From the Desk of Anthony Pompliano0:00 Is Market Sentiment Beginning To Turn Positive?3:17 Jobs Report Reveals Why The Fed Will Lower Rates4:43 Government Announces The US Tech ForceEnjoy! https://t.co/W92fBRwF9I ...

Gold edged higher in early Asian trade. However, the gains have been partially offset by the progress in the Russia-Ukraine peace talks, ANZ said. ...

Financial Performance & Strategy - The company has lowered rates three times in the last 15 months and expects to lower them again in 2026 while growing earnings at over 9% per year [3] - Infrastructure investment is offset by operating maintenance cost reductions, leading to significant cost savings [1] - Improving credit metrics results in lower cost financing, allowing the company to lower rates for customers [2] Infrastructure & Technology - The company has buried its 1,000th mile of power lines, at a million dollars a mile less than a couple of years ago [4] - Technology underpins situational awareness and responsiveness, leading to a 35% reduction in ignitions this year despite similar fire conditions [5] - The company is implementing layers of protection, starting with hardening the system to mitigate fire risk [4] Load Growth & Rate Design - The company is experiencing rate-reducing load growth due to increased compute demand, particularly from AI applications [7] - Residential customers do not subsidize large load; large load pays its full freight [7] - The company has rate designs in place so that residential customers only benefit from new and growing load [9] - Compute data centers are located throughout the service area, supporting companies using AI in their daily business [10]

Market Dynamics - Recent fluctuations in tech stocks indicate a rotation out of and back into the sector, suggesting investor sentiment is sensitive to valuation concerns and concentration risks [1] - The quick rebound in tech stocks is attributed to increased capital expenditures, particularly from companies like Meta and Nvidia, which are seen as beneficiaries of this spending [2][5] Capital Expenditures and Earnings - Meta's larger-than-expected capital expenditures have raised questions about whether such spending will translate into real profits, with Nvidia positioned as a key winner in this scenario [2][5] - The earnings season has shown a positive trend, with 77% of companies beating earnings expectations, which is above the historical median of 72% [8] AI and Profit Margins - The integration of AI technology is expected to drive improvements in profit margins across various companies, with early adopters already seeing significant benefits [3][4] - Companies like CH Robinson are utilizing AI to reduce headcount and expand margins, indicating a broader trend in the industry [4] Global Market Insights - The Japanese market, represented by the Wisdom Tree Japan Opportunities ETF (OPJ), is viewed as an attractive investment due to lower valuations compared to the US market, despite recent underperformance [11][12] - Japan's corporate governance and fiscal policies under the new prime minister are expected to support further growth, making it a top investment idea [12][13]

Core Viewpoint - Smaller banks are expected to benefit from recent regulatory changes that may provide them with more favorable operating conditions [1] Group 1: Regulatory Changes - Recent regulatory adjustments are aimed at easing the operational burden on smaller banks, allowing them to compete more effectively with larger institutions [1] - These changes are anticipated to enhance the financial stability of smaller banks, potentially leading to increased lending and investment activities [1] Group 2: Market Impact - The adjustments in regulations could lead to a more balanced banking landscape, where smaller banks can regain market share lost to larger competitors [1] - Investors may see this as an opportunity to capitalize on the growth potential of smaller banks as they adapt to the new regulatory environment [1]

Financial Implications - Lower interest rates could benefit Trump's bank account [1] Source Information - The report originates from a news article discussing the potential benefits of lower interest rates for Donald Trump's bank account [1]

Market Trends & Economic Outlook - The market may see a similar situation to a year ago with potential for rising inflation and two-year Treasury yields around 35%, possibly moving higher [1] - Economic growth alongside rising inflation isn't necessarily negative [1] - Small caps are potentially underowned, with futures short on Russell, suggesting lower rates could benefit them [1] Investment Strategies & Portfolio Allocation - The firm suggests not being long bonds and considering a lower bond allocation, with alternatives like gold for balance [1] - Diversification is crucial, with potential opportunities in international markets (e g, China) and small caps [1] - Consider diversifying from the "Magnificent Seven" (Mag 7) due to their concentrated exposure [1] Individual Stock Picks & Sector Focus - Axon, a maker of body cams and tasers, is highlighted as a potentially good investment with 30% type growth [1] - AI is a significant theme for the next 3-5 years, but diversification beyond chip manufacturers is recommended, including data centers, cooling systems, and energy companies [1][2] Valuation & Risk Management - Overconcentration in a few AI chip names carries significant risk [2] - The traditional valuation game may not always work, as seen with Nvidia and Broadcom, where earnings eventually justified high valuations [1] - Stocks hitting highs often continue to make new highs, while stocks hitting lows can potentially go to zero [1]

Core Insights - The article emphasizes the importance of a holistic approach to investment recommendations, considering the entire investment ecosystem rather than evaluating companies in isolation [1]. Group 1 - Michael Del Monte is identified as a buy-side equity analyst with over 5 years of experience in the investment management industry [1]. - Prior to his current role, he spent over a decade in professional services across various industries, including Oil & Gas, Oilfield Services, Midstream, Industrials, Information Technology, EPC Services, and consumer discretionary [1]. - The article suggests that investment recommendations are built upon a comprehensive understanding of the investment landscape [1].

Monetary Policy - The report suggests Trump's argument for lower interest rates has some validity [1] - The report mentions a specific interest rate target of 1% [1] Economic Commentary - The report implies the Federal Reserve's independence is crucial [1]