China reported faster-than-expected economic growth in the first quarter–but… Although Gross Domestic Product climbed 5.3% in the quarter–a faster rate of growth than in the first quarter of 2023 and above economist estimates, most of the good news came from the first two months of the quarter. In March growth in retail sales slumped and industrial output fell short of forecasts. That doesn’t bode well for the rest of 2024.
Can’t figure Tesla (TSLA) out? Welcome to the club. The stock was down another 5.59% today, April 15, and is now down 31% for 2024. Maybe investors will get some clarity on the company’s identity and strategy when it announced earnings on April 23. Wall Street analysts expect earnings of 36 cents a share against earnings of 73 cents a share in 2023. I think that strategic clarity is actually more important than quarterly earnings at this point for Tesla.
All good things come to an end. After seven straight quarters of record levels of profits from net interest income, the spread between what earns by lending and what it pays depositors to raise funds, JPMorgan Chase (JPM) reported that net interest income slightly missed analyst estimates for the first quarter. The quarter the company reported today certainly wasn’t a disaster. The bank earned $23.1 billion in net interest income in the period, up 11% from the first quarter of 2023. But the end of the beat and raise guidance of the last year and a half plus an increase in costs were enough to lead to substantial selling today, April 12. The shares finished the day down 6.47% at $182.79. Analysts and investors were clearly hoping for more.
So why was this so important today? Important enough to send the yield on the 10-year Treasury up another 3 basis points to 4.58%.The Producer Price Index for final demand rose 0.2 percent in March, seasonally adjusted, the Bureau of Labor Statistics reported today. Final demand prices moved up 0.6% in February and 0.4% in January. On an unadjusted basis, the index for final demand increased 2.1% for the 12 months ended in March, the largest advance since rising 2.3% for the 12 months ended April 2023..The March increase in the index for final demand is attributable to a 0.3% rise in prices for final demand services. In contrast, the index for final demand goods edged down 0.1%. Look at the last set of numbers.
First, it was Viking Therapeutics (VKTX) on the attack with trial results that shows its GLP-1 dibetes/weight loss drug out performing current leader of the pack drugs fro Novo Nordisk (NVO) and Eli Lilly (LLY). On the news Viking soared.
Then Novo Nordisk struct back with data of its own showing progress on an oral formulation of its rugs. (All existing GLP-1 drugs are delivered by injection.) That cratered Viking Shares. Now, March 26, Viking has released new Phase 1 trial data from a multiple ascending dose study of the oral version of VK2735, a dual agonist of the glucagon-like peptide 1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors.
Today’s video is What Powell Said, and What the Market Heard. Jerome Powell, Chair of the Federal Reserve, tried to walk a fine line during Wednesday’s press conference. He said that while inflation is sticky; he’s still confident in a soft landing at 2.0% and that they will cut rates once they confirm that a 2.0% rate is achievable. What the market heard was “we can tolerate higher inflation for longer while still cutting rates, ” and this is backed up by the Fed’s Dot Plot economic projections . The Dot Plot lays out 2-3 cuts in 2024 even though core PCE inflation rates are expected to be at 2.6% at the end of the year–not the target of 2.0%. That 2.0% target will now not likely be reached until the end of 2026, the Fed’s own economic projections say. The market reacted to the news that they heard as “the Fed is no longer insisting on the 2.0% target and will be cutting rates this year,” by hitting its 20th all-time high for 2024. The market heard happy days are here again, and rallied.
Today’s Hot Button Moves NOW video is Buy Madrigal Pharmaceuticals (MDGL). This biotech company just received U.S. Food and Drug Administration approval for the first drug available for treating MASH (formerly known as NASH). MASH is a liver disease where fat builds up and compromise liver function. It’s measured in stages (1-4) and at stage 4, you need a liver transplant. Companies have long worked toward a treatment for the disease but have failed in trials or in getting FDA approval. The major achievements for Madrigal are efficacy in stopping the disease from progressing to the next stage and a clean label and no “black box warnings.” Additionally, this drug does not require a liver biopsy before a doctor can prescribe it and will be available after a much less invasive test. The market for this drug is forecast at $5 billion a year market. Madrigal will be able to start selling this drug in April. The Medical Technology Stock Letter, my preferred source on all things biotech, suggests buying MDGL below $300 with a target price of $400. I’m adding Madrigal Pharmaceuticals to my 12-18 month Jubak’s Picks Portfolio.
Let’s say you’re a dividend income investor. You need cash income in retirement. Or you want your portfolio to generate cash now so you can invest in new opportunities. Or you just want the extra safety and lower risk that owning a stock with a substantial dividend can bring. Whatever your reasons–and I can think of a lot more–this is a particularly challenging financial market for dividend income investors.But I do think there are strategies dividend income investors can successfully pursue even in this challenging market. In the rest of this Special Report I’m going to explain the three ways I think you should be thinking about dividend income investing in this market. And then I’m going to give you 10 dividend stocks that I think are especially well-suited to producing income (and price appreciation, which is always nice even if you’re an income investor) in this market environment. First pick just posted–Pfizer
Today’s Quick Pick is Lithium Americas (LAC). Lithium Americas is an American lithium producer, with a big deposit in Thacker Pass that has been going through litigation and delays while struggling to get enough financing with lithium prices down. We’ll likely see a bottom of lithium prices in the second half of 2024 or early 2025, so this is a good time to be getting in near the bottom. Lithium Americas signed a contract with General Motors agreeing that GM would take all the lithium they can produce, the question is, Can they produce it? Recently, the Department of Energy announced they’ll be lending Lithium Americas $2.3 billion to move forward with their processing facility. At the moment, China controls nearly all of the processing facilities for lithium globally and this investment will allow for domestic processing. This loan will cover all their capital costs and enable them to start production. The stock is moving upward, with shares around $6.50 per share. The recent rally has brought the stock back up to the price from December 2023, and the Wall Street consensus is that the stock may hit $11.50 in a year. While that prediction may be a bit ambitious, I think it’s likely we’ll see it reach $9-10, up about a third once they start to actually produce lithium in conjunction with lithium prices going up.
As James Earl Jones told Kevin Costner in Field of Dreams, “Build it and they will come.” Of course, if they don’t come on schedule, you’ll wind up sitting on a mountain of debt. Which is the reason that Melco Resorts and Entertainment finished 2023 with total debt of $8.1 billion. Which, in turn, is why the stock traded at just $7.20 a share on Friday, March 15. And why it’s down 18% for 2024 to date, as of the March 15 close, and down 40.36% for the last 12 months. But I also see the potential for a 60% gain to fair value in these shares.
Shares of Viking Therapeutics (VKTX) are down norther 6.22% as of noon today in New York. That comes after the stock dropped 18.84% yesterday. I think that the market thinking here by and large wrong and I’d use the big painful drop as an opportunity to buy more shares of Viking Therapeutics.
Right now Tesla (TSLA) is a case study in how sentiment on a stock changes, how long it takes sentiment to change (and recover), and the stages of sentiment change. You understanding of this process should be our guide to whether you want to own Tesla and when. Tesla (TSLA) could potentially lose money in 2024, Morgan Stanley’s Adam Jonas wrote in a note to investors this week. And he cut his Tesla earnings projections by 25% to $1.51 a share from a prior $2.04. Gross profit margins will fall to 11.4% (excluding regulatory credits that Tesla gets paid by automakers looking to meet EPA mileage and emissions rules.) And this is from a Tesla bull.
