Archive
Hot Tips
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April 10, 2024
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CPI Comes in Hot at 0.4% for March,
the same rate as in February according to the Bureau of Labor Statistics, knocking stocks down 500 points. Housing and transportation were the big badges. Hopes of a June interest rate cut have been dashed. September is now the earliest. Avoid (TLT).
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FAA Caps Boeing at 38 Deliveries per Month,
until the quality issue is solved. This is a disaster for (BA). The outgoing CEO clearly destroyed the long-held culture of precision and quality. Will the bad news never end?
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Small Business Optimism Index Hits 11-Year Low,
at 88.5, down nearly a point from February to the lowest since December 2012. A quarter of all respondents cited inflation and in particular, higher input and labor costs, as their most pressing issue.
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US Dollar Rockets on Hot CPI,
hitting a new 34-year high against the Japanese yen at ¥151.55. Bank of Japan's intervention to support the yen is expected. Yen shorts in the futures market hit a five-month high. Avoid (FXY).
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Starlink to Boost Low Earth Orbit Satellites,
from the current 5,000 to 40,000. As a result, Starlink speeds are improving, especially in rural areas. Starlink caters to 2.6 million customers in countries lacking modern networks, including Ecuador….and Ukraine. They are also favorites with cruise lines like Carnival (CCL) and Royal Caribbean (RCL), which until now charged high fees for molasses slow Internet access. SpaceX has blanketed the world with a cheap satellite network at only 2,000 km, versus 36,000 km for traditional geostationary satellites. I was amazed when I did my own installation, I was ordered to point my dish north.
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April 9, 2024
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Fed Not to Cut Interest Rates in 2024.
At least that is the assumption we have to make from a trading point of view for the medium term. While this represents a worst-case scenario, I don’t expect bonds to drop much from here, maybe a couple of points, as future interest rate cuts are a certainty. At some point, there will be a great bond trade out there, but definitely not yet!
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Gold Derivatives are Now Wagging the Dog.
There are 187,000 metric tonnes of gold above ground worth a mere $14.4 billion which price is 50 times that figure in paper derivatives, like ETFs, futures contracts, and options. A metric tonne of gold today is worth $77 million. That increases the barbarous relic’s volatility once it breaks out of long-term trading ranges, which it has just done. With new volatility eventually, some bodies have to float to the surface. The bad news is that this may also be a signal that China will invade Taiwan.
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Blackstone Bets on Higher Real Estate Prices,
agreeing to acquire Apartment Income REIT, known as AIR Communities, in an all-cash deal for $10 billion. The takeover is Blackstone’s latest housing bet, following its $3.5 billion deal to take single-family landlord Tricon private earlier this year. The company is stepping up its hunt for deals as prices fall in commercial property markets. It’s really a big play on falling interest rates.
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US Consumer Inflation Expectations Remain Flat for March,
according to the Federal Reserve Bank of New York. They increased to 2.9% from 2.7% at the three-year-ahead horizon and decreased to 2.6% from 2.9% at the five-year-ahead horizon. Labor market expectations were also mixed. While expectations about earnings growth and the mean probability that the U.S. unemployment rate will be higher one year from now remained essentially unchanged, respondents’ perceived probability of finding a job decreased to 51.2% in March from 52.5% in February, the lowest reading in almost three years.
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Ely Lilly Builds $2.5 Billion German Weight Loss Drug Factory,
to meet overwhelming demand in the US and meet severe shortages. Backlogs for Mounjaro orders are stretching out to months. The factory will open in 2027 and ship worldwide. Buy (LLY) on dips.
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April 8, 2024
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Tesla Cancels Model 2,
a key part of the bull story for (TSLA). Elon Musk says “Not so fast” and instead highlights the company’s move into robotic self-driving cars. Don’t be so dismissive, as Waymo completed an eye-popping 100,000 robotic taxi rides in San Francisco in December, many with thrilled first-time users. The stock held up incredibly well on awful news indicating that it believes Elon and not the media. Buy (TSLA) on dips.
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Boeing Boss Gets $33 Million Golden Parachute,
after infusing a corrosive cost-cutting culture, putting dividends and share buybacks before quality, and nearly destroying a 100-year-old brand. It also nearly wiped out its largest customers, Alaska Airlines (ALK) and United Airlines (UA). This is truly a flaw in the American capitalist system.
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Is Gold the New Cocoa?
An upgraded gold price forecast for 2024 from a raft of analysts drew an unexpected follow-up question this week from market participants. The enquiry was: "Can gold 'go cocoa'?" Cocoa prices have more than doubled since the start of 2024 due to poor harvests in Ivory Coast and Ghana. Meanwhile, spot gold hit record highs on five previous trading sessions as investors jumped in looking for exposure to the metal used to preserve wealth. Buy (GOLD), (GLD), (GDX), and (NEM) on dips.
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China Continues Record Gold Buying,
soaking up Central banks bought a record 1,082 metric tonnes of gold in 2023. The Bank of China bought a record 735 tonnes of gold in 2023, two-thirds of which were purchased through covert third-party middlemen. An additional 1,411 tonnes, likely to bypass a collapsing Yuan, and a whopping 228 tonnes in January 224 alone. This is what delivered the barbarous relic’s decisive upside breakout from a three-year trading range. This dwarf’s the record 1,082 metric tonnes of gold global central banks bought in 2023. The world gold market has been taken short and prices will continue to rise.
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Monday Eclipse Sparks Travel Boom,
as some parts of the United States that fall in the "path of totality" see unprecedented demand for lodging from eager Americans waiting to catch a glimpse of the celestial event.
The moon will blot out the sun for millions of people in Mexico, the United States, and Canada. Airbnb (ABNB) listings along the U.S. path of totality, or the narrow strip stretching from Texas to Maine from where people will be able to view the sun's corona, have seen occupancy levels skyrocket to nearly 90%, the vacation rental firm said. Occupancy for all active rental listings across the path in the United States, Canada, and Mexico was at 92.4% for the night of April 7, up sharply from about 30% a few days prior. No, it’s not the end of the world- it just feels like it.
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April 5, 2024
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Nonfarm Payroll Jumps by 303,000 in March,
almost double what was expected. The headline unemployment rate drops 0.1% to 3.8%. Wages rose 0.3% for the month and 4.1% from a year ago, both in line with Wall Street estimates. Health care led with 72,000 new jobs, followed by government (71,000), leisure and hospitality (49,000), and construction (39,000). Interest rate cuts fade into the future.
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Investors are Piling into Cash,
with Money-Market funds getting $82 billion in a week through Wednesday. Investors are still flocking to cash funds, and history suggests redemptions won’t begin until a year after the Federal Reserve starts cutting interest rates.
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Commodities Trading Firms Harvest Record Profits,
some $104 billion in 2023. The surprise increase from 2022, when the fallout from the war in Ukraine pushed up prices and supercharged profits, was driven by a wave of new entrants into the sector — including tech-focused traders and hedge funds — and rising returns from power trading activities. The figures reflect profits from the entire sector, including independent traders, banks, hedge funds, and national oil companies. This year will be even better.
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Oil Continues to Bubble of Tight Supplies,
supported by geopolitical tensions in the Middle East, concerns over tightening supply, and expectations about demand growth as economies improve. I’m keeping my longs in (XOM) and (OXY) and looking to pick up (COP) and (FANG).
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Lithium to Stay in the Dumps,
as long as EVs are suffering a nuclear winter on sales. Tesla is offering deep discounts on inventory that is at record highs. Avoid (ALB). Don’t confuse “gone down a lot” with “cheap”.
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April 4, 2024
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Weekly Jobless Claims Jump to 221,000, up 9,000,
a two-month high. The weekly claims report from the Labor Department on Thursday also showed fewer people remaining on jobless rolls towards the end of March, suggesting that laid-off workers continued to find work, though not as easily as two years ago. There were 1.36 job openings for every unemployed person in February compared to 1.43 in January. Worker shortages persist in industries like construction.
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US Dollar to Stay Higher for Longer,
as a result of the higher for longer Fed tilt on interest rates. High-yielding currencies are always the strongest. The buck is up 3.3% this year against a currency basket.
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Foreign Investors Flee Tokyo,
offload a net ¥1.18 trillion worth of stocks during the week of March 29 - their largest weekly net disposal since Sept. 29, 2023, If the yen turns, it will demolish local stocks. A cheap yen has been powering Japanese stocks for the last three years. Only the Bank of Japan knows for sure.
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Boeing Pays Alaska Air $160 million for Delivery Groundings.
An Alaska Airlines-operated MAX 9 jet experienced a mid-air cabin panel blowout in January, which led the U.S. aviation regulator to order a temporary grounding of 171 jets for inspections. The font of bad news from Boeing continues. Avoid (BA).
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Levi Strauss Soars by 20%,
on cost cutting, more direct to customer says, and rising earnings. The DTC channel accounted for nearly half of the total revenue in the first quarter ended Feb. 25, up from 42% in the prior quarter. When was the last time your heard anything about San Francisco-based (LEVI)?
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