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  • June 17, 2021

    1. The Fed Takes a Turn,

      leaning towards more inflation. It is keeping interest rates unchanged at 0%-0.25% and continuing bond purchases at $120 billion a month. It is still sticking with the “transitory” argument on inflation but raised its full year target from 2.4% to 3.4%, more than most expected. It went more specific on rate rises, predicting two 0.25% increases by the end of 2023. Bonds and technology stocks crashed, and inflation plays like banks, Bitcoin, and Berkshire Hathaway soared. The barbell strategy wins again!

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    2. The Fed Inches Towards a Taper.

      Although it was not specifically mentioned, the ‘taper” or cut back on monthly federal bond buying was all over this press conference. That brought forward the next big down move in bonds. Keep those vertical bear put LEAPS in the (TLT)

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    3. Torrid Chip Growth Will Continue for a Decade,

      said the CEO of Intel (INTC). That’s why he is spending $20 billion on a new fab in Arizona which won’t come onstream for years. The world is going digital at a very rapid pace, and all of it requires more semiconductors. Buy (NVDA), (MU), and (AMD) on dips. Oh, and maybe some (INTC) too.

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    4. The US is Now the Safest Country in the World

      when it comes to the chance of dying of Covid-19. It is followed by China and western Europe. The big risk is in the southern hemisphere, especially Africa. The outlier is Australia, which was best at keeping pandemic numbers with a complete ban on international travel, then a total screw-up in vaccine distribution. More than 2.47 billion shots have been distributed worldwide.

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    5. The Highest Risk Covid-19 Counties in the US

      have a vaccination rate of less than 25%, and therefore the greatest chance of dying. They are concentrated in the Deep South and the Midwest seen in orange below. States in white have no data. You can expect the economic recovery to be slowest there too.

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  • June 16, 2021

    1. It’s Fed Day,

      and we can spend hours waiting for them to do absolutely nothing. Once we have the proof of that, the markets should rally. It’s 18 months early to see an interest rate rise. A 1.42% ten-year yield shows that the Fed isn’t buying enough bonds with their QE program, so they aren’t stopping that anytime soon. Much of today’s focus is on the Biden-Putin summit in Geneva anyway.

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    2. May Producer Prices up 0.8%,

      and up 6.6% YOY, a new high in this cycle. It’s the last read the Fed gets before their two-day meeting on interest rates. However, Retail Sales were down 1.3%, suggesting a cooling.

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    3. May Industrial Production is Up a Strong 0.8%,

      telling us what we already know, that the economy is strong beyond belief. Capacity Utilization rose to 75.2%.

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    4. China Bans Bitcoin Mining,

      which views it as a US grab for currency dominance. Until now, the Middle Kingdom accounted for 65%-75% of the global total. That sends a lot of miners looking for cheap energy sources. Saudi Arabia? Russia?

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    5. Housing Starts Up Only 3.6% in May,

      to a seasonally adjusted 1.57 million units, with sky-high lumber and other materials prices a major drag. New Permits hit a seven-month low.

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  • June 15, 2021

    1. Paul Tudor Jones Says the Taper Tantrum is Coming,

      despite last week’s perverse reaction by the bond market to the red hot 5% inflation rate. The Fed’s obsession on jobs only and not inflation will end in tears. My old client and legendary investor has 20% of his assets in inflation plays, including gold (GLD), Bitcoin, commodities, and short US Treasury bonds (TLT). When Paul is wrong, it’s usually not for very long.

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    2. Honeywell Launches Major Effort into Quantum Computing,

      tying up with the UK’s Cambridge Quantum Computing. The move puts leading quantum players in hardware and software under one roof. Quantum computing promises a trillionfold increase in speeds and capacity at less cost and will revolutionize technology. Converting from Bytes to cubits. Buy (HON) on dips.

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    3. California’s Economy is Booming.

      No gloom and doom here. The Golden State has generated more jobs than any other state, some 1.3 million in a year. The budget surplus has exploded to $74 billion, thanks to a soaring stock market, enough to send out the biggest individual tax rebates in history. The state accomplished the lowest pandemic death rate in the country, half of that seen in Florida and Texas. California remains a mecca for technology companies. So why has the Republican party launched a recall effort against Governor Gavin Newsome, one of the most popular in history and a future presidential contender? Maybe I just answered my own question. Go figure.

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    4. Five-Year Greek Bond Yields Turn Negative,

      for one of the worst credits in the world. That is down from 67% back in 2012 when the home of the gods was teetering on the edge of bankruptcy. It shows that the debt shortage is global and that governments around the world haven’t been borrowing enough. Massive QE from the European Central Bank is another factor. The Athens stock market has responded in kind, jumping some 30.4% this year, one of the best returns in the world. Buy (GREK) on dips.

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    5. An Aluminum Shortage is Looming,

      with 260,000 miles of long-distance transmission lines that need to be built over the next decade. That’s how much will be needed to handle the power of an all-alternative energy US economy. Aluminum is used instead of copper because it is cheaper and lighter. The trade-off is that Al melts at a much lower melting point, 1,221 degrees Fahrenheit instead of 1,984 degrees for copper. One mile of transmission line requires 322 pounds of aluminum so you can do the math. Buy Alcoa (AA) on dips, the largest producer in the US of Al, and your next big inflation play.

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  • June 14, 2021

    1. The Big Rotation is On,

      with traders moving out of inflation plays and into big tech. That is the outcome of the shocking bond market spike that came out of last week’s 5% print for the Consumer Price Index. The Fed is telling the world that any inflation is temporary, and the world is believing them.  It could give us a bond and tech rally that lasts a couple of months.

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    2. How Serious is the Fed Taking Inflation?

      We find out at 2:00 PM on Wednesday when Jay Powell holds his press conference after the next Open Market Committee Meeting. Should be fascinating.

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    3. Shipping Costs are Out of Control,

      for everything from everywhere to everywhere else. Transporting a 40-foot steel container of cargo by sea from Shanghai to Rotterdam now costs a record $10,522, up a whopping 547%. Tens of thousands of containers are on the wrong side of the Pacific. Shortages of truck drivers are extreme, with $50,000 signing bonuses rampant. It is one thing that could make continuing inflation pernicious.

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    4. If Copper Sells Off, It Won’t be by Much.

      Convention internal combustion cars use 40 pounds of copper for wiring. EVs use 200 pounds for the heavy copper rotors in each wheel, in addition to two ounces of silver (SLV). EV production will rise from 700,000 units last year to 25 million by 2030. You do the math. There aren’t enough copper mines in the world to accommodate this demand and it takes five years to build a new one. Buy (FCX) on the next big dip. It’s going to $100 in five years.

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    5. Royal Dutch Shell Selling US Oil Holdings,

      in the first move by a major to withdraw for the carbon industry, putting 260,000 areas in the Permian Basin on the block. $10 billion has been mooted as a price. Expect the other major to eventually follow. It’s time to read the writing on the wall. Who will be the buyer? China will be the last big consumer of Texas tea as their technology lags.

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  • June 11, 2021

    1. Bond Yields Drop Even With Higher Inflation Data,

      Treasury yields fell again as investors looked through the 5% annual jump in the inflation report. The Federal Reserve’s argument that the price increases will be temporary is given the benefit of the doubt by investors.

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    2. Apple Poach BMW Executive to Build Apple Car,

      Apple plucked Ulrich Kranz, a former executive at BMW’s electric car division, to lead its own vehicle efforts. Apple has been making waves lately to forge a path towards an iPad on wheels type of future.

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    3. German Economy Rebounds.

      Germany’s economy expecting a strong upswing in the second half of this year, according to latest data.

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    4. Hackers Target Another U.S. Corporation,

      McDonald’s reports hackers stole data giving the cyberespionage community another win on the back of the Colonial Pipeline debacle.

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    5. No Need For Humans To Design Semi Chips Anymore.

      Google claims its AI can design computer chips in under 6 hours. Yes, the pace of technology is hyper-accelerating as we speak and this is more evidence behind this thesis. 

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