI Hype Cycle Rolling Over?
Despite talks last week of Anthropic raising money at a whopping $60 billion valuation, there are early signs. Usage prices are dropping.
Mr. Kessler is seeing lots of Nvidia GPU chips on eBay: Without the fastest Nvidia chips, a Chinese AI model, DeepSeek, spent about $5.5 million and in two months almost matched the OpenAI 01 model’s performance. Elon Musk’s Grok now fact-checks ChatGPT. Competition is fierce.
Robot Overlords Rising?
Tesla’s Optimus humanoid robots made a splash. Now robots from Figure AI and Agility Robotics are starting to ship. Operating costs for the robot could eventually drop to under $1 an hour. That’s how manufacturing returns to the U.S.
Private Equity, the New Bogyman?
Check out this headline from Politico, advises Mr. Kessler: “How a Private Equity-Associated Lender Helped Precipitate a Nursing-Home Implosion.”
From Harvard’s School of Public Health: “Private equity’s appetite for hospitals may put patients at risk.” The backlash against healthcare providers and funders is real.
Replace “E pluribus unum” with Eat My Dust
U.S. and European stock-market capitalizations were comparable at the end of 2009. Now estimates show that the U.S. market is more than three times the size of Europe’s. The dollar and euro are close to parity. A Canadian dollar will buy you only 69 Lincoln pennies. Chinese consumers have lost $18 trillion in real estate since 2021, more than U.S. households lost in the 2007-09 financial mess. Eat my dust indeed.
Is Easy Money Era Over?
The Federal Reserve cut short-term rates from 5.25% to 4.25% since September, yet long bond rates are up more than 100 basis points, from 3.6% to 4.8%. Still, there is plenty of froth. The Magnificent Seven stocks keep rising. Credit spreads, a measure of risk, are at 10-year lows. Crypto manipulation continues. Before blowing out last week, a joke cryptocurrency named Fartcoin increased more than 3,000% after Election Day, peaking at nearly $1.6 billion value. Bitcoin has similar hot air. Stock markets rise because of productive earnings. As Charles Ponzi would explain, without productivity, the money coming out of crypto can only equal the money going in. So easy money over? Nope. The Fed may hike rather than ease this year.
Is Snoop Dog Overexposed?
D-O-Double-G’s soft nasal twang is irresistible, agrees Mr. Kessler, who neglects to acknowledge the wildly popular, sold-out “authentic” Snoop Dogg Snoop “Elf on a Shelve.”
He’s everywhere: The Olympics. A new album. A Snoop AI voice generator. Corona and T-Mobile ads. Throw him in with Martha Stewart for (wink, wink) Bic Lighters: “Perfect for candles . . . and more.” Mr. Kessler met Snoop at a basketball game years ago and told him, “Welcome to Oakland.” I will never forget his twangy reply, “What up? What up?” Maybe he meant interest rates.
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