Today, February 25, Bloomberg and Reuters reported that Tesla had told its workers that the company could halt some production at its car-assembly plant in California for about two weeks. Staff on a Model 3 production line in Fremont were told their line would be down from February 22 until March 7. Tesla is battling supply-chain issues resulting from backlogs at ports, severe snow storms affecting ground transport, and shortages in some semiconductors used in the its cars.
I’m very reluctant to go bottom fishing here–since I can’t tell where the bottom might be and the one-day losses are significant here. Tesla (TSLA), for example, was down 8.06% TODAY. That’s $59.80 dollars a share. Teladoc (TDOC) dropped 13.74% or $34.98 a share. Guessing wrong on a bottom could be very expensive here. But I am willing to try a few trades. Nothing fancy. Very short-term. But using stocks with very strong longer-term stories that make me feel good about the longer-term prospects for the stocks. And to believe that there are significant numbers of potential bargain hunters hiding in the bushes. So, for example, I’ve been trading in and out of the Call Options on Applied Materials (AMAT).
Yields on U.S. Treasuries hit 1.61% early today before pulling back slightly to 1.51% as of 3 p.m. New York time. It’s not just the rise in yields or even the magnitude of the increase that has so disconcerted the bond market today, February 25. It’s the speed of the move. As of 3 p.m., the bond market was looking at a 14 basis point increase in yields just today. That’s a huge move for the normally slow-moving bond market.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. The twelfth YouTube video “5 Picks for the Next Six Months” went up today.
I’m making Xylem (XYLEM) the 10th and last pick for Stage 1 in my Special Report on the stock market stages for 2021. The stock fills the final slot in my three picks for the climate change trend. The collapse of the energy delivery system in the deep freeze that killed so many people and disrupted the economy from Texas east to Ohio has received the bulk of the headlines. But the stories about families left without drinking water–or indeed water of any sort–should remind us that climate change is also a water crisis.
Federal Reserve chair Jerome Powell didn’t take all worry off Wall Street’s plate, but he did downsize the portion.
Yesterday tech tumbled but utilities, commodities like copper and even gold, and many “vaccine recovery” plays gained. Today almost everything is down.
Which to me is a sign that this now 6-day downturn is getting closer to an end. Right now, as of 1:30 a.m. in New York the NASDAQ is off another 2.32%. The brings the drop from the mid-february high to 6%. A little more than half way to a 10% correction. I don’t think we’re at the bottom yet. But I am looking for growth stories–which is not the same as “momentum growth stocks”–where the selling has created an opportunity.
I’m working on Part 1–stocks that will let you profit from the continued rally in the first half of 2021 (I know it doesn’t feel like that over the last few days.) I’ve so far posted 9 picks (out of an eventual 10) in three trends for the next few months. I’ll have pick #10 posted this evening.
As of the close in New York today, February 22, the yield on the 10-year Treasury had climbed another 3 basis points to 1.37%. Commodities that can act as inflation hedges were up as well. Copper showed no signs of ending its climb, rising 4.17% today to $8909 a ton on the London Metal Exchange today
Simple rules of supply and demand say that plans by the Biden administration for a $1.9 trillion package of coronavirus stimulus/relief and proposals to spend another $2 trillion on infrastructure should be driving up yields on government bonds (and driving down prices.) Investors want more reward–higher yields–in return for buying more Treasuries and taking on the risk that all this supply will push Treasury prices lower. But the bond market is hardly ever as simple as it looks and there are other trends at work that you ought to figure into your investment calculations.
Federal Reserve Chair Jerome Powell will testify in front of the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday–and do his best not to make any news.
Please go to the Special Reports section of JUBAKAM.com to find the first 10 picks. The goal is to eventually bring this portfolio up to 20 picks. Just not quite yet.