Archive
Hot Tips
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April 29, 2021
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Fed Leaves Rates Unchanged,
indicating that the economy is improving, but that interest rates are going nowhere. No surprise here. Jay Powell is still going for maximum dove. Strong Biden policy support and the rollout of the vaccine are major positives. $120 billion in bond buying continues. The Fed will keep interest rates at zero until the US economy reaches maximum employment by adding 8.4 million jobs. That could be a long wait as I suspect those jobs have already been destroyed by technology. Stocks popped on the news. It all sets up a ballistic Q1 GDP report for tomorrow, which the Fed already knows. The Bull lives!
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Boeing Disappoints,
delivering a bleaker outlook than expected. The company is still hemorrhaging cash, some $3.68 billion in Q1. But there is a silver lining behind the clouds with China coming back sometime in the future. The 20-month 737 MAX grounding is over and the company is ramping up production once again but is bedeviled with new electrical problems. Buy (BA) on dips like this one.
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The Chinese are Looking to Buy Saudi Aramco.
It underlies the complete dependence on Middle Eastern oil and America’s complete lack of dependence. Buy before it goes to zero! It a terrible trade in a decarbonizing global economy. No need for a US Army here.
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Apple Shocks to the Upside,
with revenues up a staggering 54% to $89.6 billion. The shares soared $5 on new od sales of 48 million iPhones on the quarter. The company committed another $90 billion to its share buyback program from its $204.4 billion cash mountain. The dividend was increased. The dream case scenario is here and justifies my $200 target for $2021. Steve Jobs is laughing from the grave. Buy more (AAPL) on dips.
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5) Private Jet Sales are Soaring,
in anticipation of a post-Covid booming economy. So says General Dynamic CEO in its Q1 earnings report, manufacturer of the Gulfstream family of small jets, the ultimate CEO trophy.
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April 28, 2021
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You are Free to Go Outside,
without a mask if vaccinated, says the CDC. You’re even better off only meeting friends and family who have also been vaccinated. This is going to be a massive spur to the economy. Too bad you can’t get a reservation, as there are few good restaurants left.
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Case-Shiller Explodes to the Upside,
the National Home Prices Index soaring 12% in February. That’s the best report in 15 years. Phoenix (+17.4), San Diego (+17.0%), and Seattle (15.4%) continue to be the big winners. This was in the face of a 50-basis point jump in home mortgage interest rates during the month. The rush to buy homes is pulling forward future demand. The perfect storm continues.
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Biden Raises Federal Minimum Wage to $15 an Hour,
in an attempt to spark inflation. Affecting only 390,000 workers it won’t make much of a dent. It will go a long way in Louisiana, but not so far in California. Now government workers are among the state’s highest-paid in West Virginia.
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The Fed Could Start Tapering,
It’s $120 billion a month in bond purchases as early as October, believes Blackrock’s (BLK) Rick Rieder. When it does, expect the sushi to hit the bond market. Keep piling on those bond shorts, as I have been doing monthly, and am currently running a triple short position. Keep selling short the (TLT) on every opportunity.
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If You’re Wondering Why there is a Chip Shortage?
The Tesla Model 3 uses 24 Silicon Carbide MOSFETs for the inverter only (see below) and each car has two of them, bringing the total chip cost to $7.50 each or $300 per vehicle. The rest of the Model 3 uses many more, possibly up to 100. Tesla plans to build one million of these this year, up from 500,000 in 2020. That brings chip demand for Tesla inverters only to $300 million. Keep buying (TSLA) on dips as well as the entire chip industry like (AMAT), (AMD), (MU), and (NVDA).
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April 27, 2021
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Tesla Revenues Explode for 74%,
and earnings soar to an eye-popping $438 million. Sales are to double or more in 2021 and are up 104% YOY. Q1 is usually the slowest quarter of the year for the auto industry. Global demand is increasing far beyond production levels. It is ducking around chip shortages by designing in a new generation that is currently available. Production of high-end X and S Models has ceased to allow more focus on the profitable Y and 3 Models. Those will resume in Q3. The shares were unchanged on the news. Keep buying (TSLA) on dips. It’s headed for $10,000.
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Apple to Spend $1 Billion on North Carolina Campus,
looking to cash in on cheaper labor, land, operating expenses, low taxes, and no regulation. The Raleigh campus will be near Duke and the University of North Carolina, which it can use as feeder schools for educated talent, and will employ 3,000. They’re not massively expanding because business is terrible. The 5G rollout continues unabated. Buy (AAPL) on dips, target $200.
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Copper Hits New 10 Year High,
lighting a fire under Freeport McMoRan (FCX) which we are long. We still are in the early innings of a major commodity super cycle. The green revolution goes nowhere without increasing copper supplies tenfold. A copper shock is imminent.
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US Capital Spending Leaps Ahead,
up 0.9% in March, and up 10.4% YOY. The stimulus spending is working. All is well in manufacturing land, which is 12% of the US economy.
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Lyft Sells Self Driving Subsidiary to Toyota for $550 Million.
Toyota has lagged far beyond in this sector. Lyft was able to eliminate some cash burn and is in any case too small to compete against the 800-pound gorillas in this space.
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April 26, 2021
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Don’t Miss the Mad Hedge Global Strategy Webinar,
on Tuesday, April 27 at 4:00 PM EST. I’ll be covering why the Roaring Twenties only just started and will continue for the rest of the decade. US Treasury bonds are still the short sale of the century. The technology correction is over and which stocks are going to new highs the fastest. Climate change will become the investment theme of this generation. If you are already a paid subscriber, the same material will be covered in the regular biweekly strategy webinar on Wednesday. To register, please click here.
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New Home Sales Up a Ballistic 20.7% YOY
in March on a signed contract basis. This is in the face of rising home mortgage interest rates. The flight to the suburbs continues. Homebuilder stocks took off like a scalded chimp. Buy (LEN), (KBH), and (PHM) on dips.
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Netflix Leads in Oscar Nominations,
with a record 36. With the stock crushed by 21% on disappointing 2021 forecasts, it’s time to buy the stock. The long-term outlook is still great. The company is still the industry’s largest spender on new content.
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Bitcoin Crashes 27% in a Week,
and that’s great news for stocks, which went on to new highs. A lot of traders worried that a Bitcoin unwind would spill over into stocks, signaling a generalized “Risk Off” move. It didn’t happen, providing the rocket fuel more highs for stocks.
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US Dollar Continues to Fall,
as Q1 strength unwinds and yield support continues to ebb. A stronger American economy leads to a weaker greenback, as imports surge. Expect more of the same. Buy (FXA) and (FXE) on dips.
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April 22, 2021
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CRISPR’s Big Deal.
Swiss-based Vertex Pharmaceutical has agreed to invest $900 million into one of our biotech favorites, CRISPR Technologies (CRSP). The money will go to develop the crucial CTX001 gene-editing molecule, essential for (CRSP)’s future, which will be used to cure hereditary sickle cell anemia. (CRSP) gets a $200 million bonus on regulatory approval for the treatment. In exchange, (VRTX) will get 60% of the profits from this single molecule collaboration. It has to be good for (CRSP)’s stock. Buy on dips.
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The Government Will Pay You to Get Vaccinated.
Biden is offering a tax credit of $511 per employee to companies with less than 500 employees to take time off to get a Covid-19 vaccination. Workers can take up to 80 hours off to recover from side effects. I was on to my accountant in two seconds on this one.
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Yellen Sets Zero Emissions Target for 2035.
That sets up one of the biggest investment opportunities of the century. The trick is to find companies that have viable technologies that can make a stand-alone profit that hasn’t already gone up ten times, like Tesla (TSLA). Most of the new EV IPOs aren’t going to make it. This will be a major focus of Mad Hedge research going forward. I hope I live that long!
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Chipotle Blows it Away
with great Q1 earnings, as online sales top in-person ones. New menu items helped too. Q2 forecasts looking for 30% gains. Buy (CMG) on a bigger dip as the shares have already had a great run and could be double topping here.
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Existing Home Sales Down 12.3% YOY,
down 3.7% in March, to 6.03 million units. Prices are up 17.02% YOY, the highest on record. Sales of homes over $1 million are up 108%. Inventory is still the issue, down to only 1.07 million units, off 28% in a year. Truly stunning numbers.
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