Archive
Hot Tips
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Atlanta Fed Revises GDP Growth Down to 1.3%,
from a high of 5.0% last year. The cost of the war keeps growing by the day. Expect negative numbers soon, taking us into recession.
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Apple Delays Foldable Phone,
taking the stock down 4%. The phone is to be the “next big thing” for the company. Apple has suffered setbacks in the engineering test phase for the iPhone that could hurt mass production and product shipments.
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Physical Oil Hits $150 a Barrel.
European and Asian refiners are paying record-high prices for some crude oil grades, far exceeding prices for paper futures, highlighting the worsening supply crisis from the U.S.-Israel war with Iran. The Iran war has forced the shutdown of at least 12 million barrels per day - about 12% of world supply - from the Middle East due to Iran's effective closure of the Strait of Hormuz. As a result, Brent oil futures reached $119.50 a barrel last month, the highest since 2022, although still short of the 2008 record high of $147.50. The nearby Brent contract is for June delivery.
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Delta Raises Baggage Surcharges to $50.
Jet fuel, which had averaged about $85 to $90 a barrel before the U.S. and Israeli strikes on Iran in February, has surged to around $209 per barrel globally, according to the International Air Transport Association (IATA). (DAL) earnings are out tomorrow.
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Tech is starting to Look Cheap,
following a prolonged period of underperformance, creating a potential entry point for investors, Goldman Sachs said on Tuesday. So far this year, we have seen one of the weakest periods of relative returns for technology over the past 50 years.
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Nonfarm payrolls rose by 178,000
in March, a reversal from the 133,000 decline in February. The headline Unemployment Rate edged lower to 4.3%, though that was largely from a sharp reduction in the labor force. Wages also rose less than expected, with average hourly earnings up just 0.2% for the month and 3.5% from a year ago. The annual increase was the lowest since May 2021. As has been the case, health care was responsible for much of the growth, with the sector adding 76,000 jobs.
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Tesla is Getting Trashed,
as JP Morgan cuts its downside target to only $85. The EV Business is in free fall, and profits from robots are years off. Investors are also selling Tesla to buy SpaceX, and it's coming with a $2 trillion valuation. Avoid (TSLA).
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Avoid SpaceX,
as the company is likely to go public at a peak valuation. That’s because investors are unlikely to see robust returns from the aerospace manufacturer stock following its likely massive initial public offering, given that much of its value already appears to be “priced in.” If it is already one of the largest companies in the world on day one, what is the upside? Wait for the post IPO selloff as I did with (TSLA) 16 years ago, which could be as much as 50%.
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Oil Breaks Out to the Upside,
with the (USO) hitting a 20-year high at $139, as there is no sign of a reopening of the Straits. Even if they do eventually reopen, much of the Persian Gulf’s export facilities are now scrap metal requiring five-year rebuilds. Iran is demanding repayment of damage incurred by the US bombing, or more than $1 trillion. I’m not holding my breath on that one. Look for much higher highs in crude (USO).
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Inflation is Heating Up,
because of the war-driven, explosive rise in energy prices. SM services sector growth slows, PMI falls more than expected to 54.0. Input prices index surges to 70.7, the highest since Oct 2022, amid Middle East conflict and tariffs. Services employment contracts diverged from strong private payrolls in March.
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Peace Rumors Abound,
sending the Dow up 1,000 points and crashing oil 5%. Confusion is running rampant as investors attempt to nail down who said what. Keep your cash, as nothing could be more opaque.
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US Gasoline Tops $4 a Gallon,
a new four-year high for the national average. It’s over $6 in California. You can almost hear the American economy grinding to a halt. Inflation numbers in April will rocket.
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There’s a Tanker Burning Outside My Hotel Window in Dubai.
The Kuwait Petroleum Corporation says an Iranian attack on the giant 500,000-barrel Al-Salmi oil tanker at the Dubai Port has caused a fire, warning that it could lead to an oil spill. No injuries were reported among the tanker’s 24 crew members, whose safety had been secured, the media office said. Maritime firefighting teams had been working to bring the fire under control and later said it had been extinguished. It sure puts on a heck of a show.
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Aluminum Soars 10%,
after Iran’s missiles destroyed smelters in Bahrain and the UAE. The light-weight metal advanced toward $3,500 a ton in London, on course for a monthly gain of 10%. That’s the most since April 2024 and bucks a broader downtrend for metals in March. The war on Gulf infrastructure continues. The conflict has tightened the global market, with around a tenth of aluminum's global production concentrated in the Persian Gulf and exports choked off by the closure of the Strait of Hormuz.
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McCormick Buys Unilever Food Business
for $45 Billion. To purchase most of Unilever Foods' portfolio, including Hellmann's mayo and U.K. favorite Marmite, McCormick will pay $15.7 billion in cash. Unilever shareholders will own 55.1% of the combined company, while Unilever will hold a 9.9% stake. For Unilever, divesting much of its food business allows the company to focus on its personal-care segment, which is growing faster.
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Will Semiconductors Get Hit Next?
Semiconductor stocks have been a pocket of strength within the technology sector in Q1, with the VanEck Semiconductor ETF (SMH) outperforming the S&P 500 Index by around 7 percentage points year to date. However, semiconductor stocks are now vulnerable to a period of downside leadership in the short term and potentially the long term. Long-term upside momentum waned in March, as shown by a downtick in the monthly MACD histogram. This is the first downtick since the April 2025 low and serves as an indication that the cyclical uptrend in SMH is losing steam.
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Is the Fed About to Raise Interest Rates?
Traders in the futures market shifted the probability that the Federal Reserve will raise interest rates by the end of 2026 to 52%. It’s the first time the reading has crossed the 50% threshold, according to the CME Group. The move comes with global benchmark crude prices topping $110, which, combined with other developments this week, signals inflation is a growing problem.
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The Recession is Here.
Economists have pulled up their risk assessments of a U.S. contraction amid heightened uncertainty over geopolitical risk and a labor market that for the past year has shown strains. Twin concerns about growth and unemployment have triggered talk of stagflation, a characterization that Fed Chair Jerome Powell has rejected. But the threat of a prolonged war, pressure on consumers, and a labor market that, outside of health care, lost hundreds of thousands of jobs last year, has kept concerns elevated.
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Alaska Air Reports Record Loss,
due to rocketing jet fuel prices. Benchmark Brent has soared by about 58% this month, the steepest monthly jump in LSEG data going back to 1988, exceeding gains made during the 1990 Gulf War. The latest oil price spike could become the first real financial stress test for U.S. airlines since the pandemic, with weaker carriers more likely to shrink, borrow, or absorb deeper losses while stronger rivals keep investing and gaining market share. Alaska Air now expects an adjusted first-quarter loss of between $1.5 and $2 per share, compared with its previous estimate of 50 cents to $1.5.
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NVIDIA PE Hits Seven-Year Low,
with the shares plumbing $165. As global stock markets tumble over deepening worries about war in the Middle East, Nvidia, the world's most valuable company, finds itself trading at its cheapest price-to-earnings multiple since before ChatGPT kicked off the AI boom. The steep drop in Nvidia's PE suggests the dominant AI chipmaker's shares may be a bargain, but one tied to risks and uncertainty that have shaken investors' confidence in the so-called AI trade that has driven Wall Street higher in recent years.
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Interest Rate Increase Probability Rises to 30%,
because the next round of inflation reports is likely to be hard to stop. Gasoline prices, the most widely used commodity in the US, have risen by 35% since the last report. The next downside target for the S&P 500 is $6,100, or down 25% from the January high.
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Merger Arbs Cash In on Warner Brothers Deal (WBD)
Shares of Warner Bros. have fallen to around $27, some $4 less than the price Paramount agreed to pay, a signal of diminishing probability of the deal getting done. The wide gap between the stock's price and the deal price may be overdone, creating an attractive opportunity for merger arbitrage, with a potential nearly 30% annualized return if the deal closes. Traders believe the market is underestimating the likelihood of the deal closing, with one strategist estimating the true odds of the deal closing are "in the 90%s", compared to the market's current pricing of "in the 80%s". Paramount Skydance shares have plunged by 45% since they won the deal weeks ago. Oops!
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European borrowing costs hit 15-year highs as investors brace for rate hikes.
Bonds issued by various European countries continued to sell off on Friday, deepening a rout that has been near-continuous since the U.S.-Iran war began. French and German 10-year bond yields hit their highest since 2011 this week, while bonds issued by various other eurozone economies also sold off sharply. Regional officials and investors are anticipating a rise in inflation across Europe as the Iran war continues to push energy prices higher. European recession, here we come.
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Iran War Wipes out $100 billion from Luxury Stocks.
Shares of LVMH, Hermès, and Ferrari are some of the luxury stocks that have fallen since the start of the Iran War. For investors and luxury companies, the Iran War has highlighted the increasing importance of the Middle East to the global luxury industry and the high-net-worth economy. Dubai in the United Arab Emirates has been the biggest driver of growth in recent years, and the Middle East tensions come at a critical time in the luxury industry.
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Consumer Sentiment Crashes,
as war-weary Americans cut back spending. Consumer sentiment index falls to 53.3 in March from 56.6 in February. Twelve-month inflation expectations jump to 3.8% from 3.4%. It’s another nail in the coffin for the US economy.
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