(HOW TO PLAY A HARD LANDING)
May 17, 2023
Hello everyone,
One day the media and so-called experts in the know tell us are going to get a soft landing.
The next day they tell us that we are going to get a hard landing.
One day they tell us that inflation data is getting better.
The next day they tell us that inflation data is getting worse.
And they also tell us that the jobs numbers are too strong. The Fed needs more people unemployed.
I get it.
They want to slow things down and bring inflation down, but at what cost?
And what happens when they pause on the rate hikes or even cut, and inflation rears its head again – it’s a possibility.
It’s enough to make your head spin.
The market is almost bipolar or even passive-aggressive.
Inflation is getting better, but prices are still high and could remain so.
David Neuhauser, chief investment officer at Livermore Partners said that while the gradual decline in the inflation rate over the past year is a positive sign for the economy, he expects prices to remain stubbornly high for an extended period. He expects a hard landing.
John, on the other hand, believes that the inflation rate will come down and prices will slowly normalise, but it may be a bumpy journey to get there. He is leaning more towards the soft-landing scenario.
Neuhauser is arguing that inflation will remain a problem for some time to come and the markets won’t like that script.
If the markets don’t get a cut in rates, Neuhauser believes the S&P 500 could decline by more than 20%.
The debt ceiling crisis could get to the post first and bring the market down in the summer.
John has told us all to buy gold and silver stocks during the summer period. Specifically, GOLD, WPM, SLV, etc. Also, he has told clients to buy 90-day T-bills and the TLT – calls, call spread, and/or LEAPS.
Maybe you could also think about a couple of these stocks recommended by Neuhauser. Do your research first.
The first is Ferrari, a high-margin automaker with a significant market presence among ultra-high net worth individuals.
As inflation rises, companies serving the wealthy have outperformed as their customers are not as sensitive to price rises.
The trend is also evident in the automotive sector. For instance, Ferrari, which makes about 14,000 cars annually, is currently valued at 53 billion euros ($58 billion), compared to mass-market car maker Stellantis, which produces 6 million vehicles every year and is valued at around 48 billion.
Ferrari also reported a 24% jump in net profit and an increase in its waiting list earlier this month. Its financial results contrast with the wider automotive sector, which is struggling due to supply chain problems and rising costs.
Next is Jadestone Energy. It’s a London-listed oil and gas producer where the dynamics are taking hold and the cashflow is high going forward into next year.
Then we have Amaroq Minerals. Again, do your research. This is an Icelandic company engaged in gold and mineral exploration. It is set for strong cash flows and is about to construct its first mine. The company already owns high-grade gold and copper assets in southern Greenland. As gold prices rise, companies mining the metal benefit from bigger profit margins.
Livermore, the hedge fund founded by Neuhauser in 2009, owns shares in Amaroq, along with billionaire investor Louis Bacon.
Happy mid-week.
Be happy, healthy, and wealthy.
Cheers,
Jacque
"Too many people spend money they earned …to buy things they don’t want…to impress people that they don’t like. … The money you make is a symbol of the value you create." - Idowu Koyenikan
