Apple Health, Sentiment, Chips

Apple’s Convergence Device – Health

One of the amazing things about software is that it gives engineers near infinite creation and creativity abilities. In particular, the iPhone is an excellent playground for testing new products and features because we carry it everywhere we go, it’s always on, and it’s full of useful sensors that can be used to record the outside world. This month Apple released its Health Report detailing how the device is being used to track and influence user health. Cynics may complain that the iPhone has not changed much over the last five years, but they are missing the point that even subtle continuous improvement unlocks new possibilities. There is a compounding effect with the iPhone even if each new release looks nearly identical.

By the way, the convergence device refers to a single device where different technologies converge into one: camera, music, email, internet, text… and now health care.

So far, the health app nudges users to protect their ears from high headphone volumes, find better sleep schedules, send medication reminders, and track activity, or lack thereof. These types of nuanced customized health suggestions were not possible pre-iPhone. When people argue that technology doesn’t make us happier or improve our lives, show them how the iPhone can detect early signs of heart disease through irregular walking patterns or irregular heartbeats picked up passively through the watch. A few weeks ago, we wrote about how only 20% of Apple’s revenue comes from services. However, Apple has a massive opportunity to continue building game-changing software like their health services. Consider the health-related data Apple will be able to collect over the next few years on ~1 billion active iPhone users. Cynics can point out that this data can lead to manipulation. Optimists can point out that nuanced customized health monitoring for 1b+ people could make a real impact, especially once the product matures.


Human-robot interactions

A robotic arm at a chess tournament in Moscow broke the finger of a 7-year-old boy when the two mistimed their chess moves, and the robot grabbed a finger instead of the chess piece. As we move towards a more automated future, accidental robot-induced human injuries are bound to increase. This incident opens interesting questions on insurance and assessing who is at fault. Perhaps the chess-playing robots should be designed out of soft plastic with low strength so mistakes cannot end in physical injury. Sales of robotic devices are hitting all-time highs as wage increases incentivize business owners to seek productivity gains through cobots (collaborative robots) or full-on automation.


Sentiment, the Fed and Microsoft and Google earnings

Microsoft and Google both reported double-digit percentage revenue growth on Tuesday evening. If you only checked the headlines on CNBC, you would have thought the results were negative. The headlines focused only on both companies “missing” their estimates, which sends the wrong message. The more important detail about MSFT and GOOG is that they continue to grow their businesses at double-digit annual growth rates pre and post-Covid and during a Fed tightening cycle.

On the other hand, there is a sign of slowing ad spending, especially as we may be in a recession or facing a slower growth economy. This brings me to sentiment. There is a lot of good news mixed with bad news, and it seems to be everywhere all the time. This appears to be a consistent theme in 2022. The Fed meeting yesterday was also a mix of good and bad news. Powell highlighted that falling unemployment rates are incompatible with recessions, but we still don’t see tangible relief for inflation. The Fed rate hike brings us to 2.5%, back to the 2019 high as well as the highest rate we’ve been able to implement since the 2008 crisis. Sentiment is extremely low, but the data from Visa credit card spending,  LVMH sales, employment levels and Fed comments show a lot of strength.

The doomsday interpretation of all this appears to be: that the economy is too complex and therefore protecting against inevitable failure is impossible. The optimistic interpretation (and the one I agree with) is: that the economy is so complex that it has infinite ways to adapt and evolve to reach new levels of growth and homeostasis.


Renewable Non-Renewables

A solar tower built by a team led by Aldo Steinfeld of the university ETH Zurich has demonstrated the ability to convert solar energy, water and CO2 into kerosine that can be used as jet fuel. The details can be found here. Jet fuel is a hydrocarbon, like all oil and gas, forming with just hydrogen and carbon atoms. While this solar tower is not mass production ready, the proof that we can convert sunlight, water and Co2 into oil and gas products implies that oil and gas could become renewable fuel sources instead of fixed supply. This concept is not unlike lab-made diamonds, which are just rearranged carbon atoms.


Chips Bill

The Senate approved a $280 billion bill to boost US chip-making technology. Regular readers and clients know that the global semiconductor industry is one of our favorite growth themes. TSMC in Taiwan manufactures 50% of the global semiconductor supply and +90% of the high-end semiconductor technology like Apple M2 chips and NVidia GPUs. One of the most significant global economic risks is something happening to TSMC or Taiwan. Semiconductor manufacturing is one of the most mind-blowingly complex processes ever designed by humans. It’s not easy to build new facilities outside Taiwan at will, and it’s great to see legislation passed to speed up this necessary transition.

Weekly Articles by Osbon Capital Management:

"*" indicates required fields