Among the Best Places to Retire

September is living up to its reputation if this week is an indication of how the rest of the month will unfold.  It doesn’t come as a surprise as we’ve talked about September in recent weeks.  At this point, the only unknown is whether the Federal Reserve will cut interest rates by 25bp or 50bp at its next meeting on September 18th.  Today’s Nonfarm Payroll report indicates that the economy is weakening but not at an alarming rate which suggests we should expect a base case of a 25bp rate cut.  We don’t have long to wait now.

Digging into the details of the August jobs report, we see that job growth during the month was a muted 142,000, which was below expectations, but above the prior two months.  The good news is that the unemployment rate ticked down to 4.2% from 4.3% in July.  The industries logging the biggest gains in payroll were construction (+34K) and health care (+31K).  Employment in manufacturing, which has been slowing for a few months now, fell 24K in August according to the Bureau of Labor Statistics.  It should be noted there was a combined 86K downward revision for June and July.  Isn’t it strange that the revisions more recently have all been to the downside?

While artificial intelligence (AI) has dominated the news much of this year, we haven’t talked about the various developments in some time.  ChatGPT, developed by a consortium of investors in OpenAI, gets most of the attention, but did you know Elon Musk, among his various companies, also has an AI company called xAI?  The company announced it now takes the crown for the largest AI learning platform with over 100,000 of Nvidia’s GPUs.  Furthermore, it is expected to double in the next few months if Musk is to be believed.  The battle for AI supremacy has escalated the demand for Nvidia’s coveted processors.  Earlier this year, Meta’s CEO, Mark Zuckerberg, said his company plans to have 350,000 GPUs (for $10.5B) included in its infrastructure by the end of 2024.  According to Nvidia’s reporting, four customers make up over 40% of the company’s revenues, including Meta, Microsoft, Amazon, and Alphabet (Google).  While some of the air has been let out of the balloon in recent weeks, the market for AI is expected to grow to $825B by the end of the decade from $50B in 2023.

In related news, it is not often that companies in the Dow Jones Industrial Average (DJIA) are booted out, but rumors are growing that just such an event may come soon.  After more than a quarter of a century, Intel may soon be replaced in this index.  Both Intel and Microsoft were the first two tech firms to join the DJIA during the dot-com era of the late 1990s.  But Intel has been struggling to turn around its business and has recently suggested it may be open to selling off some of its divisions, including the foundry business, which is in the process of building a huge, multi-billion-dollar, facility outside of Columbus Ohio.  The stock, which lost more than half of its value YTD, is the worst performer on the Dow and has the lowest price in the index.  Dow inclusions are decided after evaluating stock prices and whether the company helps the index maintain desired exposure to the sector.  The last company to be added was Amazon in February, replacing Walgreens Boots Alliance.  As for which company may replace Intel, the crowd favorite is Nvidia, although some believe it may be too volatile for the price-weighted index.  Another potential candidate is rival chipmaker Texas Instruments (TXN).  While not Nvidia's levels of growth, TXN is up almost 21% this year.

In closing, I sometimes come across articles that purport to tell us the best places to retire.  While the locations often change, they are usually dominated by warm weather or low taxes.  That is why I did a double-take when I saw the most recent list put out by WalletHub.  Yes, Florida still dominates with four of the top five slots going to the state.  Coming as no surprise, if one has the money the best cities to retire to include Orlando, Miami, Tampa, and Fort Lauderdale.  Perhaps not surprising is Scottsdale coming in at number six which seems to have its adherents. But this is where things get wonky.  Number seven is Cincinnati!  I don’t ever recall our fine city being a coveted place to retire but here you have it in black and white.  According to the metrics in the study, it has activities, quality of life, and health care as its biggest selling points.  Between the Bengals and the Reds, FC Cincinnati soccer, world-class museums and restaurants, events like Oktoberfest Zinzinnati, BLINK Cincinnati, a world class zoo, Music Hall and the Aronoff Center, and so much more, we certainly stack up with the best.  As for some less desirable places to retire, we must look at California which ranks low primarily because of the cost of living.  Now you know. 

Bruce J. Mason, MBA