Archive
Hot Tips
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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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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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