Archive
Hot Tips
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April 23, 2024
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Apple China Sales Dive,
by 19% as Chinese switch to cheaper Huawei phones for nationalism reasons. It’s also another sign of a slow Chinese economy. China remains one of the company’s biggest markets, but business there has grown harder after Beijing escalated a ban on foreign devices in state-backed firms and government agencies. Avoid (AAPL) until the turnaround.
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March New Home Sales Jump,
by 8.1% when only 1.1% is expected, to 693,000. The median price of a home sold fell to $430,700 as builders pull back on incentives like those cherry cabinets. It’s an uphill slog with those 7.0% mortgage rates.
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OIL & 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, a continuation of last year's fierce merger pace centered in the top U.S. shale field. Energy companies have rushed to expand oil and gas drilling inventories, especially in the Permian Basin of West Texas and New Mexico, where producer breakeven costs are about $64 a barrel. Buy (XOM) and (OXY) on dips.
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Freeport McMoRan Beats,
helped by higher production and easing costs. The mining giant said its quarterly production of copper rose to 1.1 billion pounds from 965 million pounds a year earlier, helped by a 49% jump in output from its Indonesia operations. (FCX) said it was working with the Indonesian government, which has put a ban on raw material exports, to obtain approvals to continue shipping copper concentrates and anode slimes. Its current license is set to expire in May. Buy (FCX) and (COPX) on dips.
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Work Starts on Los Angeles to Las Vegas Bullet Train.
Privately owned Brightline West, whose sister company already operates a fast train between Miami and Orlando in Florida, aims to lay 218 miles (351 kilometers) of new track almost all in the median of Interstate 15 between Las Vegas and Rancho Cucamonga, California. It would link there with a commuter rail connection to downtown Los Angeles. A station also is planned in San Bernardino County’s Victorville area.
Company officials say the goal is to have trains exceeding speeds of 186 mph (300 kph) — comparable to Japan’s bullet trains operating in time for the Summer Olympics in Los Angeles in 2028.
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April 22, 2024
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Big Tech Crashes,
with all of the Magnificent Seven breaking 50-day moving averages. (NVDA) alone gave up 10% on Friday. Next stop is the 200-day moving averages, which are far, far away. If those hold, this is just a correction. If they don’t, the bear market is back.
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Tesla Announces New Wave of Price Cuts,
chopping several models by $2,000 each. It also is paring the price for Full Self Driving (FSD) to only $8,000, half the original price. This is in the wake of a recall of 3,878 Cybertrucks over a sticky accelerator pedal. The EV nuclear winter continues and the stock may take a run as low as $100.
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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, down 14% on the week, which brought in an implied volatility jump on its options from 42% to 62%. The bottom is probably close.
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Carrier is Moving into Home Heat Pumps,
which can be powered by solar, eliminating energy costs. Willis Carrier invented the current electric power air conditioner design in 1902, although most modern ones now run on natural gas. It is another interesting restructuring of the economy prompted by technology. I have three five-ton heat pumps (American Standard are the best), which heat and cool my house all year for free.
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Massachusetts is the Most Expensive State to Raise a Family
of four, where you would need to earn $301,184 a year to live comfortably. Hawaii came in second at $294,611 and Connecticut third at $279,884. “Comfortable” is defined as the income needed to cover a 50/30/20 budget for a family of four. The budget allocates 50% of your earnings for necessities such as housing and utility costs, 30% for discretionary spending and 20% for savings or investments.
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April 19, 2024
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Meta Announces Partnership with Google,
to use its search function in its new AI image search app called Llama 3. The move shows the incredible speed at which AI is developing. Buy both (META) and (GOOG) on dips.
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Netflix Adds 9.33 Million New Subscribers,
nearly double analyst forecasts, including my five kids who aren’t allowed to share my password anymore. But the shares dropped on weak Q2 guidance. Netflix has rebounded from a slowdown in 2021 and 2022 to grow at its fastest rate since the early days of the coronavirus pandemic. That is due in large part to its crackdown on people who were using someone else’s account. The company estimated more than 100 million people were using an account for which they didn’t pay.
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Junk Bonds See Biggest Outflows in a Year,
as the Federal Reserve’s hawkish approach to inflation makes investors wary, sending yields soaring to 6.33%. Yields won’t peak until the Fed actually cuts rates. Buy (JNK) and (HYG) on dips.
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Mortgage Rates Top 7.0%
for the first time in 2024, adding dead weight to the housing market. Most borrowers are now taking out adjustable 5/1 ARMS and then praying for a Fed rate cut later this year.
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Today is Options Expiration Day,
for the April series. Expect a lot of volatility at the close around key strike prices with the largest outstanding volume.
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April 18, 2024
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Ten-Year Rates Headed to 5%,
says Vanguard, up from the current 4.63%. Rising rents continue to be the boogie man in the inflation fight. Investors had piled into Treasuries late last year, betting on a swift easing cycle from the Federal Reserve. Still, as incoming data has pointed to persistent strength in the US economy, the market has turned against them. Avoid (TLT).
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Weekly Jobless Claims Unchanged at 212,000,
consistent with a healthy job market. The median forecast in a Bloomberg survey of economists called for 215,000. Continuing Claims, a proxy for the number of people receiving unemployment benefits, were also little changed at 1.81 million in the week ended April 6.
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The New Home Market is Still Hot,
says DR Horton (DHI) with a red-hot earnings report. New home building still has a big advantage with their backdoor discounts like free upgrades and subsidized mortgages.
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Existing Home Sales Dive by 4.3%
in March to 4.19 million units on a signed contract basis. Inventories rose 4.47% to a 3.2-month supply, up 14% YOY. The median price of an existing home sold in March was $393,500, up 4.8% from the year before. Regionally, sales fell everywhere except in the North, where they rose 4.2% month-to-month. Sales fell hardest in the West, down 8.2%. Prices are highest in the West.
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Leading Economic Indicators
drop 0.3% versus 1.1% expected after increasing by 0.2 percent in February. Over the six-month period between September 2023 and March 2024, the LEI contracted by 2.2 percent—a smaller decrease than the 3.4 percent decline over the previous six months.
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April 17, 2024
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Rate Cuts Could Be Shelved Until 2025,
In just a short time span, the markets have gone from pricing in three 25 basis point interest rate cuts to something significantly less as the recent data has not given the right ammunition for the Fed to pull the trigger on easing. Yields have shot up, the US dollar has exploded up, and the US economy keeps chugging along with its humming growth engines leading the way. 2024 is now at risk of no rate cuts at all as GDP projections see the US economy expanding close to 3% year over year.
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Elon Musk Looking For Another Payout,
Tesla will ask shareholders once again to reinstate the $56 billion pay package for CEO Elon Musk. Also in question is Tesla moving its location of incorporation from Delaware to Texas. Musk has been highly critical of the state of Delaware after his pay package was ruled illegal. The interesting takeaway here would be, what is the value of Tesla without Elon Musk as CEO? Either way, Musk appears hellbent on cashing out of Tesla almost seemingly to fund his losses in social media company X, formerly known as Twitter. The chaos has hit Tesla stock hard as it fights for dear life against Chinese competition. The controversy couldn’t have happened at a worse time for the company.
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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. On Wednesday, the president will visit the United Steelworkers headquarters in Pittsburgh and has vowed his saber-rattling is not just empty threats. His rhetoric on China could make relations between the US and the Middle Kingdom that much frostier as we enter into the heart of the US election race.
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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. The unavailability of new aircraft will hit United Airlines growth trajectory for the rest of 2024 and United expects to receive just 61 new narrow-body planes this year, down from 101 it said it had expected at the beginning of the year and contracts for as many as 183 planes in 2024. Boeing has been confronted by quality issues for some time now and it has had a hard time rectifying it.
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Chipmaker ASML Hits An Air Pocket,
Dutch chip manufacturer reported weaker-than-expected sales in the first quarter. The stock has been on a tear this year up over 30%, and ASML remains one of the most strategically important tech companies in Europe. ASML is preparing for a scorching hot 2025 as demand for AI and memory chips soars. This chip stock should never be slept on.
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