Archive
Hot Tips
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February 13, 2025
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PPI Comes in Hot,
reversing the gains on inflation of the past two years. The Producer Price Index, a measurement of average price changes seen by producers and manufacturers, rose 0.4% on a monthly basis and 3.5% for the 12 months ended in January. That held steady with December, which was upwardly revised to 3.5% according to Bureau of Labor Statistics data released Thursday.
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BYD Shares Soar at Tesla’s Expense.
Shares of Chinese electric vehicle leader soared on Wednesday. Essentially free self-driving technology is the reason. The company’s decision to put advanced driver-assistance technology on most of its vehicles, regardless of the cost to BYD, says a lot. Tesla has a lot to worry about. Is Elon Musk paying attention?
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Defense Secretary Slams Defense Stocks,
telling NATO that a return to Ukraine’s pre-2014 borders is an unrealistic objective. It’s a suggestion that the US will withdraw all support. (RTX), (LMT), (GD), (NOC), and (HON) all have taken major hints. Avoid defense.
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Cisco Beats with Strong Guidance.
The networking company reported earnings of 94 cents a share on revenue of $14 billion. Analysts surveyed by FactSet were expecting earnings of 91 cents a share from revenue of $13.9 billion. Cisco’s earnings rose from last year’s 87 cents a share, while revenue increased from $12.8 billion. Buy (CSCO) on dips as another legacy tech stock that has come back from the dead. Defense spending is not controlled by hard core isolationists.
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Weekly Jobless Claims Fall.
Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 213,000 for the week ended February 8, the Labor Department said on Thursday. Economists polled by Reuters had forecast 215,000 claims for the latest week.
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February 12, 2025
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Core Inflation Rate Comes in Red Hot at 0.50%.
Overall advance was broad, led by shelter, food, and medicine. Shelter accounted for nearly 30% of the advance, according to the report from the Bureau of Labor Statistics out Wednesday. The so-called core CPI also climbed by more than forecast. That reflected higher prices for car insurance, airfares, and a record monthly increase in the cost of prescription drugs. It looks like no interest rate cuts for 2025.
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Jay Powell Gives No Hint of Interest Rate Cuts Anytime Soon,
in his congressional testimony yesterday. Powell reiterated his main message from two weeks ago, when the Fed kept its benchmark rate unchanged after 1 percentage point of cumulative cuts late last year. He said that after those actions, policy is “significantly less restrictive,” and policymakers “do not need to be in a hurry” to adjust” rates further at this point. Avoid all falling rate plays like bonds, real estate, and REITs.
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Tesla Tanks 7%,
and down 34% since December after Chinese competitor BYD announced a partnership with DeepSeek. The move is expected to accelerate BYD’s move into full self-driving. Tesla sales are falling in all major markets. Call it DeepSeek bite part 2.
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Hedge Fund Titan Ken Griffin Warns Trump,
that his “bombastic” behavior risks damaging the US economy. He said it tears into the minds of CEOs, policymakers that we can’t depend upon America, as our trading partner.” Griffin, who voted for Trump and was a megadonor to Republican politicians, believes the hostile dynamics caused by punitive tariffs could make long-term investments challenging for multinational companies and investors.
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Denmark Makes a Bid for California,
in response to Trump's efforts to buy Greenland. Some 200,000 Danes have signed a petition. No price was mentioned. Personally, I am completely in favor of more Danish women migrating to the Golden State.
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February 11, 2025
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Wall Street Souring on Magnificent Seven.
The market stronghold has diminished slightly, as the cohort struggles to meet ever-loftier expectations, and investors rotate into other parts of the market such as small caps. Tech titans also took a hit in late January after the emergence of Chinese startup DeepSeek raised concern over how much spending will be needed to implement AI capabilities.
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Government May Revalue Gold Holdings,
from the 1932 price of $42 an ounce to $2,936 currently. As of January 2025, the United States government owned 8,133.46 tons of gold worth $39.9 billion at current market prices. This makes the US the country with the largest gold reserves in the world. The New York Fed uses the United States official book value of $42.2222 per troy ounce for gold holdings. Why is this happening, and what will the market effects be except to improve the paper value of the US balance sheet? Will the government sell gold to finance tax cuts for the wealthy?
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Government to Stop Minting new Pennies.
With copper at current prices, it costs two cents to mint one penny. The U.S. Mint reported losing $85.3 million in the 2024 fiscal year that ended in September on the nearly 3.2 billion pennies it produced. Every penny cost nearly $0.037 — up from $0.031 the year before. When the government has done this in the past, prices rise as retailers will market prices up to the nearest five cent number, and not down.
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Market is Giving Up on any Interest Rate Cuts this Year,
as the prospects of rising inflation from trade wars weigh on the market. Economists have warned that a wide-scale trade war could significantly raise prices, and consumers appear to be worried as well. Respondents to the University of Michigan’s consumer sentiment poll released Friday indicated they expect inflation to run at a 4.3% rate a year from now, up a full percentage point from the January reading.
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McDonalds is Selling More Burgers Abroad than in the US.
Is it the Ozempic effect?
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February 10, 2025
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US to Announce European Tariffs this Week,
tanking stocks on Friday. Steel and metals shares are surging this morning. It’s pretty clear that markets hate all things tariff-related. Can we talk more about deregulation, which markets love? The reality is that markets don’t know how to price in Trump, swinging back and forth between euphoria one moment to Armageddon another. Best case, markets flatline. Worst case, they crash.
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Gold Headed for $3,000,
my long-term target, on central bank and flight-to-safety buying. What’s the next target? $5,000 if the current turmoil in Washington continues. Notice that it’s the physical metal that’s moving, not the miners.
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Mass Layoffs Threaten SEC,
as the agency focus shifts to promoting crypto. Expect securities fraud and theft to explode.
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Foreign Investors Continue to Soak Up US Debt,
seeking higher interest rates in an appreciating currency. Americans own 55% of the outstanding $36 trillion in US debt, while foreign investors own 24%, and the Federal Reserve 13%.
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Trade Wars are Pushing Up the US Dollar,
making American exports more expensive. High import duties will shrink US imports dramatically and impoverish our foreign customers.
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February 7, 2025
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Gold Sachs Sees a Correction Coming,
in the face of deteriorating global macro conditions, trade wars, and sky-high valuations. Goldman believes the tit-for-tat tariffs between the U.S. and its key trading partners is likely to result in more market uncertainty. China has retaliated with additional tariffs of up to 15% on select U.S. imports starting Monday, while Trump earlier this week paused tariffs on Canada and Mexico for 30 days. Time to pare back risk. I am running half positions. The market has not experienced a 10% correction in 19 months, almost unprecedented in market history.
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NonFarm Payroll Plunges to 146,000,
in January. The unemployment rate came in at 4.0%. While not directly comparable to prior months because of population adjustments, BLS said excluding those effects, the rate fell from December. Markets hated the number.
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Consumer Sentiment Falls,
according to the University of Michigan. The University of Michigan consumer survey showed that respondents expect inflation a year from now to be 4.3%, a 1 percentage point jump from January and the highest since November 2023. Worries over inflation dovetailed with lower optimism overall, as the headline index fell to 67.8, a one-month drop of 4.6% and an 11.8% move lower from the same month a year ago.
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Bill Ackman Announces $2 Billion Stake in Uber,
the hedge fund activist. Uber is one of the best managed and highest quality businesses in the world. Remarkably, it can still be purchased at a massive discount to its intrinsic value. This favorable combination of attributes is extremely rare, particularly for a large cap company. Warning: announcements like this are often made when hedge fund managers want to sell.
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Tesla China Sales Dive 11% YOY.
Chinese rival BYD, with its Dynasty and Ocean series of EVs and plug-in hybrids, sold 296,446 passenger vehicles last month, a 47.5% increase on the year, but a 41.8% decline from the prior month. Go to South America and you see BYDs everywhere, but they break down in four years.
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