A disciplined weekly review of the forces shaping risk and return.
Key Points
- Crude continues expansion with 17% rise this week.
- ISM Manufacturing PMI in at 52.7, signaling growth in manufacturing.
- Intel (INTC) repurchases 49% equity stake in Ireland fab venture.
Markets
- WTI Crude is up again this week at almost 18%, bringing the 6m change up to 84%.
- Gold had another up week at almost 7%, bringing the 5 year change to 170%, outpacing all major indexes.
Macro
ISM Manufacturing PMI
ISM Manufacturing PMI came in at 52.7 for March compared to 52.4 for February.
A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining.
“So What?”
Expanding manufacturing is considered a leading indicator that can possibly help predict future GDP 6 to 12 months out (no guarantee). All else equal, an expanding manufactiring economy is a good thing.
Gold Outpacing Markets on 5 Year TimeFrame
This chart blows my mind:
Gold outpacing equities can say something. One possible explanation is that investors may be responding to concerns more commonly associated with fiscally stressed environments, though there are many competing explanations and no single narrative fully explains gold’s move.
The “so what?” here is to be careful. Just because something rose in price in the past doesn’t mean it will continue. Past performance is not indicative of future results. It’s actually a great idea to take extra precaution when considering any security or commodity that has risen in price more than a reasonable amount.
Equities
Intel (INTC) Re-Purchasing 49% Equity Interest in Ireland Fab Joint Venture
From the press release:
Intel Corporation (Nasdaq: INTC) and Apollo (NYSE: APO) today announced a definitive agreement for Intel to repurchase the 49% equity interest in the joint venture related to Intel’s Fab 34 in Ireland not held by Intel for $14.2 billion. The agreement reflects Intel’s continued business momentum underpinned by the growing and essential role CPUs play in the era of AI, a significantly strengthened balance sheet and the strong partnership between Intel and Apollo.
. . .
The repurchase of the 49% JV stake is expected to be funded through cash on hand and proceeds from the issuance of new debt of approximately $6.5 billion. The transaction is expected to be accretive to ongoing EPS while strengthening Intel’s credit profile in 2027 and beyond. Intel continues to expect it will retire debt maturities as they come due in 2026 and 2027.
Ireland and Fab 34 remain central to Intel’s global manufacturing footprint and current and future product roadmap. Fab 34 is a high-volume semiconductor fabrication facility for products utilizing the Intel 4 and Intel 3 process technologies, including Intel Core Ultra and Intel Xeon 6 processors. Intel continues to make significant capital investments in its Ireland campus to expand manufacturing capacity, strengthen execution, and deliver for customers building next-generation AI-enabled systems.
You can read the full press release here:
Intel to Repurchase 49% Equity Interest in Ireland Fab Joint Venture :: Intel Corporation (INTC)
So What?
Intel seeking to own more of itself at this time is interesting.
This is general market commentary, not a recommendation to buy or sell any security.
Education
What Owning a Stock Actually Means
A stock is a slice of a business, much like a slice of a pie. It’s not a piece of paper, or a number on a screen, but a legal reality that attaches part of that business to the owner. That’s why you’ll hear me talk about fundamentals, accounting, and assessing leadership. It’s because buying stock is literally owning a piece of the business. I want to make sure the fundamentals look good, the accounting makes sense, and the leadership is someone I can root for long term.
It’s so much more than numbers on a screen.
Wealth
Why Business Owners Need a Different Wealth Strategy
My heart goes out to business owners. They have it pretty tough. It’s the epitome of putting all the eggs in one basket. What’s more, income to business owners is not linear like that of a W-2 employee. There can be lean years and cash-flow-heavy years. This alone requires a more involved type of wealth strategy.
What’s more, the business owner has to navigate business strategy and then bridge the (hopefully) positive results into personal wealth. This goes beyond Internal Rate of Return (IRR) on a proposed project or expansion. Market cycles, taxes, regulations, industry landscape, and more contribute to the vastness of options.
I hope to cover some of these in the coming weeks/years.
Quote of The Week
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Mark Twain
Michael’s Corner
First Principles Thinking
It’s getting to the fundamental of whatever it is we’re exploring. It’s the child asking “Why?” 5 times in a row to every answer. It’s also the machine that makes Socratic questioning run.
It’s also the mental method to help us know why we are investing in a security.
First principles thinking is the art of breaking down complex problems into their most fundamental truths.
Shane Parrish
More from Shane:
Socratic questioning can be used to establish first principles through stringent analysis. This a disciplined questioning process, used to establish truths, reveal underlying assumptions, and separate knowledge from ignorance. The key distinction between Socratic questioning and normal discussions is that the former seeks to draw out first principles in a systematic manner. Socratic questioning generally follows this process:
- Clarifying your thinking and explaining the origins of your ideas (Why do I think this? What exactly do I think?)
- Challenging assumptions (How do I know this is true? What if I thought the opposite?)
- Looking for evidence (How can I back this up? What are the sources?)
- Considering alternative perspectives (What might others think? How do I know I am correct?)
- Examining consequences and implications (What if I am wrong? What are the consequences if I am?)
- Questioning the original questions (Why did I think that? Was I correct? What conclusions can I draw from the reasoning process?)
This process stops you from relying on your gut and limits strong emotional responses. This process helps you build something that lasts.
Useful in finance, investing, and life.
(In case you missed it, last time we covered Two Track Analysis)
Happy Easter!
— Michael
A Few Final Notes
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Disclosures
This newsletter is provided for informational and educational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security. Walsh Financial is a Registered Investment Adviser.
The content is general in nature and is not intended to be advice tailored to any particular person, circumstances, or investment objectives. Any references to individual companies, securities, sectors, asset classes, market indexes, commodities, or economic and market conditions are for general commentary and discussion only and should not be construed as a recommendation or a call to take any specific action. Walsh Financial and/or clients may hold positions in securities mentioned.
This information is not intended to provide, and should not be relied upon for, accounting, legal, tax, or insurance advice. Readers should consult with their financial advisor and/or other qualified professionals regarding their specific situation and the then-current applicable laws and rules before making any financial decisions.
All investments involve risk, including the possible loss of principal. Past performance is not indicative of future results. This newsletter may include opinions, projections, or forward-looking statements (including views on economic conditions, market trends, or broad investment themes). Such views are as of the date published, may change without notice, and there is no guarantee that any opinions or forecasts will prove to be correct.
Information is obtained from sources believed to be reliable; however, Walsh Financial does not warrant its accuracy, completeness, or timeliness.
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