Mid Term
March 7, 2024 | Daily JAM, Mid Term, Morning Briefing, Stock Alerts |
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.
March 1, 2024 | Daily JAM, Mid Term, Morning Briefing |
Access to auto credit declined in January as credit tightened across all channels and across most lender types compared to December, according to the Dealertrack Credit Availability Index. Investors who pay so much attention to interest rates to predict the trend in consumer spending need to spend more time on the other parts of the current credit crunch, the ability of loans. Consumers who can’t borrow can’t spend no matter how many times the Federal Reserve cuts interest rates.
February 29, 2024 | Daily JAM, Mid Term, Morning Briefing |
The headline, all-items Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation measure, climbed at a 2.4% year over year rate in January. That was in line with what economists had forecast and down from the 2.6% annual rate in December. The core PCE, that is after stripping out more volatile food and fuel prices, climbed at a 2.8% year over year rate. In December the annual rate of core inflation had been 2.9%. But that was the end of the good news in today’s PCE inflation report.
February 27, 2024 | Daily JAM, Mid Term, Special Reports |
Can you have your cake and eat it too? That’s basically the question stock investors and traders face now. Is there a way to build a strategy that will put profits in your pocket if the rally that set in at the end of 2023 continues? And that will hedge the downside so the your portfolio won’t tumble if the market does? Or that will at least lose less? Or that might even make some money on its downside bets. I think there is. And that’s the subject of this Special Report. Today Steps 1-3
February 23, 2024 | Daily JAM, Mid Term |
This probably isn’t a part of the credit market you watch–even if you watch the credit market. But 8.6% of commercial real estate loans bundled into collateralized loan obligations (CLOs) were classed as distressed in January, according to a report by analytics firm CRED iQ, Bloomberg reported Friday. That’s a 480% increase in distressed loans in CLOs since February 2023. The culprit, again, is real estate loans that have gone bad.
February 15, 2024 | Daily JAM, Mid Term, Videos |
Today’s video is Inflation: Stickier for Longer. The market is now beginning to suspect that the Fed has a last mile problem. The CPI numbers from Tuesday weren’t terrible, but they weren’t as low as the market hoped. Headline inflation was at 3.1% annual rate and core inflation was 3.9%–markedly better than the past high of 9%, but not quite hitting the 2.9% for headline inflation that economists were looking for. The miss has finished a flip in sentiment about a March rate cut. The CME FedWatch poll in January had March rate cut odds at 90% likely, now, just a month later, the odds of no action are up to nearly 90%. Only about a third of investors believe there will be a rate cut in May with odds of no action up to 61%. The calendar is being pushed out to June or July for cuts from the Fed. This has resulted in bond yields going back up, around 4.3% on the ten year Treasury, and stocks going down a bit. There is a hope out there that the CPI numbers were a January blip, but if you look at the breakdown of the inflation numbers, it seems clear that inflation is just plain sticky. The Atlanta Federal Reserve Bank index that looks at the sectors that tend to be sticky and how much they’re influencing the overall inflation rate shows that prices in those sticky inflation categories have stopped and that they are a major factor keeping inflation higher than hoped. . Additionally, while there’s been a big drop in goods prices, the price of services has not gone down nearly as much. The super core inflicts number, which looks a prices in the services sector after taking out the cost of shelter has stalled. All this to say, we’ve got good evidence that this last mile from 3% to 2% on inflation could take a while.
February 12, 2024 | Daily JAM, Mid Term |
When I wrote my post “Was the Meta Platform 20% pop the market top? An important sign, yes,, but not for the reasons you think” I wasn’t thinking of a three-part series. But then came Part 2 “Why his isn’t 2000–I don’t see a replay of the Dot-Com Bear Market.”
And now Part 3: “OK, It’s not 2000, but that doesn’t mean there’s no risk in the market.” Part 3 in this series is going to segue right into the new Special Report that I’ll post on Wednesday with seven concrete steps I think you should implement now to protect your portfolio. But for today, I’m going to focus on a framework for thinking thinking about reward and risk in the current market. Think of the topic as “Why your portfolio needs protection now–even if we aren’t looking at a Bear Market.”
February 9, 2024 | Daily JAM, Mid Term, Morning Briefing |
As I wrote a few days ago in my post “Was the Meta Platform 20% pop the market top? An important sign, yes,, but not for the reasons you think” I do think this stock market rally is putting in a top.
But I’m not worried that we’re looking at a reply of the Dot-Com crash and Bear Market that took the NASDAQ Composite down 40% in 2000 after that tech-heavy index gained more than 85% in 1999.
Why not? Let me count the ways. I get to four.
February 8, 2024 | Daily JAM, EWY, Mid Term, Perfect Five-ETFs, Stock Alerts |
I try not to argue with cash flows. Especially when I’m making asset allocation decisions. And right now global cash is heading for India. A number of reasons. Portfolio managers looking for diversification need emerging markets exposure and India looks like the best bet. Going long India is, in effect going short China since much of the new India money is essentially old China money fleeing what looks like an economy set to struggle for a while. And there is an India fundamental story based on an economy headed for 7% growth. For all these reasons I’m added the Franklin FTSE India ETF (FLIN) to both my Perfect 5 ETF Portfolio as rep
February 6, 2024 | Daily JAM, Mid Term, Morning Briefing |
I think we’re seeing stocks put in a top. Not immediate–I think we’ve got the impending Federal Reserve interest rate cuts to help stretch out this rally into a sideways move. But the signs are there. And the most important signs aren’t the “overvaluation” of the Magnificent 7 stocks or the narrow leadership in this market. (More on why this top isn’t likely to lead to a Bear Market in tomorrow’s post “Why this isn’t 1999.) Nope. To me the most important sign if the big announcement from Meta Platforms (META) of a $50 billion stock buy back and the initiation of 50 cents a share dividend, the company’s first.
February 5, 2024 | Daily JAM, Mid Term, Morning Briefing |
Maybe you can’t remember when the yield on the benchark 10-year Treasury fell through 4% and looked headed to 3.5%. It might be hard to remember because it was so long ago. Like two weeks. Today the yield on the 10-year Treasury completed a round trip, rising 14 basis points this morning to 4.16%.
February 3, 2024 | Daily JAM, Mid Term, Volatility |
Nothing like a bank surprise to get Wall Street in a lather. On Wednesday, January 31, New York Community Bancorp (NYCB) announced that it would cut its dividend and add to reserves against losses in its commercial lending portfolio. The stock fell 38% on Wednesday to hit a 23-year low on Thursday. The bad news wasn’t limited to U.S. banks either.Tokyo-based Aozora plunged more than 20% after warning of US commercial-property losses Frankfurt’s Deutsche Bank more than quadrupled its provisions against U.S real estate losses. I don’t see any reason to think that this is a one-day phenomenon. Or that the damage is just a minor problem in a few portfolios. Billionaire investor Barry Sternlicht warned this week that the office market is headed for more than $1 trillion in losses. “This is a huge issue that the market has to reckon with,” Harold Bordwin, a principal at Keen-Summit Capital Partners in New York, which specializes in renegotiating distressed properties, told Bloomberg. “Banks’ balance sheets aren’t accounting for the fact that there’s lots of real estate on there that’s not going to pay off at maturity.” On Monday then, I’m adding Put Options on the SPDR S&P Regional Banking ETF (KRE).
