July 24-28, 2023

Tactical Signal 9

Sowell’s technical signals remain firmly entrenched in a full position (100%) despite a week of mixed results from earnings reports and economic releases. Looking ahead, the market sentiment and momentum will largely be influenced by the Federal Reserve’s narrative and rate decision scheduled for later this week.

With the tech heavyweights pulling back from their record highs, financial stocks carried the baton pushing the S&P 500 forward gaining another +0.90% for the week. Apple, among the top 10 stocks, was the only technology-like stock to close with a positive gain for the week. Taiwan Semiconductor, the world’s largest chip fab, announced delayed production in its Arizona plant signaling to the market supply chain concerns and a possible semiconductor slowdown helped bring down technology stocks. The S&P 500 index has gained 19.4% YTD on the overall momentum and from the reversion of Technology, Communications and Consumer Discretionary sectors. Some of the largest financial stocks including American Express, Bank of America, Morgan Stanley, and PNC Financial beat consensus earnings. Economic releases and in particular manufacturing output fell short of consensus expectations as Industrial Production fell 0.5% and production capacity utilization declined to 78.9% on expectations of consumer spending. Is consumption and consumer spending finally slowing remains to be seen from a single period, but this is favorable news going to this week’s Fed rate decision.

Last month’s Fed decision to skip or pause interest rates remains to be seen and will be the highlight of the week ahead this Wednesday. Thursday’s key economic releases including GDP and Wholesale Inventories will help shape the outlook for the remainder of the year. Earnings season will broaden and heat up after leading with financial stocks. Leaders including AT&T, Boeing, GE, GM, Google, and Microsoft will report and shape investor sentiment.

How do you develop AI systems that are aligned to human values and including morality. This is why I think the development of this needs to include not just engineers but social scientists, ethicists, philosophers and so on.”

– Google CEO Sundar Pichai, AI Revolution - 60 Minutes, June 14th, 2023.

Impact of Solar Energy

In science, the principle of 'one person’s gain is another’s loss,' often referred to as a zero-sum game, has been a prevalent concept. However, as we move towards renewable energy sources, this notion is gradually shifting. One remarkable example of clean energy progress is the Ivanpah Solar Energy Generating Station, situated forty-seven miles west of the Las Vegas Strip in the Mojave Desert.

Covering over 3,000 acres of land, the Ivanpah facility hosts the world’s largest 386-megawatt solar power plant. This impressive solar plant is expected to provide sustainable energy to approximately 140,000 homes each year while also reducing an estimated 400,000 tons of harmful carbon emissions. The technology employed here involves three solar concentrating thermal power plants and an array of 173,500 reflection mirrors known as heliostats. These mirrors focus sunlight onto a 450-foot tower at the center of the heliostat array, generating steam to power turbines and convert it into electricity. It's fascinating to note that the concentrated solar beams can reach temperatures exceeding 800 degrees Fahrenheit, earning them the nickname 'death rays.'

Transitioning to renewable energy sources like the Ivanpah Solar Energy Generating Station is crucial in our efforts to combat greenhouse gas emissions and reduce our impact on the environment. Nevertheless, as with any new technology, there are potential consequences that warrant investigation.

Researchers are closely monitoring whether solar power plants like Ivanpah displace more heat within the Earth's surface, considering that only a fraction of the solar rays are converted into electricity. This concern arises from the possibility that increased heat displacement might contribute to global warming in the long run. Additionally, there have been reports of the facility posing a threat to wildlife, particularly birds, due to the intense solar rays.

As our nation faces record-breaking temperatures, with Las Vegas experiencing an intense record high of 118 degrees last week, questions arise about the potential impact of clean energy initiatives on local climates. It is essential to recognize that as we strive to mitigate climate change through clean energy, we must also remain mindful of any unintended consequences and work diligently to address them.

The evolution of science and technology is our best hope in finding solutions to global warming and its associated challenges. By fostering innovations and implementing sustainable practices, we can ensure that the aggregate effect of human activities goes beyond mere zero-sum outcomes. Through collective efforts and continuous advancement in clean energy technologies, we can create a positive impact on our planet's ecosystem and environment, safeguarding a sustainable future for generations to come.

Advisory services offered through Sowell Management, a Registered Investment Advisor. The views expressed represent the opinion of Sowell Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and non-proprietary sources that have not been independently verified for accuracy or completeness. While Sowell Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sowell Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.


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