Shares of lithium market leader Albemarle (ALB) rose 8.25% on Friday to close at $102.O9 on speculation in Australia that mining giant Rio Tinto (RIO) will pursue a major lithium deal with Albemarle cited as a possible target. Shares of Arcadium Lithium (ALTM), Lithium Americas (LAC) and Sociedad Quimica y Minera (SQM) also jumped, +10%, +7.1% and +3.1%, respectively. The speculation makes sense to me.
The Standard & Poor’s 500 Index had a banner first half of 2024 with the index climbing more than 17% as of June 30. But two-thirds of that gain is attributable to just six stocks: Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Amazon.com (AMZN), Meta Platforms (META), and Apple (AAPL.).Track the performance of equal-weighted version of the S&P 500–rather than the commonly tracked index where the contribution of any stock to the index is weighted by market cap–and the index was up just 3.9% in the first half of 2024. For the second half of 2024 and looking ahead to 2024, I’m not so much worried about the fundamentals of this extraordinary rally as I am by a failure of market imagination Everybody owns the same 6 stocks. Hey, I get the excitement around these stocks and the boom in Artificial Intelligence. I share it. Which is why I own shares of Nvidia, Amazon, and Alphabet in my online portfolios. But there are 494 other stocks in the S&P 500. And 2000 stocks in the small-cap Russell 2000.(Up 9% in the first half of 2024.)After a rally that has recorded 30 new record highs for the S&P 500 just the first half of n 2024, some of that other 494–or 2000–are actually better stock buys, and likely to out perform the 6 stocks everybody owns from their current record high prices. But which ones? That’s what my Special Report: “10 New Stock Ideas for an Old Rally” is all about.
It’s not just that stocks soared Thursday, September 19 with the Standard & Poor’s 500 climbing 1.7% to set its 39th record in 2024. It’s what stocks topped the leader board in the advance and what stocks lagged.
I think you want to own gold–through something like the SPDR Gold Shares ETF (GLD) right now to profit from decreasing interest rates at most of the world’s central banks, from global macro uncertainty, from the possibility of domestic violence in the United States around the election, and from what sure looks like a train wreck in U.S. fiscal policy.
In the short term. Say six to nine months–maybe even a year–from now. The SPDR Gold Shares ETF is up 24.84% for 2024 as of the September 16 close. In that same time period I think shares of gold mining companies are likely to lag the gains in gold. Shares of Barrack Gold (GOLD), the world’s second largest gold producer, are up just 15.09% in 2024.
Microsoft (MSFT) raised its quarterly dividend by 10% and unveiled a new $60 billion stock-buyback program, matching the size of a repurchase plan three years ago. Shares were up as much as 2.4% today, September 17, before closing ahead 0.87%.
Yesterday the DOJ sent subpoenas to Nvidia Corp. and other companies seeking evidence that the chipmaker violated antitrust laws. The DOJ, which had previously delivered questionnaires to companies, is now sending legally binding subpoenas that require recipients to provide information. That takes the government a step closer to launching a formal complaint.
I was hoping that Nvidia (NVDA) would take a bigger dip on its “disappointing” earnings news last week. But a 7% or so drop looks like the best we’ll get. And I certainly want to own these shares before the revenue from the new Blackwell chips kicks in during 2025. I already own these shares in my long-term 50 Stocks Portfolio. Today I’m adding them to my 12-18 month Jubak Picks Portfolio. The bad news out of Nvidia last week in its August 28 earnings report?
Gold hit a new all-time high today of $2554 an ounce on the Comex for December delivery. Gold’s 20% or so gain in 2024 to date (as of August 26) is a result of strong central-bank buying plus Asian purchases plus anticipation that the Federal Reserve was about to cut interest rates. Now that Fed chair Jerome Powell has just about promised a cut at the Fed’s September 18 meeting it looks like gold will climb further in 2024 on the fundamentals. Bullish Wall Street targets say $2700 to $3,000 by the end of 2024. That’s a decent reason to hold gold. But the very scary geopolitical landscape over the next six months makes me anxious to add more gold even at the record nominal high for the metal.
I’ve started to call this The McDonald’s Economy–where the long-term effects of high inflation on prices damps consumer purchasing, but where the recent drop in inflation has limited companies’ “cover” for price increases. The result is that companies are seeing lower sales volumes at the same time as consumers push back ore strongly against price increases. McDonald’s isn’t the only company caught in this vise. Customer traffic at U.S. fast-food restaurants fell 2% in the first half of the year compared to the same period a year ago, according to Circana, a market research company. Circana expects high inflation and rising consumer debt will also dent traffic in the second half of 2024.
Viking Therapeutic (VKTX) has announced that its subcutaneous obesity drug candidate VK2735 is moving into Phase III development. Viking is currently preparing for an end-of-Phase II meeting with the Food & Drug Administration later this year. Just as significant–maybe more?–pharmacokinetics data for VK2735 continues to show the potential for once-a-month dosing. The market-leading GLP diabetes/weight-loss drugs from Eli Lilly (LLY) and Novo Nordisk (NVO) require weekly injections. That dosing advantage gives VK2735 the potential to be the best-in-class obesity drug. (Viking is also at work on an oral version of the drug.)
I expect technology sector weakness to continue with earnings worries still unanswered. What could put an end to selling in tech stocks? The NASDAQ 100 is down almost 4% in the last week. Certainly earnings news that showed earnings growth at the companies in this sector robust enough to justify paying a premium for these shares would be a big help Unfortunately, the coming week isn’t going to bring enough earnings good news among tech shares to make this case. Among big tech stocks only Tesla (TSLA) and Alphabet (GOOG) are scheduled to report.
Even good earnings news and guidance from Taiwan Semiconductor Manufacturing (TSM) couldn’t reverse the drop in tech stocks that accelerated yesterday, July 17, when the NASDAQ Composite recorded its worst day since 2022 with a 2.7% decline.
