General Motors could be a bright spot in an automobile industry challenged by a weakening electric vehicle market.
Slowing sales and sluggish adoption rates have driven down shares of EV leader Tesla by 31% this year, raising concerns over whether the Elon Musk-led company can build on its EV market share globally while also delivering on full self-driving initiatives.
Citigroup and Bank of America have General Motors in their sights as they believe this company can strengthen its position in EVs.
Shares of General Motors have climbed 26% in 2024, far outperforming the 9.5% gain in the S&P500.Last month, GM topped sales and earnings in the first quarter and raised its full-year outlook.
Citigroup has a buy rating on GM with a $96 per share price target, implying a 113% upside from Monday’s $45.17 close.
Also bullish on the stock is Bank of America.Analysts at the bank think GM’s forward guidance after its first-quarter results will prove too conservative.GM’s execution and strength in its Core business continue to enable the company to make investments in EVs [autonomous vehicles] and other areas to future-proof the business while continuing to return value to shareholders.BofA analysts have given GM a $75 per share price target implying a 66% upside over the next 12 months.
Recommended Action:Buy 50/60 out of the money June 2025 Bull Call LEAPS and/or buy the stock.GM stock price:$45.03
General Motors – committing to an all-electric future
The economic data this week is rather light apart from the US CPI on Wednesday.
The Real Estate Sector is Oversold
Brian Belski, Chief Investment Strategist, and leader of the Investment Strategy Group at BMO sees opportunity for investors in the real estate sector which is currently oversold.
Belski notes that the REITS sector is the only S&P500 sector that is in the red this year, off 6%.
He believes the sector will turnaround in the coming months and is recommending that investors use the current weakness as a dip buying opportunity.
There are only four other periods, Belski argues, that this sector has showed abnormal underperformance.In the year following such troughs, real estate investment trusts outperformed the S&P500 by about 17%, on average.
Listed here are BMO’s REITS rated to outperform.
These REITS also pay dividends. For example, Boston Properties pays a dividend yield of 6.4%.The company develops, owns, and manages workspaces across the country, including New York and San Francisco.Belski believes there is a slow return to the office taking place.
Data Centre REIT, Equinix, will benefit immensely from the rapidly developing landscape of AI.In a statement, CEO Charles Meyers said that “digital initiatives will drive long term revenue growth and operational efficiency.”If BMO’s price target is any guide, Equinix has 25% upside ahead.
Ventas is also down about 4% year to date.The company’s investments include senior housing communities, which stand to benefit from the aging population.The stock which yields 3.8% has roughly 7% upside to BMO’s price target.
Host Hotels & Resorts, which owns luxury and upper-upscale hotels is down nearly 6% this year.Like Equinix, BMO’s price target sees it rallying 25%.This company has a 4.4% dividend yield.Earlier this month, the company posted a revenue beat, and upped its full-year funds-from-operations and revenue guidance.
Market Update:
S&P500 – Bull market in progress.The market is still interpreted to be undergoing a final 5th wave advance onto new highs for the year (around 5,700).
GOLD – New highs are ahead.Looking for a rally to around an initial target of 2400 and then onto 2500-2550.
BITCOIN – Waiting for the next advance.Support lies around $60k/$59k.Looking for an upside target around $80k in the next several weeks to months.
(AUSTRALIA IS CONFLICTED ABOUT ITS APPROACH TO ENERGY)
May 10, 2024
Hello everyone,
I recently heard Sky News host, Rita Panahi interview Ian Plimer, a geologist.Plimer talked about the types of energy Australia has at its disposal and the damage wind and solar are doing to the environment.
Plimer pointed out that Australia has a huge supply of gas that is not being used.In Victoria, for example, he said that there is an enormous amount of onshore gas in the Gippsland region that is low in carbon dioxide, and low in mercury, but regulations state that companies cannot drill onshore for gas.Rather they must drill onshore for gas offshore and vice versa.This is creating massive gas shortages in Victoria.
In New South Wales, too, there is also a gas shortage, due to mismanagement.Massive reserves at Narrabri have taken a decade to get that up producing gas for the people.
Eastern Australia relies on Queensland for much of its gas.
Plimer argued that there are thousands of years of gas in Australia and millions of years of uranium.
Six projects have been named to start feasibility studies for Australia’s first offshore wind farms.Plimer was scathing about wind projects because he says they “don’t save anything.”Rather, he says they have a telling negative effect.They “change aviation patterns, change shipping patterns, change fishing patterns, and kill a lot of wildlife.”
Killing the wildlife offshore hides the damage – the death of wildlife, and possibly whales.In effect, it puts the problem out of sight offshore.Interestingly, Plimer noted that elsewhere in the world wind projects are being shut down because of environmental damage.
Beautiful Australian agricultural land is being covered with wind turbine farms.Plimer argued that these wind turbines pollute large rich parcels of land with dangerous chemicals.Instead of disposing of wind turbine blades, he says “We bury them, or we cut them up and bury them in the ground.”He was critical of the fact that there is no industry at all where we can recycle these items.
Furthermore, Plimer details the long-term effects of pollution from solar panels.He stated that solar panels leak out cadmium telluride, and leak out lead, which is left in the soil.
OK, so how damaging is cadmium telluride?
Acute toxicity – oral, category 4
Acute toxicity – dermal, category 4
Acute toxicity – inhalation, category 4
Harmful if swallowed, Harmful in contact with skin, Harmful if inhaled.
Breathing high levels of cadmium damages people’s lungs and can cause death.Exposure to low levels of cadmium in air, food, water, and particularly in tobacco smoke over time may build up cadmium in the kidneys and cause kidney disease and fragile bones.Cadmium is considered a cancer-causing agent.
The United States is the leader in cadmium telluride (CdTe) photovoltaic (PV) manufacturing…due to their efficiency and relatively low manufacturing energy requirements.
Cadmium is recognized as a toxic substance by the United States Environmental Protection Agency (EPA), which set a maximum contaminant level (MCL) for cadmium (Cd) of 0.005 mgL in drinking water.Tellurium (Te) while not regulated by the EPA, has also been shown to have the potential to cause kidney, heart, skin, lung, and gastrointestinal system damage in rats and in humans.
Plimer was very critical of governments, past and present, for their poor decisions regarding effective energy solutions for Australia.
He pointed out that Australia has plenty of energy and it is cheap.
Impact of Wind Turbines:
Visual Pollution
Noise Pollution
Impact on Wildlife
Disturbance to existing ecosystems and land use.
Update to Australia’s future energy direction as of Thursday, May 9, 2024.
New gas fields will be key to the Labour’s government strategy.Gas will become a central part of Australia’s energy and export sectors by 2050 and beyond.The government is backing the energy source as the key to transitioning the energy sector and economy.Environmental and climate groups have condemned the strategy saying it will lead to more emissions, not less.
Responses to Labour’s plan have been mixed.
The Business Council of Australia was supportive, saying the plan struck the right balance ‘” by ensuring Australia can transition to net zero, while also keeping prices down, delivering reliable power supply and retaining jobs.”’
The Australia Institute called the strategy “regressive”, while the federal Greens leader, Adam Bandt, said Labour was “’ threatening its legislative agenda by committing to a future fuelled by fossil fuels.’”
Environmental groups including the Australian Conservation Foundation, Surfers for Climate, Solutions for Climate Australia, Climate Communities Alliance, and Parents for Climate were all disappointed.
Attention will now turn to how Labour plans to meet Australia’s climate targets as it embarks on an expansion of the gas industry.
The Safest and Deadliest Energy Sources
There are vastly divergent views on the impact of different energy sources on the environment.As of 2021, nearly 90% of global CO2 emissions came from fossil fuels.But as we know energy production doesn’t only lead to carbon emissions, it can also cause accidents and air pollution that have a significant toll on human life.
Ruben Mathisen has used data from Our World in Data to help visualize exactly how safe or deadly these energy sources are:
Fossil Fuels are the highest emitters.
Deadly effects
Air pollution or accidents can take human lives when we are generating energy on a massive scale.
According to Our World in Data, air pollution and accidents from mining and burning coal fuels account for around 25 deaths per terawatt-hour of electricity – roughly the amount consumed by about 150,000 EU citizens in one year.The same measurement sees oil responsible for 18 annual deaths, and natural gas causing three annual deaths.
Meanwhile, hydropower, which is the most widely used renewable energy source, causes one annual death per 150,000 people.The safest energy sources by far are wind, solar, and nuclear energy at fewer than 0.1 annual deaths per terawatt-hour.
Depending on who you speak to about energy, opinions will vary widely about the best future path for Australia to follow.There are arguments for and against all energy sources.You will never be able to please everyone.Economics, the environment, and sustainability must all be considered when planning for the future.
Update:
Global Central Banks are not taking their cues from the Fed.
When it comes to central banking, everyone assumes the Federal Reserve takes the leadership role, and global counterparts follow.Well, it looks like events are shaping up somewhat differently now.
Most recently, the Riksbank, Sweden’s Fed equivalent has approved a quarter percentage point reduction (Wednesday), with an indication that two more cuts could be in the pipeline before the end of the year should the inflation outlook hold.
It was the first time the Riksbank had cut since 2016 and took its main policy rate down to 3.75%.Meanwhile, the Fed’s rate has been locked between 5.25% - 5.5% after a series of 11 hikes that began in March 2022.
In March, this year, the Swiss National Bank also reduced its key rate.
Reductions from the Bank of England and European Central Bank are expected to come next, possibly within a month. Bank of America strategists think the BOE could even cut in June, given the dovish buzz from BOE Governor Mark Bailey and others.Otherwise, August is a likely time for the rate cut.
Should all these central banks take concrete action on their dovish chatter, and inflation and economic growth slow in the U.S. the Fed could find itself in an uncomfortable spot.
A slowdown in inflation and/or in activity in the U.S., will highlight a growing rate differential between the U.S. and other countries, and perhaps become a factor that will encourage the Fed to follow the global trend toward lower rates.
Central banks are not taking their cues from the Fed. Christine Lagarde made clear that “we are data-dependent...[and] we have to make our decisions. Hence, we are not Fed-dependent.”
To sum up, if either demand starts to fall and/or core services inflation slows, the Fed is likely to begin its own cutting cycle.
Zoom Recording of April 30, 2024
The Zoom recording is in two parts.
I had technical issues with the videos I wanted to show you, so they are part of the second recording I did.Additionally, the Excel spreadsheet of all the stocks/options recommended will be shown in this recording as well.
Companies in the Stoxx 600 index have nearly 1.5 trillion euros ($1.6 trillion) in cash on their balance sheets - that’s 25% higher than pre-pandemic levels, according to Goldman Sachs.
The bank further stated that free cash flow yield in Europe is around 6% - more than 1% point above that of the United States.Sectors with the highest yield include autos, commodity producers, and financials.Goldman favors the latter two, given their clearly stated focus on shareholder returns.
Balance sheets are strong.And the bank notes that net debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) is close to an all-time low. Furthermore, Goldman says, “Europe has rarely looked cheaper on an absolute and relative basis.”
Regarding dividends, the bank believes they can continue to grow in Europe given that payout ratios are below the historical average.They expect dividends to grow around 3% in 2024 and 4% in 2025.
Goldman particularly favors stocks in the banking and energy sectors.The MSCI Europe Value index offers a dividend yield of 4.8% - 2.8 times that of the MSCI Europe Growth.
Goldman lists here companies in the Stoxx Europe 600 with the highest, sustainable, 12-month forward dividend yields in each sector.
This is not a recommendation to buy any of these stocks.It is purely for your information to show you what dividend yields are available.Many people are interested in yield, so this is why I’m illustrating these examples.
Bonza removed from Australian skies.
Negotiations have failed between budget airline Bonza and its aircraft lenders.So, the decision has been made to remove the airline’s fleet from Australia.
The airline's financial issues have forced lease agreements on a fleet of Boeing 737-8 planes to be terminated.
Almost 60,000 passengers say they are owed money after many of their bookings were canceled.
The low-cost carrier was less than 12 months old when it canceled all flights across Australia and entered voluntary administration last week.
Wearing Clothing made from Bamboo supports the environment.
Bamboo is the fastest-growing plant in the world.It stores five times more carbon than other hardwood trees.It stores this carbon in its plant and roots, in turn helping to regenerate soil health.
It requires minimal water and little to no pesticides, which protects surrounding habitats and ecological systems from harsh chemicals used to grow crops.
Bamboo viscose, a fibre crafted from bamboo, is very soft.The fabric has natural moisture-wicking properties, meaning it can absorb moisture away from the skin.
Bamboo is biodegradable, making it a more environmentally friendly choice compared to cotton, which often requires more water and chemicals to grow and process.
Brands that use bamboo in their clothing include:Baserange, BAM, Peachaus, Patra, & Lotties Eco.
QI Corner
Goldman expresses strong confidence in the robustness of the U.S. economy, projecting a more positive outlook for the growth of U.S. GDP in 2024 and 2025 compared to consensus forecasts.
A sign on the gate of a Glen Innes property in New South Wales.It seems Australians take their privacy quite seriously.
Earnings:Anheuser-Busch InBev, Edgewell Personal Care, Embraer, Elanco Animal Health, United Parks & Resorts, ODP, Emerson Electric, Brookfield, New York Times, Performance Food Group, Reynolds Consumer Products, Shopify, Teva Pharma, Uber Technologies, Brink’s Tegna, Hain Celestial, Choice Hotels, Dine Brands, Liberty Broadband, Affirm Holdings, Fox Corp., Cushman & Wakefield, Liberty Media, Valvoline, Arm Holdings, Airbnb, Robinhood, Beyond Meat, Bumble, Kodiak Gas Services, NuSkin, SolarEdge Technologies, TKO Group, Vizio, AMC Entertainment, Cheesecake Factory, News Corp., Toyota Motors, Celanese, Instacart, Klaviyo.
Thursday, May 9
8:30 a.m.
Continuing jobless claims
8:30 a.m. Initial claims
Earnings:Nissan, Cedar Fair, Six Flags, Yeti, Hanesbrands, Planet Fitness, Sally Beauty, Tapestry, US Foods, Warby Parker, Krispy Kreme, Hyatt Hotels, Warner Bros, Discovery, Roblox, Viatris, Papa John’s, Hilton Grand Vacations, Warner Music Group, Solventum, DropBox, Akamai, Figs, Sweetgreen, Unity Software, Yelp, Synaptics, H&R Block, Iamgold, Fidelis Insurance, GenDigital, Savers Value Village.
Friday, May 10
10:00 a.m. Michigan sentiment (May)
2:00 p.m. Treasury budget (April)
Earnings:Honda Motor, AMC Networks.
Maybe time to start looking at Emerging Markets.
The weaker than expected employment numbers last Friday marked the first sign this year that we may just see some interest rate movement in the form of cuts toward the latter part of this year.
And if we do see a lower rate environment on the horizon, one area that will be boosted is emerging markets.
Emerging market equities are at attractive valuations presently; earnings growth too has started to accelerate.
Start looking at this ETF:
(EEM)iShares MSCI Emerging Markets ETF
Continue scooping up some Berkshire Hathaway stock.
Berkshire Hathaway’s annual general meeting on Saturday, May 4, has been dubbed “Woodstock for Capitalists.”
Analysts have a $472 price target on class B shares, and this suggest nearly 18% upside from last Thursday’s close.
I listened to several hours of the meeting and the topics covered included climate change, succession planning, artificial intelligence, the sale of a chunk of Apple shares (around 13%) - 115 million shares.
The company has approximately $200billion in cash.Greg Abel will make investing decisions for Berkshire Hathaway when Buffett passes.
Buffett spoke of “scamming” as a growth industry, which will be enabled by AI.While he didn’t see AI as all bad, he did note that the potential for AI to manipulate videos and images - to extract money from people - poses enormous harm to those who are unsophisticated in critically evaluating these types of media.
One of the best lessons from Charlie Munger.
Patience.
Munger was well known for waiting – not only when it came to building wealth, but for finding attractive investing opportunities.
In his words: “We wait for no-brainers.We’re not trying to do the difficult things.And we have the patience to wait.”
When it came to investing in what he viewed as great companies, Munger shared Buffett’s view that your best move as an investor is holding for the long term.
In Buffett’s words: “When we own portions of outstanding businesses with outstanding managements, our favourite holding period is forever.”
Warren Buffett’s insights about life.
“If you are lucky in life, make sure others in life are lucky too.”
“Be kind and the world will be better off.”
Market Update:
S&P500
It’s possible that this correction is completed to enable the resumption of uptrend in a Wave 5 advance towards the next upside target at around 5,450.If the 5th wave has begun, then support at 5,060/5,011 should now hold.
We must be aware, though that there is still risk of a final sell-off toward the low/mid 4,800’s, before the uptrend is ready to resume.
The Bigger Picture outlook remains bullish.The 5,735 mark is the potential target over the coming months.
Gold
Gold has been undergoing a 4th wave correction.A sustained break above $2,350 resistance will represent the resumption of uptrend for rally back toward the area of $2,430.
The Bigger Picture outlook remains bullish, with the next upside target at around $2,530.
Bitcoin
Bitcoin has been undergoing a 4th wave correction, and this might be completed now.
Support lies around the $59,500 level.If this area holds, we should now see rallies on to the next resistance areas at $67,240 and $73,794 levels.
However, the downside is limited to 5%-8% with $8 trillion in cash on the sidelines and a further $26.8 trillion in short-term US treasury bills.
Technology stocks won’t crash, just have a sideways ‘time’ correction.
All economic data is globally slowing, except for the US, with the only good economy in the world.
Interest rates are higher for longer.
Buy stocks and bonds but only after substantial dips.
THE GLOBAL ECONOMY – STAGFLATION:
Personal Consumption Expenditures (PCE) come in warm for March, up 2.8% YOY, the same as for February.Service prices led.
GDP Bombs for Q1, at a 1.6% annualized rate.US economic growth slid to an almost two-year low last quarter.
Leading economic indicators drop 0.3% versus 1.1% expected after increasing by 0.2% in February.
Tariff wars heat up.US President Joe Biden is threatening China again and this time he wants to triple the China tariff rate on steel and aluminum imports.
China surprises with Q1 GDP growth at 5.3%, but John questions the validity of the numbers.
US Retail Sales come in hot, up 0.7% in March.
STOCKS – CORRECTION TIME:
Big Tech crashes, with all the Mag’ 7 breaking 50-day MA’s.
Meta crashes 15% sparking a selloff in big tech stocks after the social media giant signaled its costly bet on AI would take years to pay off.
Volatility Index ($VIX) hits six six-month high, on threats of a new Iran war, oil supply cut-offs, and topping stocks.
Next stop = 200-day moving averages.
If those hold this is just a correction.If they don’t, the bear market is back.
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.
Airlines make contingency plans for new aircraft.United Airlines cut its aircraft-delivery expectations for the year as its main supplier of airplanes Boeing has signaled a slower production schedule.
BONDS – NO 2024 RATE CUTS:
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 guarantee 10% yield in two years.
Another $70 billion of five-year notes sold the next day.
Half of this is going to foreign investors and central banks.
Faith in America and the US$ remains strong.
Passage of the Ukraine aid bill was probably a help.
Junk Bonds see the biggest outflows in a year, as the Federal Reserve’s hawkish approach to inflation makes investors wary, sending yield soaring to 6.33%.Buy (JNK) and (HYG on dips.
FOREIGN CURRENCIES – 40 YEAR YEN LOWS:
Japanese yen collapses to 160.
Bank of Japan intervened, boosting the currency temporarily. Avoid (FXY)
Chinese Yuan remains weak.International trade is collapsing.
Declining exports, collapsing foreign investment, and minimal population growth, it all add up to a weaker Chinese currency.
Higher for Longer rates mean higher for longer greenback.
Falling interest rates = falling USD$.
ENERGY AND COMMODITIES:
Oil and 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.
BHP makes a $39 billion bid for Agnico Eagle (AEM), to create the world’s largest copper producer.
Activist Elliot takes a run at mining giant Anglo American, accumulating a $1 billion stake.BHP is also making a takeover bid here.
Biden boosts the cost of Alaska Oil Drilling Leases, from $10,000 to $160,000, the first increase since 1960.There is also a bump in the royalty on extracted oil, from 12.25% to 16.27%.
The US is currently the largest oil-producing country in history at 13 million barrels/day and hardly needs any subsidies.
Buy energy stocks on dips, like (XOM) and (OXY), which are posing record profits.
PRECIOUS METALS – GEOPOLITICAL FEARS:
Gold hanging on to all-time highs, up 34.25% since October.
Central bank buying is accelerating, especially from China.
Gold is also being dragged up by the global commodity boom.
Traditional demand for gold has been absent until now.
ETF and jewelry demand fell in 2023.
Their return is what will take gold up to $3000 in 2025.
Silver is also starting to outperform.
REAL ESTATE – RATES BUZZ KILL:
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.
March New Home Sales Jump by 8.1% when only 1.1% expected, to 693,000.
The median price of a new home sold fell to $430,700.
Existing home sales dive by 4.3% in March to 4.19 million units.
Housing starts plunge, down 14.5% in March.
TRADE SHEET:
Stocks – buy dips.
Bonds – buy dips.
Commodities – buy dips.
Currencies – sell dollar rallies, buy currencies.
Precious metals – buy dips.
Energy – buy dips.
Volatility – buy $12.
Real Estate – buy dips.
NEXT STRATEGY WEBINAR:
Wednesday, May 15 @ 12 EST from Incline Village, Nevada.
Welcome to May, and what could be a continuation of the market behaviour we saw in April. The market is in the doldrums about what the Fed might say on Wednesday. Investors are already interpreting and theorizing possible outcomes, hence putting the market on the back foot.
As we wait to decipher the Fed’s stance on the road ahead, let’s look at what Bank of America thinks about this market correction.
According to the firm, investors should not panic.Instead, they should use the downside movement as a promising entry point before the market swings back to the green this summer.
It’s that ‘buy on the low, sell on the high’ idea.Most of the reluctance to buying at these times comes from the mindset: ‘But, what if the market (or stock) goes lower?’Answer:you buy in small parcels at different levels, average in.
That’s how I approach the market.Take what the market gives you.
During election years, headwinds in April and May can be expected. But this is mostly temporary.Seasonality supports buying the dip prior to a summer rally.Volume indicators for the S&P 500 are suggesting a pause ahead of upsides in the summer.
Why is the Japanese Yen cratering?
The Japanese stock market has been rallying over the past few years.From its Covid-induced low in 2020, the Nikkei has run to a record high of over 38,000. That gallop has even outdone the U.S. S&P500 over the same period.
Japan’s previous three decades saw stagnant performance and low economic growth.Now in 2023/2024, we see Japan’s stock market entering a new era of strength, but alongside this strength, the Japanese Yen has collapsed.
On Monday morning the Yen briefly touched 160, a 34-year low compared to the U.S. dollar.However, in what may have been the Bank of Japan's intervention, the dollar dived below 157 in a heartbeat not long after the low was reached.In January 2023 the Yen was sitting at 129.So, what gives?
The Yen’s collapse can mostly be explained by the rising U.S. interest rates.The currency’s fortunes are mostly tied to expected interest rate differentials.In other words, the Yen will fluctuate in accordance with the anticipated difference between the interest rates in Japan and other parts of the world, most particularly the U.S.
So, when the U.S.’s interest rates are higher than Japan’s, it puts pressure on the yen.And the reasons for this are twofold.Firstly, due to Japan’s low interest rates, the yen is often used in the so-called “carry trade.”This means investors can borrow at a low interest rate to invest in an asset with a higher return.So, you might see a fund manager borrowing yen and investing it in a higher-yielding foreign instrument, pocketing the difference.
The interest rate differentials between Western powers and Japan also impact investment and hedging in Japan’s $4.2 trillion portfolio of overseas assets.When Japanese investors see that interest rates are far higher in other developed nations, they’ll often increase their investment in these overseas assets, pulling down the yen.Hence the rising interest-rate differential between the U.S. and Japan has become quite a dilemma for the yen over the past few years.
In the short to medium term, there is little likelihood of change here for JPY/USD.With the resilient U.S. economy and inflation showing signs of accelerating, many believe the Fed is unlikely to cut interest rates soon, which will see the yen remaining at the mercy of developments, particularly in the U.S.
But the tide will eventually turn.U.S. and European central banks will eventually cut their respective interest rates, lessening the painful interest-rate differential for Japan.
Bank of America argues that the Bank of Japan may hike rates in the third quarter, and the U.S. could cut rates.This would then pave the way for yen appreciation.
Earnings:Apple, Live Nation Entertainment, Fortinet, Booking Holdings, Pioneer Natural Resources, Motorola Solutions, Ingersoll Rand, Expedia Group, EOG Resources, Coterra Energy, Dominion Energy, Howmet Aerospace, ConocoPhillips, Moderna, Stanley Black and Decker.
Friday, May 3
8:30 a.m. April Jobs Report
Previous: 303k
Expected: 250k
9:45 a.m. PMI Composite final (April)
9:45 a.m. Markit PMI Services final (April)
10 a.m. ISM Services PMI (April)
Earnings:Hershey
The Fed is set to convene for their third meeting of the year this Wednesday with market consensus anticipating no adjustments in interest rates this month.Amid increasing signs of an economic slowdown paired with sticky inflation, the focus will pivot if Fed Chair Powell intends to adjust their interest rate outlook.
Meanwhile, it’s become a guessing game as to when the Fed might be likely to deliver the first rate cut. September has now come in at good odds as the first likely date, but there has now been a noticeable uptick in the probability (19.6%) of interest rates remaining at 5.25 – 5.5 % throughout 2024.
The latest U.S. jobs market report will be released on Friday.
Additionally, it will be a mega-packed week of earnings reports.
Despite a challenging economic backdrop, the American economy is showing remarkable strength, thus far.But, as the effect of higher rates become fully felt throughout the economy, it would not be surprising to see growth cooling.Above-target inflation and fears of slower growth can lead to stagflation – which no-one wants to see.However, America seems to be equipped with elements that are mitigating the effect of higher rates and helping the economy steer clear of a contraction.
Jose Rasco, chief investment officer of the Americas at HSBC’s wealth division, sees four themes which will insulate the U.S. economy from a downturn. Firstly, he sees growth staying above 1.7% and the unemployment rate pushing moderately higher.
Advancement in technologies is curbing inflation.
Rasco argues that technological disruptions have historically put downward pressure on prices given the potential to streamline inefficiencies and cut back on labour. (We can see this well illustrated in many companies adopting blockchain technology, which cuts out intermediaries, increases efficiency and cuts cost).This can help the path of inflation as the Fed struggles to return price growth to no more than 2%, the central’s banks preferred rate.
Technological health care innovation
Advancements in technology are boosting patient care and health administration.Revolutionary technologies are providing more options for surgery that provide better outcomes and can be cheaper.As I have already pointed out above the use of blockchain can reduce costs as it cuts out the middleman and this is particularly applicable to both billing and insurance costs in the health sector.
On-shoring
Moving production back to or closer to the U.S. spells good news as it is bringing money and investment to the U.S. and to Mexico.
Re-industrialization of the U.S.
A record amount is being spent on research and development in the U.S.Coupled with legislation such as the CHIPS Act, it is not hard to see that an industrial boom is taking place which can boost the entire U.S. economy.Many American companies are spending large amounts investing in technology to become more productive and profitable.
Presidential Election Year
U.S. stocks tend to outperform in presidential election years. As far back as 1926, BlackRock found an average gain of 11.6% in election years, or 1.3 points better than the average 10.3% return in all years.
Rasco notes that HSBC Asset Management oversaw $707 billion in client assets as of the end of 2023.
Brief Market Update
S&P 500 is undergoing a 4th wave correction.Whilst resistance around 5125/5150 contains strength, there is risk of a final sell -off toward the low/mid 4800’s before the uptrend is ready to resume.
Brent Crude is still expected to rally towards $100 over the short to medium term.
Bitcoin chart formation cautions the eventual formation of a Head and Shoulders reversal pattern.From an Elliott Wave perspective this could mean that Bitcoin will correct back to the prior span of support (4th wave) which sits around $49,000 - $38,000.
Resistance $65 - $67,000.
Gold is undergoing a correction and may fall towards $2,260 area before the uptrend resumes.
The economic landscape at present is a little uncomfortable, to say the least.Investors’ perceptions about interest rates, inflation, and employment stability are being influenced by data the Fed is watching closely.In turn, the interpretation of this data is causing volatility in the market.We are in a long-overdue correction, which should take the froth out of the huge market rally we have recently experienced.
Tech stocks, overall, have been brought back to earth.It certainly does not mean the tech sector is dead.It’s just resting. Five, ten, twenty, thirty years in the future, we will look back on this correction as a blip. Technology will keep advancing and take tech stocks along for the ride.
So, what exactly do those tech advancements look like? An insight into some of the tech of the future shows just what is ahead of us.
Future of Education
We will probably see a shift to more interactive method of learning.Online learning platforms to more personalized learning experiences alongside the incorporation of virtual and augmented reality.The traditional lecture-based, note-taking methods may be replaced by an emphasis on collaboration and problem-solving to better prepare for the workplace.
In schools, we could see biometric scanning upon check-in, which will streamline registration. 3-D printers will be a standard appliance both in the home and at school.They will be an essential learning aid for teachers, facilitating the task of teaching complex concepts.
Learning systems driven by artificial intelligence (AI) will have been integrated into the school environment by 2050.Personalized learning experiences will consider learning styles and create adaptive assessments that adjust in real-time based on performance.AI may predict a student’s future performance, allowing teachers to step in before a student falls behind in a particular area.Furthermore, AI will ensure students receive immediate feedback with suggested areas for improvement, thereby tailoring to a student’s strengths and weaknesses.
Self-driving cars
We have all heard about the crashes because of self-driving cars, which have often made headline news.In decades to come, self-driving cars could well make our roads safer, and reduce deaths and injuries from car accidents.The insurance industry will surely be impacted by this change.This AI could also change our lifestyles as well.The grind of the daily commute will be more comfortable and less taxing on the body, and consequently, it may even change where we choose to live.Overall, AI will make our transportation systems both safer and more efficient, as AI-powered systems will coordinate traffic flows.
Plants will charge your iPhone.
Forests are set to become the energy stations of the future.Bioo is a clean-tech company capable of generating electricity from plant photosynthesis.
Delivery Drones
By 2050 the urban skyline will probably be buzzing with drones delivering all manner of things from books to medical supplies to food.I wonder how noisy that will be?
Ocean Thermal Energy
Ocean thermal energy is one of the world’s largest renewable energy sources, and it has been relatively untapped to date.However, a company called Bluerise is working on creating an energy breakthrough by generating utility-scale electricity through Ocean thermal energy conversion.It is believed it will be able to outcompete fossil fuel-based generation and other renewables that require storage and grid balancing.It will play a crucial role in the future energy mix being one of the very few constant energy sources, available day, and night, year-round.
Health Wearables
Wristbands tracking our movement came about in 2009 when the Fitbit Tracker debuted.Since then, many watches can now monitor our movement, our sleep, our heart rate, and other health data.By 2050, wearables may eliminate the annual physical because they will be loaded with sensors that transmit vital health data, hence giving us warning signs of health issues. Nanobots and wearable devices will monitor and enhance our mental and physical health continuously.Necklaces and wristbands that reduce inflammation and pain may also be common items. This will revolutionize healthcare, making it more personalized and proactive.
Augmented Reality and Virtual Reality
By 2050 technology will be seamlessly integrated into our everyday lives.AR and VR will be commonplace transforming how we work, learn, and interact.
The Job Landscape will be ‘smart’.
Half of the world’s current jobs are unlikely to exist in 2050.The jobs that will be on offer haven’t been invented yet. AI and smart assistants will be commonplace.Robots will play a significant role in the workplace as they can perform many human jobs. Everything will be ‘smart’ – connect and data-driven.This will lead to a big shift in the job market, with a greater emphasis on roles that require human creativity and emotional intelligence.Employers will need to become responsible for creating a life-long learning culture at work, so their staff can take ownership of their professional development, thereby staying up to date with skills and knowledge as their workplace transforms.
Update:On Wednesday I wrote about the metals sector and mentioned a copper stock that was worth looking at - Solaris Resources Inc (SLSR). Yesterday It rose 0.29 cents, a total of 8.49%.
(WALL STREET IS PAYING ATTENTION TO THE METALS SECTOR)
April 24, 2024
Hello everyone,
Arizona Metals Corp.
I’m diving into a Canadian gold explorer today that is only priced at $2.21.
New drilling results from its Kay Mine Project, located 45 miles north of Phoenix, Arizona, suggest the presence of high-grade copper and gold mineralization within the drilled areas, which could potentially lead to the discovery of a significant mineral resource.
Analysts at Scotiabank believe the company has completed 106,000 meters of drilling on the Kay property and remains well-funded, with $31 million in cash at the end of last year to complete the remaining 53,000 meters of the drill program.
There is an expectation by analysts at Scotiabank that shares will rise 114% to $4.50 Canadian dollars ($3.27) from current levels.
The Kay Mine, a wholly owned gold-copper-zinc exploration-stage project, is Arizona Metal’s flagship mine.According to the company, minerals have been identified through drilling from 150 metres to at least 900 meters below the surface.
Arizona Metal’s stock has a consensus price target of six Canadian dollars, representing a potential upside of 185%, according to FactSet data.
BMO Capital Markets analyst Rene Cartier has a price target of 6.50 Canadian dollars on the stock, giving it an upside potential of 209%.
Beacon Securities analyst Bereket Berhe, meanwhile, has set a price target of 10.50 Canadian dollars, suggesting a potential upside of 400%.This makes Scotiabank’s price target the most conservative among analysts polled by FactSet.
Investments in mineral exploration companies are often considered to be high-risk, so if you are risk-averse, please skip this investment.
Wall Street is bullish on copper.
Supply risks and rising demand amid the energy transition and the artificial intelligence boom have Wall Street taking note and becoming increasingly bullish on this metal.
Copper is used in data centres for power cables, electrical connectors, power strips, and more.
Global copper demand by data centres will increase from 239 kt (thousand tons) in 2023 to at least 450 kt per annum in 2030.
Jefferies analysts argue that the potential demand growth will exacerbate an underlying copper market deficit, ultimately leading to higher prices.
Data centres house vast amounts of computing power needed for AI workloads, and that need is set to grow as many tech companies are rapidly developing infrastructure for artificial intelligence.Large language models require a lot of data centre capacity.
Recently, Morgan Stanley predicted that the price of the metal will reach $10,500 per ton by the fourth quarter of this year – representing around 12% upside.
Copper is also widely considered an indicator of economic health.The metal has a wide range of applications throughout construction and industry.It’s also a critical component in electric vehicles, used in batteries, wiring, charging points, and more.
If you want another copper stock besides Freeport McMoRan (FCX) for your investment portfolio, you could consider Solaris Resources (SLSR) Price of $3.33.Analysts have given it a 100% buy rating, with the potential for more than 100% upside.
If you want to consider ETFs you could have a look at Sprott Copper Miners ETF (COPP) and the iShares Copper and Metals Mining ETF (ICOP), as well as the Global X Copper Miners ETF(COPX).
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