Archive
Hot Tips
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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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April 23, 2024
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Apple China Sales Dive,
by 19% as Chinese switch to cheaper Huawei phones for nationalism reasons. It’s also another sign of a slow Chinese economy. China remains one of the company’s biggest markets, but business there has grown harder after Beijing escalated a ban on foreign devices in state-backed firms and government agencies. Avoid (AAPL) until the turnaround.
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March New Home Sales Jump,
by 8.1% when only 1.1% is expected, to 693,000. The median price of a home sold fell to $430,700 as builders pull back on incentives like those cherry cabinets. It’s an uphill slog with those 7.0% mortgage rates.
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OIL & Gas M&A Hits Record in Q1,
hinting that the new bull market in oil may extend. U.S. oil and gas deals hit a record $51 billion in the first quarter, a continuation of last year's fierce merger pace centered in the top U.S. shale field. Energy companies have rushed to expand oil and gas drilling inventories, especially in the Permian Basin of West Texas and New Mexico, where producer breakeven costs are about $64 a barrel. Buy (XOM) and (OXY) on dips.
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Freeport McMoRan Beats,
helped by higher production and easing costs. The mining giant said its quarterly production of copper rose to 1.1 billion pounds from 965 million pounds a year earlier, helped by a 49% jump in output from its Indonesia operations. (FCX) said it was working with the Indonesian government, which has put a ban on raw material exports, to obtain approvals to continue shipping copper concentrates and anode slimes. Its current license is set to expire in May. Buy (FCX) and (COPX) on dips.
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Work Starts on Los Angeles to Las Vegas Bullet Train.
Privately owned Brightline West, whose sister company already operates a fast train between Miami and Orlando in Florida, aims to lay 218 miles (351 kilometers) of new track almost all in the median of Interstate 15 between Las Vegas and Rancho Cucamonga, California. It would link there with a commuter rail connection to downtown Los Angeles. A station also is planned in San Bernardino County’s Victorville area.
Company officials say the goal is to have trains exceeding speeds of 186 mph (300 kph) — comparable to Japan’s bullet trains operating in time for the Summer Olympics in Los Angeles in 2028.
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April 22, 2024
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Big Tech Crashes,
with all of the Magnificent Seven breaking 50-day moving averages. (NVDA) alone gave up 10% on Friday. Next stop is the 200-day moving averages, which are far, far away. If those hold, this is just a correction. If they don’t, the bear market is back.
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Tesla Announces New Wave of Price Cuts,
chopping several models by $2,000 each. It also is paring the price for Full Self Driving (FSD) to only $8,000, half the original price. This is in the wake of a recall of 3,878 Cybertrucks over a sticky accelerator pedal. The EV nuclear winter continues and the stock may take a run as low as $100.
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Short Sellers Pocketed Record Profits Last Week,
on the technology crash and volatility explosion, raking in $10 billion. (NVDA) shorts accounted for $3 billion of this, down 14% on the week, which brought in an implied volatility jump on its options from 42% to 62%. The bottom is probably close.
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Carrier is Moving into Home Heat Pumps,
which can be powered by solar, eliminating energy costs. Willis Carrier invented the current electric power air conditioner design in 1902, although most modern ones now run on natural gas. It is another interesting restructuring of the economy prompted by technology. I have three five-ton heat pumps (American Standard are the best), which heat and cool my house all year for free.
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Massachusetts is the Most Expensive State to Raise a Family
of four, where you would need to earn $301,184 a year to live comfortably. Hawaii came in second at $294,611 and Connecticut third at $279,884. “Comfortable” is defined as the income needed to cover a 50/30/20 budget for a family of four. The budget allocates 50% of your earnings for necessities such as housing and utility costs, 30% for discretionary spending and 20% for savings or investments.
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April 19, 2024
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Meta Announces Partnership with Google,
to use its search function in its new AI image search app called Llama 3. The move shows the incredible speed at which AI is developing. Buy both (META) and (GOOG) on dips.
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Netflix Adds 9.33 Million New Subscribers,
nearly double analyst forecasts, including my five kids who aren’t allowed to share my password anymore. But the shares dropped on weak Q2 guidance. Netflix has rebounded from a slowdown in 2021 and 2022 to grow at its fastest rate since the early days of the coronavirus pandemic. That is due in large part to its crackdown on people who were using someone else’s account. The company estimated more than 100 million people were using an account for which they didn’t pay.
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Junk Bonds See Biggest Outflows in a Year,
as the Federal Reserve’s hawkish approach to inflation makes investors wary, sending yields soaring to 6.33%. Yields won’t peak until the Fed actually cuts rates. Buy (JNK) and (HYG) on dips.
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Mortgage Rates Top 7.0%
for the first time in 2024, adding dead weight to the housing market. Most borrowers are now taking out adjustable 5/1 ARMS and then praying for a Fed rate cut later this year.
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Today is Options Expiration Day,
for the April series. Expect a lot of volatility at the close around key strike prices with the largest outstanding volume.
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April 18, 2024
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Ten-Year Rates Headed to 5%,
says Vanguard, up from the current 4.63%. Rising rents continue to be the boogie man in the inflation fight. Investors had piled into Treasuries late last year, betting on a swift easing cycle from the Federal Reserve. Still, as incoming data has pointed to persistent strength in the US economy, the market has turned against them. Avoid (TLT).
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Weekly Jobless Claims Unchanged at 212,000,
consistent with a healthy job market. The median forecast in a Bloomberg survey of economists called for 215,000. Continuing Claims, a proxy for the number of people receiving unemployment benefits, were also little changed at 1.81 million in the week ended April 6.
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The New Home Market is Still Hot,
says DR Horton (DHI) with a red-hot earnings report. New home building still has a big advantage with their backdoor discounts like free upgrades and subsidized mortgages.
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Existing Home Sales Dive by 4.3%
in March to 4.19 million units on a signed contract basis. Inventories rose 4.47% to a 3.2-month supply, up 14% YOY. The median price of an existing home sold in March was $393,500, up 4.8% from the year before. Regionally, sales fell everywhere except in the North, where they rose 4.2% month-to-month. Sales fell hardest in the West, down 8.2%. Prices are highest in the West.
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Leading Economic Indicators
drop 0.3% versus 1.1% expected after increasing by 0.2 percent in February. Over the six-month period between September 2023 and March 2024, the LEI contracted by 2.2 percent—a smaller decrease than the 3.4 percent decline over the previous six months.
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