After the close on Monday, August 22, Palo Alto Networks (PANW) reported fiscal fourth-quarter (adjusted) earnings of $2.39. a share. Analysts had projected $2.28 a share. Revenue climbed 27% to $1.6 billion. The company also announces a 3/1 stock split.
When I added Alibaba (BABA) to my Jubak’s Picks Portfolio on April 29, 2022, and Tencent Holdings (TCEHY) to my Volatility Portfolio on January 3, 2022, I thought two things were about to happen in China. First, I thought that the People’s Bank would unleash enough stimulus to more than compensate for the slowdown in China’s economy. And, second, I thought that we’d seen the end of the regulatory crackdown on China’s big entrepreneurial technology companies. I got both trends wrong.
If the return of the Bear Market is very likely, WHEN will it return? That’s important because the timing of the return of the Bear determines what strategy we should adopt. If the Bear will go back on the prowl very soon, say somewhere around August 24 (the date of Nvidia’s (NVDA) very important (for the tech sector and more) earnings report) and August 26 through 28, the dates of the Federal Reserve’s annual Jackson Hole confab, then you should be battening down the hatches now and selling everything you don’t want to hold through another down leg from the Bear. On the other hand, the return of the Bear could be delayed until early 2023 when it becomes clear to all the interest rate optimists on Wall Street that the Federal Reserve isn’t about to start cutting rates soon. So what do you do?
Despite today’s CPI inflation bounce and the continuation (flagging but still in business) of July’s Bear Market rally, my goal is still to sell into rallies. I don’t think this Bear Market is over and done with. I see another down leg when investors and traders admit that the Federal Reserve isn’t going to be able to get inflation under control with just another 100 basis points of interest rate increases (and, the other part of this hopeful scenario, to begin cutting interest rates by the middle of 2023.) So I’ll be making three sells today out of my Jubak Picks Portfolio to take advantage of the CPI bounce.
I’ve seen several comments on the site asking this question. I assume we’re talking about oil stocks in the short- and medium-term. In the long term, I think it’s clear that you should be thinking about selling these out of your portfolio at a profit (of course) whenever you can. Demand for oil will fall in the long-term–defining long-term as 5 years or more–or we can all count on figuring out how to survive 120-degree (Fahrenheit) heat. Today, August 5, is a good synopsis of what’s going on with oil and oil stocks in the short- and medium-term.
My one-hundred-and-sixty-fourth YouTube video “Quick Pick Cummins Part 3” went up today. I’m returning to my pick Cummins (CMI) because the company just released strong second-quarter earnings. What caught my eye is that besides not affirming guidance for the rest of 2022, the company reported growth in gross margins and operating margins at a time when many companies are feeling squeezed.
As of 2 p.m. New York time today, August 3, U.S. benchmark West Texas Intermediate crude was down 3.30% to $91.30 a barrel. International benchmark Brent fell 3.07% to $97.45 a barrel.
The drop was a result of Wednesday data from the U.S. Energy Information Administration showing that U.S. crude and gasoline inventories unexpectedly rose last week. U.S. crude supplies were up 4.5 million barrels in the week ended July 29, while gasoline supplies rose 200,000 barrels. This comes at a time when gasoline inventories usually fall on high seasonal demand. This report was, for the day, more than enough to offset the announcement of a smaller than expected increase in oil production by OPEC+ of just 100,000 barrels a day for September.
In yesterday’s YouTube video I explained that a recession works by peeling the sock market onion. With each step down in the economy, more stocks report negative surprises or issue negative guidance. Investors and traders sell those stocks–Snap (SNAP) for example fell 39% in the day–and buy the shares of companies that have, for the moment, shown the ability to dodge the economic bullet. (So Alphabet (GOOG) climbs 6.47% when it reports that advertising revenue hasn’t dipped as much as the Snap results threatened. But I pointed out, each time the recession peels away a layer of the stock market onion, it leaves fewer and fewer stocks on the “safe buy” side. And if the recession gets deep enough, many of these safe buys will wind up showing the same problems as earlier hit their sector peers. So tomorrow, Friday, July 29, I’ll be selling shares of Chipotle Mexican Grill (CMG) out of my Jubak Picks Portfolio.
My fourth pick for my Special Report: Own the Future for Pennies with my 10 Best Penny Stock Picks is Vestas Wind Systems (VWDRY). The Danish company has the largest installed capacity of wind turbines in service in the world. 2022 hasn’t been kind to Vestas.
At the close today, July 26, the Teucrium Corn Fund (CORN) was up 2.55% and the Teucrium Wheat Fund (WEAT) was ahead 4.11%. Both of those commodity plays outgained the U.S. Natural Gas Fund (UNG) with its 1.38% move higher. But for consistent gains–and the potential for more–I’d have to say that natural gas is my favorite commodity.
With Walmart (WMT) shares down 7.74% as of noon New York time today, July 26, on the company’s warning yesterday about falling revenue, the pool of safe consumer stocks continues to shrink. Which is bad if you owned Walmart or Dollar General (DG), also down today (by 1.88%.) But good (so far) if you owned Coca-Cola (KO) or McDonald’s (MCD), which on the evidence of today’s earnings report are surfing the recession in decent shape. Shares of Coca-Cola were up 1.58% and shares of McDonald’s (MCD) were up 2.51% as of noon.
It’s been tough going lately for investors and traders in wheat, corn, and other agricultural commodities. The Teucrium Wheat ETF (WEAT) is still up 9.07% for 2022 to date as of the close on July 15. But that’s little consolation for anyone who bought into the sector recently. WEAT is down 25.30% in the last month. And the ETF is down 29.36% since I added it to my Jubak Picks Portfolio on May 25, 2022.
My advice?
