Archive
Hot Tips
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May 1, 2024
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ADP Comes in at a Strong at 192,000,
in April in private job hires. The wage measure showed annual pay gains up 5% from a year ago, the smallest gain since August 2021. Job gains were strongest in leisure and hospitality, which posted an increase of 56,000. Other industries showing gains included construction (35,000) and sectors covering trade, transportation, and utilities as well as education and health services, both of which saw increases of 26,000.
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S&P Case Shiller National Home Price Index Soars.
Home prices in February jumped 6.4% year over year, marking another increase after the prior month’s annual gain of 6%, and the fastest rate of price growth since November 2022. Prices in San Diego saw the biggest rise among the 20 cities in the index, up 11.4% from February of 2023. Both Chicago and Detroit reported 8.9% annual increases. Portland, Oregon, saw the smallest gain in the index of just 2.2%. Strong demand and tight supply continue to push home values higher, even though mortgage rates are now moving higher again.
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Chicago PMI Fades,
at a very low 37.9 versus an expected 45 in April. It’s the lowest level in two years and a serious stagflationary number. The Chicago PMI assesses the business conditions and the economic health of the manufacturing sector in the Chicago region. A value above 50.0 indicates expanding manufacturing activity, while a value below 50.0 indicates contracting manufacturing activity.
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Consumer Confidence Dives,
to 97 versus an expected 103.5, a three-year low. Expectations drop to 66, a two-year low. Earlier months were revised down. It’s yet another stagflation number. Confidence now stands at the lower end of its recent range as consumers contend with elevated inflation, high borrowing costs, and a gradually cooling labor market.
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Amazon Blows Out Earnings,
taking the shares up $6. In its first-quarter earnings report on Tuesday, Amazon’s operating margin reached double digits for the first time on record. The company’s margin climbed to 10.7% in the period, up from 7.8% in the fourth quarter and topping a previous high of 8.2% in the first quarter of 2021. Buy (AMZN) on dips.
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April 29, 2024
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Musk Cuts China Deal,
sending stock soaring by 12%. Tesla can now use full self-driving in China, an ideal test bed for future US deployment. The carmaker will partner with tech giant Baidu on maps and navigation. It’s a blockbuster deal that will immediately add to (TSLA) earnings. The company charges $8,000 for FSD in the US, or $99 a month for a subscription. Elon kills the shorts again.
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Stock Trading is Getting More Concentrated,
with a third taking place in the last ten minutes of each 390-minute session. Now fresh evidence emerging from Europe — where the pattern is similar — suggests the trend may be hurting liquidity and distorting prices. It’s new ammo for critics of index trading because index funds drive the phenomenon. These products typically buy and sell shares at the close, since the last prices of the day are used to set the benchmarks they aim to replicate.
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Copper Tops $10,000 per Metric Tonne,
a new two-year high and higher prices beckon. The takeover battles continue with BHP trying to buy Anglo American. BHP is trying to buy copper supplies in the stock market it can’t get from mining. The problem is that miners just aren’t building enough mines, with the Pandemic making a major dent in the pipeline. Production from existing mines is set to fall sharply in the coming years, and miners would need to spend more than $150 billion between 2025 and 2032 in order to fulfill the industry’s supply needs. Buy (FCX) and (COPX) on dips.
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Yen Crashed Below ¥160,
a new 40-year low. Higher for longer rates in the US means lower for longer for the Japanese yen. A brief Bank of Japan intervention caused a snapback rally to 156. Did the BOJ just draw its line in the sand? Avoid (FXY) while the turmoil persists. Japan is so cheap now I might have to move back to Tokyo. Bikrishita!
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Viking Goes Public at High $1.33 Billion IPO,
valuing the company at $10.8 billion, taking advantage of the current boom in cruise line bookings. Viking, founded in 1997, started out with four river vessels and now owns a fleet of 92, allowing customers to book voyages to destinations including Antarctica and the Arctic. The company will list its shares on the New York Stock Exchange under the symbol (VIK). Buy (RCB) on dips.
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April 26, 2024
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Personal Consumption Expenditures Come in Warm
for March, up 2.8% YOY, the same as for February. Service prices led. But the numbers were not as hot as feared so both bonds and stocks rose.
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Activist Elliot Takes a Run at Mining Giant Anglo American,
accumulating a $1 billion stake. BHP is also making a takeover bid here on the coattails which Elliot is clearly trying to ride. It just highlights global interest in mining shares. Anglo American plc is a British multinational mining company that is the world's largest producer of platinum, with around 40% of world output, as well as being a major producer of diamonds, copper, nickel, iron ore, polyhalite, and steelmaking coal. On a side note, copper hit an all-time of $10,000 per metric tonne in the London Market this morning. Buy (FCX) and (COPX) on dips.
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Alphabet Earnings Beat Delivers Monster 10% Move,
recovering a $2 trillion market cap. It also announced its first ever dividend and a $70 billion share buyback, the second largest after Apple.
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Global Equity Funds Face Fourth Week of Outflows,
at $2.7 billion, far less than the $23 billion last week. Hopes of a Fed rate cut are fading beyond the horizon. U.S. equity funds experienced outflows of $1.2 billion, while European equity funds saw $6.3 billion leave during the week. Conversely, Asian markets, primarily driven by Japanese equity funds, recorded inflows of $5.1 billion.
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CDC Birth Data Fall to Lowest Level Since the Great Depression,
1.1 births per 1,000 people. That is well below the Great Depression levels. Only 3,664,292 new Americans were born in 2021. It means there will be a shortage of consumers in 20 years so be out of stocks by then. The good news is that Covid deaths have fallen from 4,000 per day to only 19 since January of 2020.
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April 25, 2024
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GDP Bombs for Q1,
at a 1.6% annualized rate. US economic growth slid to an almost two-year low last quarter while inflation jumped to uncomfortable levels, interrupting a run of strong demand and muted price pressures that had fueled optimism for a soft landing. Stocks got crushed, but bonds too? Bonds should rise on a GDP slowdown.
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BHP Makes a $39 Billion Bid for Agnico Eagle (AEM),
to create the world’s largest copper producer, outflanking (FCX). It’s an all share deal. An Anglo deal would be the second major acquisition by BHP in about a year after its 2023 purchase of copper miner Oz Minerals. (AEM) rocketed 15% on the news. (AEM) was at the top of the list for companies to buy at the next market bottom. Increased M&A activity is always a precursor of great stock market performance. You just follow the big money. Buy (FCX) on dips.
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Meta Crashes 15%,
sparking a selloff in big tech stocks after the social media giant signaled its costly bet on AI would take years to pay off. “Patience” is the last word in the world investors want to hear. Meta forecast April-June revenue below estimates and raised the bottom end of its 2024 total expense forecast by $2 billion on Wednesday. It also raised the top end of its capital expenditure view as it invests in data centers essential to its efforts to catch up with AI frontrunners OpenAI and Microsoft. Buy (META) on dips.
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Ron Baron Calls the Bottom on Tesla,
right here, right now. Robotaxis and low-cost cars are key for future growth. Ron is a longtime fan of (TSLA) and an early investor at $7 a share in 2014. Tesla is the biggest holding in Baron’s oldest and biggest fund, (BPTIX), accounting for more than 30% of the portfolio. Don’t bet against Ron.
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Venice Creates First City Entry Fee,
at €5 euros, triggering local riots. Overtourism has become a major problem in much of Europe as the Chinese return to the continent en masse. Venice is so chokingly crowded in the summer that it’s difficult to move. Other popular cities like Florence will follow.
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April 24, 2024
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Tesla Delivers Worst Earnings in 12 Years,
with a 9% revenue drop, but the stock rallied big as the disappointment was well-telegraphed. Revenue declined from $23.33 billion a year earlier and from $25.17 billion in the fourth quarter. Net income dropped 55% to $1.13 billion, or 34 cents a share, from $2.51 billion, or 73 cents a share, a year ago. The drop in sales was even steeper than the company’s last decline in 2020, which was due to disrupted production during the Covid-19 pandemic. Tesla’s automotive revenue declined 13% year over year to $17.38 billion in the first three months of 2024. I’ll watch (TSLA) from the sidelines from now.
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Biggest Treasury Bill Auction in History is a Huge Success,
at $69 billion for a two-year paper with a 4.898% yield. That is almost a risk-free government-guaranteed 10% yield in two years. Another $70 billion of five-year notes go on sale today. Half of this is going to foreign investors and central banks. Faith in America and the US dollar remains strong. Who else’s bonds would you rather buy? Passage of the Ukraine aid bill was probably a help.
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Visa Pops on Earnings Beat,
continuing as the powerhouse that it has been for years. GAAP Net Income Reported at $4.7 billion, showing a 10% increase year-over-year, slightly above the estimate of $4.943 billion. Visa is really a call option on the growth of the Internet. Buy (V) on dips.
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Thermo Fisher Beats,
Wall Street estimates for quarterly profit and raised its annual profit forecast, betting on improved demand for its products and services used in drug development and sending shares up about 4% premarket. The company sells the shovels to the miners in the biotech industry. Buy (TMO) on dips.
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Mortgage Rates Soar to 7.25%,
bringing new applications to a grinding halt. In one shot the market has gone for six Fed rate cuts in 2024 to zero.
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