Archive
Hot Tips
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May 16, 2025
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Consumer Sentiment Crashes,
with the second-lowest reading in 73 years at 50.8. One-year inflation expectations are at 7.3%. The majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs between the two countries.
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Meta Delays Flagship Behemoth AI Product,
taking the shares down 6%, as concerns about its capabilities rise. Company engineers are struggling to significantly improve the capabilities of their Behemoth large-language model, resulting in staff questions about whether improvements over earlier versions are significant enough to justify public release. Incremental improvements are shrinking, despite a planned $72 billion capital investment this year.
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Coinbase Hit with SEC Investigation,
taking the stock down 6%. The inquiry focuses on the number of “verified users” reported by the company, which it has claimed is more than 100 million in various securities filings and marketing materials. The investigation began during the Biden administration, which was famously hostile toward the crypto industry, and has continued under the Trump administration’s more crypto-friendly SEC.
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Existing Home Sales Plummet.
In April, sales dropped unexpectedly, despite increases in available inventory. Sales decreased 17.8% from the previous month, reaching 4.330 million (annually adjusted). The median price of an existing home sold in April was $407,600, a 5.7% increase compared to the previous year. While inventory rose 9% month-over-month, it was still only a 3.5-month supply at the current sales pace.
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Building Permits Dive in April,
falling 4.7% to a seasonally adjusted annualized rate of 1.412 million, the lowest in eleven months. This decline, which was below market expectations, was influenced by factors such as rising mortgage rates and tariffs on imported building materials.
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May 15, 2025
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United Health Care Investigated for Medicare Fraud,
taking the stock down 14%. The company has lost 75% of its $1 trillion value from the top. Conviction would bar any Medicare business for five years and get (UNH) removed from the Dow Average. Avoid the sector as long as RFK is demolishing the health care industry from the top.
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Dick Sporting Goods Takes Over Foot Locker (FL),
for a bargain $2.3 billion, whose business was completely destroyed by the trade war. Some 100% of (FL) products were made in China. It's hard to see what Dicks is going to get out of this failing business, which is why the shares are down 14%. The companies have discussed a deal at $24 per share for Foot Locker, the report said. That would represent an 86.5% premium to the stock's last closing price. It seems that trade wars have consequences.
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Retail Sales Crater,
gaining 0.1% in April from March, the Census Bureau reported Thursday. Economists surveyed by FactSet had forecast that overall retail sales would gain 0.2% month over month in April, a slowdown from a revised 1.7% surge in March. This is what the beginning of a recession looks like.
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US producer prices unexpectedly declined in April
by 0.5%, the weakest in five years, largely due to a slump in margins. The decline suggests companies are absorbing some of the hit from higher tariffs, rather than passing them on to consumers, who have so far seen only a modest impact. Yet another pre-recession indicator.
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Weekly Jobless Claims at 229,000.
Claims have moved in a 205,000-243,000 range this year, consistent with a historically low level of layoffs. Companies have been hanging on to their workers following difficulties finding labor during and after the COVID-19 pandemic. Trump's on-again, off-again tariffs have created an uncertain economic environment, resulting in major companies from airlines to motor vehicle manufacturers pulling their 2025 financial forecasts.
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May 14, 2025
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Nvidia Scores $1.5 Billion Blackwell Chip Sale in Saudi Arabia.
(NVDA) shares have risen 55% from the bottom, receiving a massive boost from the surprise wind down of the China trade war. It also helps that restrictions on high-end chips to Saudi Arabia were lifted, allowing for an immediate sale of 18,000 Blackwells. No doubt some of these chips will end up in China, as the Middle East has long been a transshipment point for sanction busting. It, however it does give a further boost to (NVDA) shares against our short.
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How High Can Stocks Go into a Recession?
Store shelves are about to go empty. Economic data points for the next six months will be awful. The budget deficit is about to double, pushing interest rates up. How many shares do you want to buy after the sharpest move up in history?
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Say Goodbye to the EV Tax Credit,
long a major incentive for car buyers. Some details of the house tax bill are out. Now, automotive investors have two matters to consider: the possibility that electric-vehicle tax credits could vanish, and the potential for a new tax break on cars assembled in the U.S.. That’s a huge plus for Tesla, which prompted a major rally in the shares.
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AMD Announced $6 Billion Share Buyback,
reversing a downtrend that is a year old. Low-end chips aren’t commanding big premiums these days.
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Lockheed Martin ould Get Major F-35 Contract Soon.
The fighter jets in lot 19 could potentially be awarded sooner than the second half of this year, which was the company's earlier timeline. The Pentagon, U.S. allies, and partners are the primary customers for these lots of the F-35 jets. The F-35 Lightning II program has been bogged by delays in rolling out an upgrade to give the jet better displays and processing capabilities for its electronic systems. Last month, Lockheed beat expectations for quarterly profit and reaffirmed its annual forecasts, buoyed by resilient demand for its missile systems and fighter jets.
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May 13, 2025
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Inflation Comes in Cool at 2.3%,
indicating that recession risks are rising. US inflation rose less than forecast in April, with the consumer price index increasing 0.2% from March, driven by tame prices for clothing and new cars. The report suggests that companies are absorbing some of the extra costs of higher tariffs, and consumers are cutting back on leisure and discretionary spending.
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Stocks Rocket Back Up to Zero,
after the massive rally of the past month, leaving them unchanged on the year. Markets are now extremely overbought and expensive. The (SPY) is still down 4.4% from the February top. A correction is overdue.
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Boeing Deliveries Double,
45 up commercial jets in April, nearly twice the 24 airplanes it delivered during the same month a year ago. Years of crises and production problems have left Boeing heavily saddled with debt, and it needs to increase deliveries to bring in more cash.
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Coinbase Joins S&P 500 Index,
taking the stock up 21%. It will replace credit card issuer Discover Financial, which is being acquired by Capital One. The move will be effective before trading begins on May 19. The move reflects S&P’s preference for adding new technology companies while dumping old economy ones.
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Volatility is Keeping Money Out of the Market,
says BlackRock CEO Larry Fink. Uncertainty is the word of the day every day. There is 12 trillion euros sitting in bank accounts in Europe. In the United States, there's $11 trillion sitting in money market funds. In the meantime, federal deficits are exploding at a record rate.
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May 12, 2025
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Trump Caves on Most Chinese Demands,
squeezing the shorts. You can only talk markets up for so long. Stock markets were already in the process of peaking out and are looking for the slightest excuse to dive. Chinese exports fell by 20% in April, setting off a supply chain disaster. How do you go from a 145% Chinese tariff to 80%, to 60%, to 30% in a week? The tax increase is still there, it's just $100 billion instead of $1 trillion. The recession is still on. Getting China to agree is one thing. Getting them to honor agreements is entirely another kettle of fish.
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Americans are Staying Home this Year,
opting for domestic road trips instead of expensive foreign ones. A 20% decline in the US dollar doesn’t help either. Some 39.4 million are expected to drive this Memorial Day weekend, up 3.1% from last year. Gasoline prices at a four-year low are another incentive.
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Tesla Supplier Panasonic Lays off 10,000,
indicating that grim days are ahead for Elon Musk’s Hobby. The company has more than 200,00 employees worldwide who make everything from washing machines to motors to EV batteries to TVs and other consumer products. I’m maintaining my Tesla short.
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Berkshire Hathaway Now Owns 5% of the US Treasury Bill Market,
which are currently yielding 4.3%. Warren Buffett wasn’t drinking the Kool-Aid, nor was I. Buffett, in fact, has been raising cash for years, now at $340 billion, and the recession he waited for to deploy is now here.
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Eat that Steak Now,
as inventories hit 70-year lows and beef prices take off. A year-long western drought has sent feed prices through the roof. The average price of a pound of ground beef is up 12.8% YOY to $5.98. Labor and insurance costs are also rising sharply. The entire food industry is being turned upside down by the trade wars, where the US was a major exporter.
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