Jubak Picks

Bad day for consumer stocks; good day for commodity shares

Bad day for consumer stocks; good day for commodity shares

The Conference Board’s latest reading on consumer confidence showed consumer expectations in June fell to their lowest level since 2013. The consumer confidence index for June fell to 98.7 from 103.2 in May, below expectations for a reading of 100. The report’s expectations index, which is based on consumers’ short-term outlook for income growth, the job market, and overall business conditions, fell to 66.4, its lowest reading since March 2013.

Bonus Special Report: Where to Park Your Cash

Bonus Special Report: Where to Park Your Cash

The advice is sound, very sound. Move part (at least of your portfolio to cash and sit out the worst of this bear market on the sidelines. And since you have that cash in hand, you’ll be ready to snap up bargains when the market has put in a bottom (or near the bottom, or on the way up from the bottom…or something.) But right now that’s easier said than done.

Selling Booking Holdings out of my Jubak Picks Portfolio

Selling Booking Holdings out of my Jubak Picks Portfolio

As I noted in my Saturday Night Quarterback post, consumer spending on services is looking weaker by the day and consumers seem to be trimming plans for summer travel. Bookings are slowing at airlines and hotels, for example. And it looks like the summer travel rally that I’ve been looking for is going to be a damp squib rather than a Fourth of July rocket. So I’m beginning to sell some of the stocks that I added in anticipation of that travel rally.

It’s a war of two narratives–today “recession” narrative replaces “rate cut” narrative and stocks fall heavily

It’s a war of two narratives–today “recession” narrative replaces “rate cut” narrative and stocks fall heavily

Yesterday, the stock market was up with the Standard & Poor’s 500 gaining 1.46% on the day and the NASDAQ Composite up 2.49%. Listening to the Federal Reserve’s policy statement after the June 15 meeting of its Open Market Committee, Wall Street chose to hear a promise of interest rate cuts as early as the end of 2023 and certainly in 2023. Aggressive interest rate increases in 2022, from this perspective, are just a necessary precondition to those interest rate cuts. Today, the stock market is down with the Standard & Poor’s 500 falling 3.25% and the NASDAQ Composite off 4.08% at the close. The narrative on investors’ and traders’ minds today is the rising odds of a recession–75% odds in favor by 2024 a Bloomberg survey of economists says with 25% odds of a recession in 2023. For a day that trumps the hopes for 2024 interest rate cuts (which would, after all, only materialize if the economy has, indeed, tumbled into recession. I expect this “War of the Two Narratives” to continue for a while

Target outlook cut says some retailers have an inventory problem

Target outlook cut says some retailers have an inventory problem

Target (TGT) cut its profit outlook for the second time in three weeks. The company will attack oaring inventories in discretionary categories such as home furnishings with price mark downs, cancelling orders from vendors, and “off-loading excess inventory. (To deep discount sellers, I’d assume.) Three weeks ago, on May 18, the retailer’s shares slumped more than 25% after reporting that net profit shrank 52% in the first quarter. In those quarterly results, Target said its inventory rose 43%, compared with a year earlier.
In its guidance for the second quarter on May 18 Target said operating margins for the second quarter would be in a range centered around 5.3%. In today’s inventory warning the company said that orating margin would fall to 2%. Target’s stock, which fell as much as 7% today on the news, closed down 2.22% today. Shares of competitors Walmart (WMT) and Costco (COST) were down only 1.24% and 0.15%, respectively.

Alcoa Call Options seeing action ahead of July 21 earnings report

Alcoa Call Options seeing action ahead of July 21 earnings report

I’m seeing a lot of traders buying Alcoa (AA) Call Options ahead of the company’s July 21 earnings report. The action seems to be most concentrated on the $70 October 21 Call at $75. The stock closed at $64.10 today, June 6, up 3.53%. I think the Call Buying is a result of the very big spread in estimates for second quarter earnings with the high estimate at $4.01 and the lost at $3.19. The consensus for the quart is at $3.66. That would be a huge gain from the $1.49 reported in the second quarter of 2021.

Please watch my new YouTube video: Trend of the Week Danger of a Lithium Drought

Please watch my new YouTube video: Trend of the Week Danger of a Lithium Drought

My one-hundredth-and-forty-first YouTube video “Trend of the Week: Danger of a Lithium Drought” went up today. My Trend of the Week video looks at the effects of Chile’s 15-year drought on global lithium production and prices. In particular, I look at Chilean-based national producer SQM in comparison with Albemarle (ALB.) Albemarle has more diversified production and I think it is a better bet due to this diversity of supply, but lithium will still be a volatile area for the short term. Albemarle is a member of my Jubak Picks Portfolio (up 162% from August 10, 2018) and my long-term, 50 Stocks Portfolio (up 180% from February 17, 2017.)

Please watch my new YouTube video: Quick Pick WEAT

Please watch my new YouTube video: Quick Pick WEAT

My one-hundredth-and-thirty-sixth YouTube video “Quick Pick WEAT” went up today. I’m continuing my recent focus on wheat prices as they continue to rise. Higher wheat prices are the result of a perfect storm: the ongoing war in Ukraine, a blockade of Black Sea exports, and reduced yields from India (the 2nd largest wheat producer) due to temperatures and export bans. Teucrium Wheat Fund is the only ETF I’ve found that is focuses exclusively on wheat futures. I think this is a good time to buy and I’ll be adding this ETF to my Jubak Picks Portfolio tomorrow.

Albemarle as a test case: Can a “special situation” go up in a bear market?

Albemarle as a test case: Can a “special situation” go up in a bear market?

Lithium producer Albemarle (ALB) has been staging a very important experiment over the last few days. Here’s the question being tested: The overall market is in a serious decline–a bear or almost bear market depending on what index you track–that looks likely to go on for a while. In this environment can any individual stock deliver enough good news to buck the market trend and post gains for more than a day or two? On May 4 Albemarle raised its sales guidance for 2022 when it reported first quarter earnings. And then Monday, May 23, the company raised estimates again to a range of $5.8 billion to $6.2 billion. That was up from a previous estimated range of $5.2 billion to $5.6 billion. In total, the midpoint for the company’s estimate of 2022 revenue 38% higher than it was a month ago. And what happened to the shares?

For such a scary day, the market was amazingly “normal”; look at what went up

For such a scary day, the market was amazingly “normal”; look at what went up

Of course, there’s nothing even vaguely normal about a day when a stock falls 43% and takes much of the market with it.Snap’s (SNAP) plunge did take some surprising candidates along for the ride. Tesla (TSLA) dropped 6.93% on yet more bad news on production in its Shanghai factory. Disney (DIS) fell 4.01% just because. SentinelOne (S) was lower by 8.11% since everyone knows that cybersecurity stocks are just a fad.
But on balance, on the green side (and yes, there was a green side to the market) the market did what markets are supposed to do in the face of bad news and an increase in fear.