Market Commentary - August 2024

August was a volatile month and the Fund´s return ended at -4.25%. The month started with a major correction in the stock market, and August 5 became known as “Black Monday 2024” due to widespread selling of stocks. This decline was triggered, among other things, by weak US jobs data and the return of the term “hard landing”. Since then, a slow recovery has taken place, with economic data, particularly from the United States, helping to allay fears of a hard landing or recession. In addition, the Fed has signaled that it is ready to start cutting interest rates. It is a difficult balancing act, as we need to see weaker economic data for interest rate cuts to become relevant, but not too weak data, as this could create concerns about a deeper recession. September will be characterized by a focus on the Fed's interest rate announcement in the middle of the month. A rate cut of 0.25% is seen as a given in principle, but the odds of a double cut of 0.5% have decreased. Before the announcement, however, important new job statistics will be presented that could have a major impact.

CME Group has developed one of the most sophisticated tools for predicting the probability of a Fed rate change, based on futures trading. At the time of writing, the probability of a double cut in September is estimated at 31%.

Holdings

The best-performing holding for the month was AST Spacemobile, up +42.1%. This new addition in the space sector, often compared to Nvidia as a potential game-changer, is unique in its ambition to create a direct satellite-to-mobile network connection. In August, the company confirmed it is on schedule to launch satellites in the coming weeks. Upon completion, this network will provide nearly 100% geographic coverage in the US for direct satellite-to-mobile service, with beta testing by mobile operators AT&T and Verizon expected within a few months.

At the other end, Immersion was the fund’s worst performer, down -22.1% for the month. Although Immersion, a leader in sensory technology, released an earnings report that met expectations, the decline likely stemmed from profit-taking by investors, despite significant insider purchases following the report.

News

New Developments in Our Megatrends: Augmented Reality and AI Synergies

The field of AR glasses is evolving rapidly, with tech giants Meta and Google shifting their focus towards the next generation of "smart glasses." While Apple launched its high-end Vision Pro last year, combining Augmented Reality (AR) and Virtual Reality (VR), Meta—likely Apple’s main competitor with its Meta Quest Pro—now appears to be focusing on smart glasses, in collaboration with Google. Supporting this shift, Meta recently concluded its “La Jolla” project, which insiders describe as its attempt at a Vision Pro competitor. Additionally, since 2021, Meta has partnered with Ray-Ban to develop smart glasses.

The terminology in this field can be confusing: unlike VR-enabled devices, smart glasses leverage AR for notifications and basic holograms, without advanced graphics or immersive VR. This approach reduces the technical complexity and cost. Another reason for this shift is the rapid advancement in AI. With AI, these glasses can perform many functions with minimal hardware. A few sensors, voice activation, and a camera allow the glasses to interpret the environment and answer questions, exemplifying the powerful synergy between Augmented Reality (AR) and Artificial Intelligence (AI).