Tomorrow I will add shares of Walmart (WMT) to my Jubak Picks Portfolio. The stock is one of the 12 “Recession Picks” in my current Special Report: A Recession is Coming–Three Portfolio Strategies for a Recession; and 12 Recession Stock Picks. Right now I think Walmart’s stock has three things going for it. And only one of those is explicitly linked to a recession, which makes it a great recession stock
With the war in Ukraine continuing its horrible grind and with economic sanctions imposed on Russia by the United States and Europe including more and more of the global economy, I’ve been looking for ways to invest in higher commodity prices. My steps have included buying oil and natural gas stocks back at the end of January and adding the iPath Bloomberg Commodity ETN (DJP) back on a few days ago on March 23. That’s given me good exposure to trends pushing energy prices higher, but I also want to include more exposure to higher agricultural prices. So I’m adding the iPath Series B Bloomberg Agriculture Total Return ETN (JJA) to my Jubak Picks Portfolio
Projections schedule a potential Recession for the second half of 2022 or 2023. Fears of that impending trend will begin to be felt in stock prices before that. The sector most likely to feel the effects of any Recession–and thus the sector most likely to first feel the anticipation of that Recession on stock prices–is what Standard & Poor’s calls Consumer Discretionary” stocks. (The Consumer Discretionary Select Sector SPDR ETF (XLY) tracks these stocks for the S&P 500 index.) In my YouTube video yesterday, I flagged three stocks in this sector to sell ahead of any potential Recession–Netflix (NFLX), Starbucks (SBUX), and Lululemon Athletica (LULU). Of these I said I would sell Lululemon first
Australia has banned alumina shipments to Russia in response to the Russian invasion of Ukraine. The country is the source of 20% of the alumina used by Russia’s aluminum industry. Aluminum rose as much as 4.8% on the London Metal Exchange.The metal is now 25%for 2021. Shares of Alcoa (AA), which have been on a tear first on news of supply deficits and then on sanctions against Russian aluminum producers, gained 10.01% on Monday, March 21.
Shares of Ford Motor (F) were up 7.01% as of noon on Wednesday, March 2, on news that the company would reorganize its auto operations into two distinct businesses—one that makes its gasoline-powered vehicles and and another that produces electric vehicles. But, the company said, it has no plans at the moment to spin off the electric vehicle business.
You didn’t expect Russian President Vladimir Putin to just shrug at Western sanctions that now include theU.S. Treasury clamping serious restrictions on Russia’s central bank, did you? Putin has banned all Russian residents from transferring hard currency abroad, including for servicing foreign loan contracts. Russia has $478 billion in external debt. Much of that is now in danger of default. (It’s not clear to me how this helps the Russian economy. Anyone want to lend or do business with a country that says, “Hey, forget about getting paid?) Today in New York trading, it’s clear that U.S. traders and investors don’t think these moves are Putin’s last. Cybersecurity stocks are soaring. And why not since Russia and it hacker gangs are about to demonstrate exactly why everybody needs to buy more security software. Which is why I’m adding shares of SentinelOne to my Jubak Picks Portfolio today.
After the close today, Nvidia (NVDA) reported fourth quarter earnings of $1.32 a share (versus analyst projections of $1.22) and revenue of $7.6 billion (versus expectations for $7.42 billion). As of 4:45 the stock has trading down $1.09 in the after-hours market. In my opinion that’s likely a result of a big run up in the stock before earnings. The stock gained 11% from February 11 through the close today, February 16. From January 27, a low in the recent downturn in Nvidia shares, to today’s close the shares are up 21%.
OPEC+ meets tomorrow and the oil cartel and friends like Russia is expected to approve an increase in production that will reduce last year’s cuts in production. But the odds are that the decision won’t matter.
The reaction to Microsoft’s (MSFT) earnings report yesterday after the market close tells you that this market is poised at an earnings inflection point. Earnings, especially technology company earnings, are going to be strong this quarter, but earnings growth rate will be down from the big Pandemic recovery growth rates of 2021. Will the solid earnings growth this quarter be enough to stabilize this market? Which brings me to Microsoft.
Copper prices rose 3.54% on the London Metals Exchange today to $10,064 a metric ton. And that looks like just the beginning of a classic commodity run based on supply shortages in the copper industry and increases in demand from growth in electric cars and renewable energy technologies. Inventories at the London Metals Exchange now sit at multi-year lows. Goldman Sachs recently increased its forecast for copper to $12,000 a metric ton and sees a 20% upside for copper in 2022. Bank of America recently put a $20,000 price target on copper by 2025. Today, January 12, copper stocks were on the march.
Wells Fargo (WFC) is scheduled to report fourth quarter 2021 earnings on Friday, January 14. The bank is expected to be one of the few big money center banks to show a significant increase in earnings for the lat quarter of 2021 from the fourth quarter of 2020 (when numbers were elevated by a big recovery from the Pandemic bottom.) The Wall Street consensus projects fourth quarter earnings of $1.09 a share, up from 64 cents a share in the fourth quarter of 2020. (I’d note that the bank has delivered a positive earnings surprise above analyst projections in the last 4 quarters.) This is a good time to buy bank stocks.
