Daily JAM
April 26, 2024 | Daily JAM, Mid Term, Morning Briefing |
Yesterday we had a report of core Personal Consumption Expenditure for March that showed core inflation ticking up to an annual rate of 3.8% from 3.7%. Core inflation, if you remember, looks at prices after excluding more volatile food and energy prices, The reasonable conclusion was that inflation was remaining stubbornly higher than the Federal Reserves % target. And that the first cut to interior rates from the Fed wouldn’t come until December, instead of July or September. Today we got the report on all-items PCE inflation.
April 25, 2024 | Daily JAM, Mid Term, Morning Briefing |
How views on interest rates have changed since the start of 2024. Then, in January, the consensus view called for as many as six interest rate cuts from the Federal Reserve in 2024 for a total of 150 basis points in cuts to the Fed’s benchmark interest rate. Today, after a dip in first quarter GDP below a 2% annual rate and an uptick in core PCE inflation, the markets are pricing in just 33 basis points in rate cuts and quite possibly no cut until the Fed’s December 18 meeting.
April 25, 2024 | Daily JAM, GOOG, Long Term, Mid Term, Stock Alerts, Top 50 Stocks |
After the close today, Alphabet (GOOG) reported revenue of $80.5 billion, easily beating the consensus projection of $78.7 billion. Earning per share came in at $1.89 versus expectations for $1.50 a share. And none of the worries before the news turned out to be problems. Advertising revenue rose 13% to $61.7 billion. Ad revenue for YouTube–an area of worry rose 21% to $8.09 billion. Subscriptions, platforms and devices revenue jumped 18%.
April 25, 2024 | Daily JAM, Videos |
Today’s video is NOW I’m Worried About Stocks. Investors and analysts have shown a willingness to pay for vapor in the last couple of days. The market reaction to two companies, Tesla (TSLA) and Apple (AAPL), has made this clear me.. Tesla’s earnings were terrible at $0.45 a share, below the expectations of $0.52 and revenue was down 50% year over year. However, the stock was up the day after earnings thanks to expert spin from CEO Elon Musk. He announced that Tesla will move ahead with the Robotaxis and full self-driving cars but it will also advance plans to produce a $25,000 car to enter the lower end of the market and compete with China. Although the company previously waffled on offering a more affordable Tesla, Musk was now suggesting it may be available at the end of 2024 or early 2025. When asked for more specifics, Musk declined to offer a definitive date on any of these promises. Wall Street ate it up and jumped on the spin that Tesla will be selling a more affordable vehicle “soon.” At this point, these are totally imaginary revenues from a car that has no release date and a full self-driving technology that doesn’t fully exist yet, and investors are saying they’re willing to pay for it? What worries me here is that in the market paying for spin has become normal because stocks go up on spin. Even if the product is “vapor,” investors are willing to get in on the stock bump associated with the announcement of imagined prospects. Similarly, Bank of America recently predicted Apple (APPL) is going to go up 36% soon because the company will announce its plans for adding AI into the iPhone. This is speculation on an announcement, not of the product itself, but on the prospect of an announcement. Bank of America is likely right on this, but I’m not willing to pay up for this speculative announcement without a tangible product or date and it concerns me that the market IS willing to do that. I understand the spins and the anticipation but the reaction and willingness to buy on vapors isn’t a sign of a healthy market.
April 25, 2024 | Daily JAM, Morning Briefing, Short Term |
U.S. economic growth slowed in the first three months of the year, the Bureau of Economic Analysis reported today. Gross Domestic Product (GSP) grew at an annualized rate of just 1.6%. That’s a big retreat from the 3.4% annual rate in the fourth quarter of 2023. Just as important as the drop in the growth rate itself is the reason for the decline.
April 24, 2024 | Daily JAM, Morning Briefing |
One down and billions more to go.
Yesterday’s big auction of 2-Year Treasury notes saw rock solid demand that let the day pass without a big, destabilizing drop in prices and a jump in yields. Today, in Round #2, the Treasury is set to auction off $70 billion in five-year notes. So far, at least, the sale looks like it will see solid demand again. Though, can I say, You ain’t seen nothing yet? Treasury is likely to increase its monthly issuance of the seven main notes and bonds (not including TIPS) by nearly 60% in 2024 to $354 billion in August 2024, from the $222 billon it issued in July 2023, according to “Neutral Issuance” scenario in the presentation by the Treasury Borrowing Advisory Committee.
April 24, 2024 | Daily JAM, Dividend Income, T |
Today, April 24, before the market open, AT&T reported first quarter earnings that beat the Wall Street consensus. The good news came from strong growth in its mobility and consumer wireline connectivity businesses, which make up about 80% of the company’s total revenues. AT&T (T) added 349K postpaid phone subscribers in the quarter, above a consensus estimate of 303,539, according to Bloomberg. Prepaid churn was 2.77% compared to 2.73% in the year-ago quarter. Remember that if you own AT&T, you own it for the dividend, currently 6.73%, and the possibility that the company will increase its payout.
April 24, 2024 | Daily JAM, Dividend Income, Jubak Picks, Long Term, Stock Alerts, Top 50 Stocks, V |
Tuesday, April 23, after the market close Visa (V) reported adjusted net income of $2.51 a share. That ws 7 cent a share more than the consensus of estimates from Wall Street analysts. Earnings rose 7% year-over-year in the quarter. Revenue climbed 10% from a year prior to $8.8 billion, also exceeding Wall Street estimates
April 23, 2024 | Daily JAM, Jubak Picks, Long Term, Millennial, Stock Alerts, Volatility |
I certainly understand the sell off in shares of development stage lithium producer Lithium Americas (LAC). Today, April 23, the stock closed at $4.68 a share, down another 1.47%. On April 16 the stock closed at $6.49 after hitting $7.34 on April 11. The culprit? The company closed a previously announced stock offer to 55 million shares at a price of $5 a share to raise $275 million.
You can see the problem, right? Stock is trading at $7.34 or $6.49 and then a big public offer dumps 55 million shares on the market at $5 a share. Ouch!! So I understand the price plunge–36.2% from April 11 to the close on April 23. And as someone who owns shares in his personal portfolio, I can’t say I’m a happy camper. But I will be being more in my personal account three days after this is posted.
April 22, 2024 | Daily JAM, GLD, GOLD, Jubak Picks, Morning Briefing, NEM, Short Term |
Gold futures for June delivery closed down 2.92% on the Comex today. The metal closed at $2343.40 an ounce. The drop came on a lessening of fears that the exchange of attacks between Israel and Iran would quickly lead to a wider Middle East war. And on growing sentiment that the Federal Reserve isn’t likely to cut interest rates soon. The drop in the gold contract for June delivery was the largest since February 3, 2023 when it fell 2.8%.
April 22, 2024 | Daily JAM, Videos |
Today’s Quick Pick is Abbott Laboratories (ABT). The medical device sector is very complicated with constant changes to technology and best practice therapeutics and it can be very hard to keep track of, but two things recently caught my eye about Abbott. The company is generally very conservative and rarely raises guidance, but it did exactly that in its first quarter earnings report. It wasn’t a huge raise but the company went from projecting earnings in a range of $3.20 a share to $3.40 a share to a range with a higher floor of $3.25 to $3.40 a share. The other announcement was a big boost in sales of its diabetes continuous glucose monitoring device, Freestyle Libre. Sales grew to $1.5 billion, up 22.4% year over year. Overall, at the company medical device sales grew 14% year over year, though their Covid test sales were down 18% year over year. I think this is a medical device company that is well-positioned for an aging population. The stock pays a 2.08% dividend. Morningstar says this stock trades at fair value with the shares down about 7.8% in the last month. I think this is a good chance to buy this well-managed, conservative company.
April 21, 2024 | Daily JAM, Mid Term |
It’s been a tough month for Treasuries with yields rising on a re-thinking of when the Federal Reserve might begin to cut interest rates. The yield on the 10-year Treasury closed at 4.62% on Friday. That’s an increase in yield of 35 basis points in a month. (When yields climb, bond prices fall.) And this week the Treasury will auction a combined $183 billion of two-, five- and seven-year Treasury notes. Ans that’s ahead of the latest update on the Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation measure.
