1. Power is power…
Power demand and efficiency are huge themes in global markets right now. Whilst there are lots of challenges and long timeframes with bringing on new baseload power supply for data centres, one of the best things you can do is upgrade your chips to the latest technology. As the chart below shows, this is why there is a scramble for the latest chips right now…and also why TSMC, a holding in the S3 Global Opportunities Fund, has been raising prices!
Source: Jefferies (June 2024)
Companies mentioned are illustrative only and not a recommendation to buy or sell any particular security.
2. Bigger and better…
The US continues to strengthen in the face of higher interest rates. Even the Fed just talking about rate cuts has spurred further optimism for the consumer, and consumer spending. And all the recent stimulus, such as the CHIPS Act, the Inflation Reduction Act, and the Infrastructure Act, has meant manufacturing continues to surge. It seems the positive effects of fiscal policy are dominating the negative effects of Fed hikes.
Source: Bloomberg, Apollo Chief Economist (June 2024)
Source: Census Bureau, Haver Analytics, Apollo Chief Economist (June 2024)
3. Doctor doctor…
As part of the NSW Budget this week, the government announced a new $189 million GP bulk-billing support initiative. The aim of this initiative is to lower costs for GP practices to ensure that they continue to be able to bulk bill, and try and improve GP attendance following a significant decline in volumes post Covid. The entire healthcare system is impacted by weaker GP attendances, in particular specialists with less GP referrals. Estimates are that GP attendance is still tracking ~10% below the pre-COVID trendline.
Source: Medicare, E&P (June 2024)