(SCAMMERS ARE MAKING A MINT OUT OF THE REAL ESTATE MARKET)

February 10, 2025

Hello everyone

WEEK AHEAD CALENDAR

MONDAY FEB. 10

9:00 a.m. Euro Area ECB Speech

Earnings: ON Semiconductor, Rockwell Automation, McDonalds.

TUESDAY FEB. 11

6:00 a.m. NFIB Small Business Index (January)

3:30 p.m. New York Federal Reserve Bank President and CEO John Williams gives keynote remarks at Pace University, New York.

Earnings: Gilead Sciences, Coco-Cola, Fidelity National Information Services, Ecolab, Marriott International, Humana.

WEDNESDAY FEB. 12

8:30 a.m. Consumer Price Index (January)

8:30 a.m. Hourly Earnings (January)

8:30 a.m. Average Workweek (January)

2:00 p.m. Treasury Budget (January)

Earnings:  Paramount Global, MGM Resorts International, Global Payments, Cisco Systems, Tyler Technologies, Dominion Energy, Albemarle, Kraft Heinz, CME Group, Martin Marietta Materials, Westinghouse Air Brake Technologies, CVS Health, Generac Holdings, Exelon, Biogen.

THURSDAY FEB. 13

2:00 a.m. UK GDP Growth

Previous: 0%

Forecast: -0.1%

8:30 a.m. Continuing Jobless Claims (02/01)

8:30 a.m. Initial Claims (02/08)

12:20 p.m. New York Federal Reserve Bank Director of Research Kartik Athreya speaks at the University of Bridgeport, Ernest C. Trefz School of Business.

1:00 p.m. New York Federal Reserve Bank Interim Head of the Markets Group Anna Nordstrom gives opening remarks in “Women in Fixed Income Conference”, New York Fed.

4:00 p.m. New York Federal Reserve Bank Director of Research Kartik Athreya speaks on “Economic Outlook with a Focus on Regional Business Conditions”, Connecticut

5:15 p.m. New York Federal Reserve Bank Deputy SOMA Manager Julie Remache gives closing remarks in “Women in Fixed Income Conference”, New York Fed.

Earnings: Motorola Solutions, Airbnb, Wynn Resorts, Applied Materials, Ingersoll Rand, GoDaddy, DexCom, PPL, Howmet Aerospace, Duke Energy, Molson Coors Beverage, GE Healthcare Technologies, West Pharmaceutical Services, PG&E, Deere & co.

FRIDAY FEB. 14

8:30 a.m. Export Price Index (January)

8:30 a.m. Import Price Index (January)

9:15 a.m. Capacity Utilization (January)

9:15 a.m. Industrial Production (January)

9:15 a.m. Manufacturing Production (January)

10:00 a.m. Business Inventories (January)

Earnings: Moderna

It will be a quieter week on the economic data front, but that doesn’t mean markets will be calm.  The CPI and PPI are on deck this week, so investors will be paying close attention to the numbers here after Friday’s economic data revived concerns around inflation.  The January jobs report showed strong wage growth, an inflationary signal.  But it was the drop in consumer sentiment that represented growing concerns about rising price pressures from tariffs that turned the market off.  The angst was felt in the bond markets as we saw yields spike higher.  US Retail Sales data will show whether the health of the American consumer is humming along nicely.

Take the long way round when dealing with real estate financial transactions.

I have heard of this tale so many times, it is heartbreaking.  Singles or couples who have saved up a deposit to buy a property. They transfer it to the bank account indicated by the real estate agent/and associated bank and then find it has evaporated.

Australians lost more than $318m to scammers last year.  When it comes to real estate scams, buyers, sellers, and renters are all at risk. 

So, it is wise to keep up with the latest scams and know what to look out for.  This will help you minimise the threat and keep your money as safe as possible.

Payment redirection scams are one of the biggest ways consumers are getting fleeced in the property market.  This is where a scammer will impersonate a real estate agent to convince the unsuspecting client to deposit funds into a different bank account.

Ray White warns consumers that scammers will create a very similar email address and start emailing the client pretending to be the agent.  Furthermore, the real estate company goes on to point out that the scammers provide updated banking details, trying to get the client to deposit funds into the scammer’s account.

The rental market is not safe either.  Scammers are imitating offices and trying to redirect rental payments into scam accounts.  There are new scams coming out daily – and these messages can be sent via post and not email.

REIA (Real Estate Institute of Australia) President Leanne Pilkington says it is crucial to pick up the phone and speak with the real estate agent before transferring funds if you have received a payment request with new account details.

Buyers are losing their deposits.

Another common scam operating in the market now is when fraudsters use the photos and information from a legitimate rental listing and create a fake private listing on a consumer trading site.

Posing as the landlord of the property, they give excuses about not being able to run inspections while offering deals that seem too good to be true.

They request a deposit and indicate that once that is received, the place will be yours.  When it comes time to collect the keys, there are no keys – no owners.

Many people who are feeling vulnerable due to the rental crisis in Australia have found themselves easy targets for such scammers.  Depositing money without physically walking through the premises is not safe – better to take the long route and check things out thoroughly.  It could save you a mint in the end.

RED FLAGS

A change of account request.

Do not reply to the email.  Instead, call the agent directly and ask them for confirmation.  Even better, make an appointment and physically visit the branch.

Avoid clicking links.

It is possible that this link could take you to an unsecured website where you are tricked into entering sensitive information.

Choose secure payment platforms.

Many agencies offer BPAY or DEFT for making rental payments or PEXA for buying and selling rather than transferring funds into a bank account.

Private rentals – be careful.

Request documentation from the landlord.

Check if the owner is registered with Bonds Online.

Contact your bank.

If you think you have been scammed, contact your bank straight away and follow the instructions given.

The goal is prevention.

Even better than a phone call, walk into your agency/bank and verify bank details and emails you have received.  It is worth the effort and the time.

MARKET UPDATE

S&P500

The bull market is looking shaky; the market is showing wide-ranging swings, which can be representative of tops forming.  Most are expecting the bull market to continue making new highs in its third year; however, I am being more cautious than the consensus.

Support: $5900/$5775/$5750

Resistance: $6110/$6100.

GOLD

Gold can continue this rally for some time, but I am expecting the metal to eventually sell off in the medium term down to at least the $2,500 area.

Support: $2830/$2732

Resistance:  $2900/$3000

BITCOIN

We can expect some more ranging behaviour for Bitcoin this week. 

Support = ~ 91,000/89,000/85,000/80,000.  Resistance = $108,000/$105,000

QI CORNER

HISTORY CORNER

On February 10

QUIZ CORNER

1/ In what decade was the internet created?

2/ What was the name of the first computer virus?

3/ What company was initially known as “Blue Ribbon Sports”?

4/ Who created the first credit card?

SOMETHING TO THINK ABOUT

“The decline of literature indicates the decline of a nation.”

(Johann Wolfgang von Goethe)

Cheers

Jacquie

(WHERE DOES AUSTRALIA STAND IN RELATION TO THE U.S. AND TRUMP 2.0)

February 5, 2025

Hello everyone

The United States makes more from Australia than Australia makes from the United States in terms of trade and investment. The United States is Australia’s largest economic partner.

TRADE

In 2023, Australia exported $12.59 billion to the United States.

The United States has a trade surplus with Australia, with the surplus in goods and services favouring the United States.

The United States is Australia’s third largest trading partner for goods.

The United States is the third most popular tourist destination for Australian residents.

INVESTMENT

The United States is Australia’s largest foreign investment destination.

At the end of 2023, the United States had invested $1.17 trillion in Australia.

Below is a list of the top twenty exports to the United States.

This is by no means everything on the list. 

The prospect of an international trade war with the U.S. now must be factored into the realm regarding inflation and interest rates in Australia.  The likely downward trajectory of inflation and interest rates has been complicated by Trump’s “bull at a gate” mentality over tariffs on goods from many countries. 

Vowing to stick to his election promise, Trump wants the U.S. to return to a “golden age” of U.S. manufacturing.  China has been loud and clear that countermeasures are coming.  And Canada has already responded by slapping a 25% tariff on a range of U.S. imports.  Certain provinces have indicated that they will no longer buy American goods, so public influence will spin the tables against Trump’s actions.

Mexico, too, has indicated that it will also levy retaliatory duties on American goods.

It was initially understood that Trump’s rationale for threatening tariffs on Canada and Mexico was to force these countries to stem the flow of fentanyl and illegal immigrants across the border into the U.S.  But it seems they have become more than a bargaining chip and look certain to be locked into place to protect America and make it great again, even though it may be a painful journey.

Trump has also drawn attention to his intention to impose tariffs as early as mid-February on imports from all countries of computer chips, pharmaceuticals, steel, aluminum, copper, oil, and gas into the U.S.

The implications for Australia’s open and export-oriented economy, which greatly benefits from free trade, are two-fold.

Australia risks importing higher inflation. And, secondly, Australian exports to the U.S. risk getting caught up in the trade war.  For instance, blood plasma made by biotech giant, CSL, is among the $1.7 billion a year pharmaceutical exports that are at risk of being hit by Trump’s tariffs if they are imposed on Australia.

The potential hit to costs and sales for Australian companies that do business in the U.S. is significant.  The Albanese government will need to act swiftly to negotiate an agreement with the U.S. to minimize the potential damage from Trump’s trade war.

There are many other effects too.  Disruptions to international trade that slow the world economy would drag on Australia’s 0.3 annual rate of GDP.  Effects could include the acceleration of the economic slowdown in China, which is Australia’s main trading partner.

The looming trade war has consequences not only for inflation and interest rates but also for economic growth.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Trump’s latest expansionist tendency includes wanting to take over the Gaza Strip. He wants to transform it into the “Riviera of the Middle East.” This is on top of wanting Greenland, and the Panama Canal.   

Instability on the geopolitical front could go from amber to red.

Cheers

Jacquie

(WILL TRUMP’S POLICIES BE THE BEGINNING OF REAL MARKET ANGST OR WILL THE AI ENVIRONMENT DETERIORATE? – OR WILL IT BE BOTH?)

February 3, 2025

Hello everyone

WEEK AHEAD CALENDAR

MONDAY FEB. 3

5:00 a.m. Euro Area Inflation Rate

Previous: 2.4%

Forecast: 2.5%

9:45 a.m. S&P PMI Manufacturing final (January)

10:00 a.m. Construction Spending (December)

10:00 a.m. ISM Manufacturing (January)

Earnings: Tyson Foods, Palantir Technologies, NXP Semiconductors NV, Clorox.

TUESDAY FEB. 4

10:00 a.m. Durable Orders (December)

10:00 a.m. Factory Orders (December)

10:00 a.m. U.S. Job Openings

Previous: 8.1M

Forecast: 7.8M

Earnings: Apollo Global Management, KKR & Co, PayPal, PepsiCo, Merck & Co, Regeneron Pharmaceuticals, Marathon Petroleum, The Estee Lauder Companies, Pfizer, Advanced Micro Devices, Alphabet, Match Group, Prudential Financial, Simon Property Group, Electronic Arts, Enphase Energy, Mondelez

WEDNESDAY FEB. 5

8:30 a.m. Trade Balance (December)

9:45 a.m. PMI Composite final (January)

9:45 a.m. S&P PMI Services final (January)

10:00 a.m. U.S. Services PMI (January)

Previous: 54.1

Forecast: 54.3

Earnings:  Walt Disney Co., Emerson Electric, Stanley Black & Decker, Boston Scientific, Uber Technologies, Yum! Brands, T. Row Price Group, MetLife, Align Technology, Qualcomm, Ford Motor, Allstate, O’Reilly Automotive.

THURSDAY FEB. 6

7:00 a.m. UK Rate Decision

Previous: 4.75%

Forecast: 4.50%

8:30 a.m. Continuing Jobless Claims (01/25)

8:30 a.m. Initial Claims (02/01)

8:30 a.m. Unit Labor Costs preliminary (Q4)

8:30 a.m. Productivity preliminary (Q4)

Earnings: Hilton Worldwide, Air Products & Chemicals, Honeywell International, Eli Lilly & Co, Tapestry, ConocoPhillips, Fastenal, Hershey, Ralph Lauren, Microchip Technology, Take-Two Interactive Software, Amazon.com, Expedia Group, Monolithic Power Systems, Fortinet.

FRIDAY FEB. 7

8:30 a.m. Hourly Earnings preliminary (January)

8:30 a.m. Average Workweek preliminary (January)

8:30 a.m. Manufacturing Payrolls (January)

8:30 a.m. U.S. Nonfarm Payrolls

Previous: 256k

Forecast: 170k

10:00 a.m. Michigan Sentiment (February)

10:00 a.m. Wholesale Inventories (December)

3:00 p.m. Consumer Credit (December)

Another busy week is upon us.  More than 120 S&P 500 companies are scheduled to report. Some of them include Amazon, Alphabet, Walt Disney and PepsiCo.

So far, the reporting season has been good.  Most companies have beaten expectations, according to FactSet data.  What investors will be paying close attention to in the earnings this week is the future guidance of each business. 

Policy will be market-moving this week.  President Trump tapped the green light with tariffs in Canada, Mexico, and China.  The impact of these tariffs could be far-reaching and could even trigger retaliatory tariffs from the targeted countries.  A high level of uncertainty will be felt in the market.

Nonfarm payrolls are due out on Friday.  It is expected that the economy added 165,000 jobs last month, down from 223,000 new hires the prior month.  The unemployment rate is forecast to have remained unchanged at 4.1%

Another perspective on AI

Last week, Deep Seek - even with everything we don’t know about it, - stopped investors in their tracks and caused discomfort and disquiet, to say the least.  So much so, that seeds of doubt over everything investors thought they knew about artificial intelligence has become the new narrative.

Everything is being questioned, including the stock market valuations on AI stocks.

Investors are rethinking their Nvidia investment.  Are Nvidia’s chips worth the price?  This question caused the shares of the AI leader to plunge 17% last Monday, stripping around$600 billion in market value from the stock.

And what about AI data centre operators - Amazon, Microsoft, and Alphabet?  Will they be able to justify the fees and spending if Deep Seek is so cheap?

Furthermore, Deep Seek has also called into question the projections about electricity demand related to more AI usage.  Are they vastly exaggerated?  Power producers took it on the nose last Monday with stocks like Constellation Energy, Vistra, and Talen Energy among others, being smacked lower.

Last Monday, certainty was challenged.  Valuation multiples will need to find a new level. 

President Trump introduces tariffs.

We are now beyond talk, as the first steps of implementation of Trump’s tariffs to match Trump’s promised policy agenda took place on the weekend.  On Friday, Trump said he would implement a 25% tariff on Canada and Mexico and a 10% on China on Saturday.  No exemptions are known yet.

Until the market becomes familiar with the details, uncertainty will influence the market environment. Jitters could become very evident in sectors that could be hit hard by a trade battle with America’s closest trading partners, such as autos, industrials, food and beverage companies. 

If the administration builds on existing steel and aluminum tariffs with Mexico and Canada, that could create volatility given Trump’s plans to build new power infrastructure and re-energize the manufacturing sector.

How will Canada and Mexico respond?  Will they issue their own tariffs?  Canada could slap tariffs on critical minerals, natural gas, and electricity.  Furthermore, the country could also ban U.S. dairy, cattle, and fresh meat.  And some provinces could choose to ban the purchase of U.S. alcohol, which would certainly cause ripples amongst some stocks.

Mexico, too, could implement an offensive approach by targeting U.S. corn or soybean exports, before expanding its retaliation into other areas.

One thing is for sure, the market could be very turbulent.

MARKET UPDATE

S&P500

The index will be choppy, particularly with the introduction of tariffs on several countries.  This will create uncertainty in various markets/sectors.  The ranging action of the index shows a bigger picture topping action.

Support = ~ $5955/65.  The base of the rising wedge since October 2023 lies around $5750/75.  Any break/close below here argues a major top has formed and the market is rolling over (9-12 months or more).  I strongly recommend everyone take some profits now and enter a limit order for a put option or bear put spread to come into play on the SPY on any break and close below $5770.  Also, buy SDS as protection.  If you are short-term focused, you should take profits on stocks.   I am expecting a strong bear move in the market either this month or next month.

GOLD

Gold reached a new all-time high.  The metal will continue to range and could continue to nudge to the upside for now. 

Resistance = ~$2817/25

Support = ~$2785/90 and $2737/40

BITCOIN

Topping movement continues to play out here. I would expect any upside to be limited.  Resistance remains at ~$109.30/$109.80k.  Support is seen at around~ $91/$92, and below there at ~ $85,000k.

QI CORNER

HISTORY CORNER

On February 3^rd

SOMETHING TO THINK ABOUT

Cheers

Jacquie

(OPTION STRIKES: WHY WE CHOOSE A PARTICULAR STRIKE)

January 29, 2025

Hello everyone

What strikes do I choose and why

Strike prices refer to the specific price you can buy or sell an underlying stock when exercising an option contract.   In other words, it’s the fixed price defined within an option that determines whether you can profit based on the current market price of the underlying asset, categorized as “in the money”, “at the money”, or “out of the money” depending on its relation to the current market price.

“In the Money”

If the current market price is higher than the strike price, the option is considered “in the money”.  When putting your strikes “in the money” you are being more conservative.

“At the Money”

If the current market price is equal to the strike price.  This is also a conservative stance.

“Out of the Money”

If the current market price is below the strike price, the option is considered “out of the money” and has no intrinsic value.  When putting your strikes “out of the money” you tend to be more aggressive in your approach and taking on a bit more risk.

What is intrinsic value?

In options trading, “intrinsic value” refers to the immediate profit an option holder would gain if they exercised the option today, which is calculated by subtracting the strike price from the current market price of the underlying asset.

So, for example, if a stock is trading at $100, and a call option has a strike price of $90, the intrinsic value of that call option would be $10 ($100-$90).

Only options that are currently “in the money” have intrinsic value.

The total price of an option (premium) is made up of intrinsic value and time value (extrinsic).

Implied Volatility

IV is the level of volatility embedded in the option price.  Generally speaking, the bigger the stock movements, the higher the level of implied volatility.  Most stocks have different levels of implied volatility for different strike prices.  John often uses this volatility in his option trading decisions.  He often trades Tesla because of the high volatility and sends out “in the money” trade alerts. 

If the stock has very low implied volatility, you should avoid going for “out of the money” option strikes.

PORTFOLIO UPDATE

Nvidia lost around $600b in value in one day this week.  That’s a pretty hefty number.  And it was all because of one headline that completely freaked investors out.

I would be looking to take some profits on this stock, as I don’t think it has found a bottom yet and could have further to fall. 

We have done well on this stock, so it is wise to lock in some profits now.

Recommendation:  Take at least 50% of profits on Nvidia stock.

MY AIRBNB EXPERIENCE IN THE U.S.

Last week I gave an insight into some of my experiences with Uber drivers in the U.S. and what their outlook was. 

Today, I’m going to talk about Airbnb and my experience with this company, and the hosts I have encountered throughout the U.S. 

Airbnb is not everyone’s cup of tea.  Particularly if you are staying in a room in someone’s home.  A myriad of rules are put before you as though you were staying in some sort of compound.  For anything you break or ruin, there is always a dollar penalty.  Loud noise or parties are out of the question.  Not that I was indulging in any of that frivolity.    But, at times it can seem a bit constricting and somewhat unsettling.  Furthermore, at a couple of places I was not able to use the kitchen, so had to resort to prepared food, which was not always enticing. 

My experience sharing the home with one family was quite interesting.  This lady had a couple of her adult children living with her at home as well as one grandchild. Her adult children did not seem to work, and I didn’t ask why.  She smoked and had a smoker’s cough.  I noticed she had a tin of air freshener on a side table in the family room and often used it to attempt to hide the smell of smoke. At other times I witnessed her waving the smoke away with her arm.  None of these worked. 

She appeared quite disgruntled with the world and would talk to me for what seemed like a long time about the state of the U.S.  She almost religiously listened to all sorts of political podcasts and watched programs focused on the possibility of extra-terrestrial beings.  She was a staunch Democrat and had expressed her alignment by putting up large photos of the Democrat candidate – Kamala Harris - at the front of her home.  This was a trend I saw throughout the neighbourhood.  So, it became obvious which candidate each home supported as larger-than-life photos were erected in the front yard or just near their front door.    (In Australia, we have photos of candidates erected in strategic locations on footpaths before an election, but I have never seen households expressing their support for one or the other candidate by putting up large photos in their front yard.  We don’t hero-worship our leaders like the U.S. does.  We are more concerned with the environment than putting a leader on a pedestal.  To Australians, the Prime Minister has a job to do, so he should just get on with it and do it.  No fanfare needed).

Anyway, at this home I was usually always the first person up in the morning.  I emptied the dishwasher and washed up a pile of plates that sat in the sink.  Then I made my morning cup of tea and went to work.   

On occasion, I also cooked them some homemade treats, such as biscuits, and slices.  They were all demolished in a very quick time, almost as though they had never tasted a home-cooked treat.   I must say it was great to be able to use a kitchen to make my meals. 

One conversation we had focused on the bookings she was getting for her Airbnb room.  She said that bookings had begun to slow, and she didn’t know why.   She almost answered her own question by arguing that the U.S. now had a variety of accommodations for visitors, that were not necessarily hotels, so this may impact Airbnb long-term. 

At another Airbnb, where I had a room in a family home, the host was a Chinese lady.  She had three bedrooms upstairs, and two were left for Airbnb visitors.  Another room was for storage.  This lady – let’s call her Kathy - chose to sleep on a mattress on the floor in a corner of her living area, which was sectioned off with a sheet or some cloth that was hanging from a partition. Her husband had died a few years ago, and this provided a good income for her.  She owned a home back in China but said she was not likely to return.  Her son had been educated at a private university in the U.S. and worked as an interpreter and commentator on U.S./China international affairs.  He highlighted events happening in China, that many people were not aware of, and drew attention to human rights abuses that were commonplace throughout China.  I met him once.  He was very well-spoken and said he would never go back to China. 

Kathy had a Green Card, but she didn’t hold a U.S. passport.  She seemed anxious about life in general; she had a car but never used it, she said she didn’t ever travel.  She had her groceries; fruit & vegetables delivered and never ate any fast food.   At one sitting I saw her eat a bowl of mixed green leaves.  No dressing.  She drank water – no tea or coffee.  She knew I liked tea, so she would boil the kettle when she heard me get up in the morning and would place a nice cup and saucer & teabag on the dining table for me to use. 

She often talked to me about China and how restrictive it was.  She commented that if you were heard to be making disparaging comments about China, the government, or the country’s policies in general, you were often called upon to visit a special government office and explain your comments to see if they could help you better understand your position, and how you should be thinking, in some way.  Seems like you can’t trust your neighbours in China.  And Kathy pointed out that fact.  She said the Chinese were very distrustful of each other but were more likely to trust a foreign visitor.   She said the freedoms in America were taken for granted. 

My Chinese Host

Anyway, I’ll end off here with a brief observation of and exchange with a hotel employee.  He brought my luggage up to my room.  I asked him about the hotel, and he described what was available at the hotel. I asked him how long he had been working at the hotel.  He said a few years.  He seemed very disillusioned with the world. His face looked drawn, and his non-verbal communication betrayed a brow-beaten experience.  He had worked in the corporate world and called it a dog-eat-dog environment, where you have no friends.  He was obviously well educated as he said he spoke a couple of languages. He was not in his later years, but he moved slowly and was looking forward to retirement on a ranch far away from suburbia. I gave him a tip and wished him luck. 

Cheers

Jacquie

(PRESIDENT TRUMP IS PRIORITIZING AI)

January 24, 2025

Hello everyone

President Trump is prioritizing the push forward of AI.

Which companies are likely to benefit?

Think of (ORCL) Oracle, (MSFT) Microsoft, and (ANET) Arista Networks

Earlier this week, a $500 billion joint venture was announced between OpenAI Oracle, and Softbank, which aims to strengthen artificial intelligence infrastructure in the U.S.

Shares of Oracle and Microsoft have rallied nearly 15% and 3%, respectively, since the start of the week.  Microsoft is an investor in OpenAI.

Solita Marcelli from UBS notes that the project requires more computing and electricity, which may point to greater investments in grid infrastructure and power transmission.

Kash Rangan, a Goldman Sachs analyst, believes Oracle and Microsoft are prime winners from the government’s prioritization of AI.

Rangan notes that Microsoft is in a prime position to benefit from this project as the company has a strong balance sheet and capital expenditure for 2025.  Oracle, however, may take longer to benefit, but the tailwind will certainly gather strength in the years to come.  Analysts are seeing the probability of more capital AI investments for Oracle, which could boost its cloud infrastructure revenues at a compounded annual growth rate exceeding 50% through 2027.

The Stargate venture also sees Arista Networks as a potential big winner too.  The company has exposure to Oracle, Microsoft, and OpenAI, as well as the strength of its ethernet switching portfolio.  Piper Sandler’s James Fish argues that “given switching represents >50% of networking spends, and Arista’s? 30% share of high-end datacentre switching, we see this as a +$6B [serviceable addressable market] over 5 years.”

Fish also points to (PSTG) Pure Storage, as an “underappreciated way” to invest behind Stargate to meet storage capacity, estimating a $10 billion total addressable market.

(I recommended Oracle, Microsoft, and Arista Networks on January 6, 2024.

Oracle was at $104, Microsoft was at $372, and Arista Networks was at $248.00. Arista Networks had a stock split on December 4, 2024, which took it back to $62.00. 

TRADE ALERT

(TPB) TURNING POINT BRANDS

Turning Point Brands manufactures, markets, and distributes branded consumer products.  The company operates through three segments: Zig-Zag Products, Stoker’s Products, and Creative Distribution Solutions.  Zig-Zag Products segment markets and distributes rolling papers, tubes, finished cigars, make-your-own cigar wraps, and related products as well as lighters and other accessories under the Zig-Zag brand.  The Stoker’s Products segment manufactures and markets moist snuff tobacco and loose-lead chewing tobacco products under the Stocker’s, Beech-Nut, Durango, Trophy, and Wind River brands.  Its Creative Distribution Solutions segment markets and distributes other products without tobacco and/or nicotine to individual consumers through the VaporFi B2C online platform, as well as non-traditional retail through Vapor Beast.  In addition, it markets and distributes cannabis accessories and tobacco products.  The company sells its products to wholesale distributors and retail merchandising, drug stores, and non-traditional retail channels.  The company was formerly known as North Atlantic Holding Company Inc. It changed its name to Turning Point Brands Inc in November 2015.  The company was founded in 1988 and is headquartered in Louisville, Kentucky.

A shareholder return of 138% over the last 12 months is not too shabby for this company.  Most analysts rate it a strong buy or a buy and see it rising more than 20%.  Earnings are forecast to grow by 14.04% per year.  Earnings grew by 294.6% over the last year.

Recommendation:  Scale into the stock. And/or you could try a bull call spread like a 60/65 with an April 17 expiration, or a 60/65 with a July expiration.

So, your trade would look like this:

Buy 1 TPB 60 call

Sell 1 TPB 65 call

When I was looking at these trades the limit price for the April expiration was $1.48 and the limit price for the July expiration was $1.95.

Prices will be all over the place by the time you receive this, so purchase at best.

QI CORNER

SOMETHING TO THINK ABOUT

Cheers

Jacquie