Videos
November 2, 2022 | Daily JAM, Morning Briefing, Videos |
Today is Ground Hog Day for the Federal Reserve. The U.S. central bank will announce whether or not it sees its shadow. It’s predicted to announce a 75 basis point increase in interest rates. However, there’s no revision of projections on interest rates, inflation updates, or GDP growth assessments scheduled for this meeting. Which leaves Wall Street free to speculate until the Fed’s December 14 meeting with those Dot Plot projections. During this “gap” in Fed guidance, investors are speculating on a pivot from the Fed’s policy of raising interest rates to either a pause or an outright reversal that moves to cut rates. This speculation, along with seasonal trends, has led to a rally that is now feeding itself as portfolio managers try to take advantage of this end-of-the-year bounce. However, I believe that the idea the Fed will pivot soon is incorrect and we’ll see another leg of the bear market starting around January. Because of this, I’d suggest not putting any new money in the market and instead waiting for upcoming lows as the Bear Market continues through 2023 to a bottom sometime that year or in 2024. And do remember that we get jobs numbers for October on Friday.
November 1, 2022 | Daily JAM, Videos |
Today I posted my one-hundred-ninety-ninth YouTube video: Quick Pick General Motors. This week’s Quick Pick is General Motors (NYSE: GM). On Monday morning, October 25, GM announced third-quarter revenue earnings of $41.89 billion-slightly below the $42 billion that Wall Street was expecting, but still a record high for General Motors. The adjusted earnings of $2.25 per share killed Wall Street estimates of $1.89. Additionally, GM confirmed its full-year earnings guidance of $13 to $15 billion for the year. That’s extremely reassuring for a market wary of a possible recession. The Chevy Bolt is back (after a previous halt to sales due to severe battery problems) and took about 8% of the US market for electric vehicles in the last quarter. The successful return of the Bolt, with more electric vehicles coming in 2023, gives GM, essentially, sole (or close to it) ownership of the low-priced end electric vehicle market. The company also recently announced that it has assured supply of the materials needed to build the vehicles and batteries through 2025 at a rate of one million vehicles a year. While GM is no Tesla, the stock isn’t priced as if it were, either. Is Tesla with a market cap of $689 billion actually worth 12 times GM’s $53 billion? I’ll be adding recently added GM to my portfolios on JubakPicks.com and JubakAm.com.
October 31, 2022 | Daily JAM, Videos |
Today I posted my one-hundred-ninety-eighth YouTube video: Trend of the Week Buybacks Fuel This Rally. This week’s Trend of the Week: Buybacks Fuel This Rally. We’re just coming out of an informal “blackout” season where about 90% of companies don’t announce any buybacks as they get closer to earning season. For most companies, that blackout ends in November. This year, stock buybacks are running at a record rate. In the first 10 months of the year, there were about $1 trillion worth of buybacks, up about 8% year-to-year. We’re going into November with buyback wind in our sales at a time when companies are sitting on a lot of cash. Plus this is the time to do a buyback if a company wants to get ahead of the 1% tax hike on buybacks starting in January. As long as we don’t run into a big extraneous event, (like a flare-up in US-China tensions), I think buybacks will keep the rally going until the end of the year.
October 26, 2022 | Daily JAM, Videos |
Today I posted my one-hundred-ninety-seventh YouTube video: What will Xi do now Sunday, Xi Jinping was officially elevated to his third term as President of China. While his title is officially “President,” the position is truthfully more like Mao’s “Supreme Leader” with little room for dissent from the left and the pledge that XiJinping thought is the path to China’s future. However, one day following his installation, Xi received a slap in the face from the markets- Chinese stocks traded in Hong Kong (by mostly foreign investors) plunged. China Large-Cap ETF (NYSEARCA: FXI) was down almost 10% on Monday, with Alibaba (NYSE: BABA) down nearly 12.5%. Meituan (OTCMKTS: MPNG) down 15.25%, and Tencent (OTCMKTS: TCEHY) off 14%. Foreign investors sold on a belief that now there’s no end to Xi’s no-Covid policy (which has essentially cut Chinese economic growth in half.) Whatever fears they had were echoed by Monday’s economic report of just 3.9% year-over-year growth in China’s GDP–a far cry from the government’s target of 5.5%. The question is, what will Xi do about it? He may very likely take an approach that brushes off foreign investors and sticks to his policies. Now that the National Congress is over he also can be expected to retaliate against U.S. restrictions on advanced technology sales. And then, of course, there’s Taiwan where “reunifying” Taiwan with the People’s Republic would be a guarantee of Xi’s legacy. The Biden administration has stated it expects Xi to take action soon and Xi, himself, made it a focus of his “acceptance speech.” With all this potentially coming in the next few weeks, I don’t think this is a time to stock up on Chinese stocks.
October 25, 2022 | COP, Daily JAM, EQNR, Jubak Picks, PXD, Videos, Volatility |
Today I posted my one-hundred-ninety-sixth YouTube video: Trend of the Week Seasonal Trends in Energy. This week’s Trend of the Week: Seasonal Trends in Energy. There’s a predictable pattern in oil and natural gas prices. In late fall, October to November, you can expect a deep dive to begin and carry on through the winter, with a sharp rise in March and early spring. You can see this trend looking at previous years in the United States Oil Fund (NYSEARCA: USO) and the United States Natural Gas Fund, LP (NYSEARCA: UNG). Right now, we’re heading into that dip in energy prices but you should not sell – in fact, you should be adding to these positions. This seasonal fall in energy prices will allow you to get ahead of the spring bounce. Europe’s energy supply is enough to get through the upcoming winter but, in March, as they look toward next year’s supply, they’ll need to start rebuilding inventories in a market strained by the war in Ukraine, cuts in production, and a hostile OPEC. Stateside, the US Energy Information Administration is projecting record production from the Permian Basin of Texas and Oklahoma, as well as record production of natural gas this year. Even though we’re not seeing a whole lot of capital expenditure, they’re uncapping wells and pumping them harder. Look at USO and UNG as ETF oil and natural gas buys For individual stocks I’d look at Pioneer Natural Resources (NYSE: PXD), ConocoPhillips (NYSE: COP), and EQUINOR (NYSE: EQNR)–all of which I own in portfolios and have no intention of selling anytime soon.
October 20, 2022 | Daily JAM, Videos |
Today I posted by one-hundred-ninety-fifth YouTube video: Quick Pick ESS Tech. This week’s Quick Pick is: ESS Tech (NYSE: GWH) This iron flow battery company has been around since 2011 but it is very much at the first sales stage. So, like a lot of early-stage companies without very much revenue, its shares have been crushed. The 52-week range on this stock is $21.37 down to $2.60. On October 19 the stock was trading near $3.70. Given that volatility and the current Bear Market, I’d definitely recommend dollar-cost-averaging. ESS Tech sells iron flow batteries. Flow batteries are less mobile than lithium-ion batteries due to their size, but they’re a much better match than lithium-ion batteries for utility-scale energy storage. Unlike lithium batteries which see their capacity to store energy degrade with each change, flow batteries show no capacity degradation over a 25-year life cycle. Flow batteries are also much less temperature sensitive than lithium-ion batteries so they don’t require expensive heating and cooling systems. That adds up to a very low cost of ownership. ESS is starting to sell what it calls “energy warehouses” to utilities and recently signed a deal with Tampa Electric to support its Big Bend Solar Project. This early-stage company’s revenue in the second quarter was only $686,000, but it is ramping up a second manufacturing line to support a higher level of sales. and we’re seeing sales move forward. I think flow batteries are going to be a big part of the renewable energy ecosystem, and ESS is one of the best pure plays that I’ve found.
October 19, 2022 | Daily JAM, Videos |
Today I posted by one-hundred-ninety-fourth YouTube video: China Retaliates, Act 2 of the U.S./China trade war. The National Congress of the Chinese Communist Party has rubber-stamped a third term as president for Xi Jinping–a move that required amending the Chinese constitution. Because of his age, this is likely his last term–a legacy term. Legacy terms can be dangerous in states dominated by Great Leaders because these leaders are looking to make big moves and lasting changes to secure their place in history. During this “transition,” there has been a delay in China’s response to U.S. trade restrictions, but that’s likely to change now and I expect a very strong response from the Chinese government. In the next few weeks, we can expect to see retaliation in the technology sector: rare earth minerals and refined lithium. China controls 90% of the world’s rare earth supply as well as processing for that supply. Restrictions on the exports of that material to the U.S. have been very effective in the past and extremely damaging to US technology companies. The second move, I think, will be market moves to restrict access by U.S. companies to the Chinese economy. Companies like Tesla and Apple and other big U.S. actors in China can expect harsh restrictions. The third one is a real wildcard: what happens with Taiwan? Xi’s recent speech to the National Congress was very aggressive about the Chinese government’s claim that Taiwan needs to be quickly reintegrated into China. Xi has a somewhat similar problem as that of Vladimir Putin: he has created an extreme hardcore right wing, which is putting pressure on him to be more aggressive. So, he’s going to make a move and however he moves, it will rattle the financial markets. That’s the Chinese agenda for the next four weeks or so and it makes me very hesitant about putting money into technology stocks. Additionally, look to cut risk in Apple, Tesla, and Taiwan Semiconductor Manufacturing.
October 13, 2022 | Daily JAM, Videos |
Today’s topic: what if you haven’t been pessimistic enough now? I’ve been pretty pessimistic for a while now. And I don’t expect that the October 13 bounce really marks the bottom in this Bear Market. The bottom in my opinion won’t come until the end of 2023 or, maybe, 2024. But my worry after the events of the last few days is that I haven’t been pessimistic enough. It looks like the global economy is slowing even more than we expected. The IMF International Monetary Fund came out Monday, October 10 with new lowered projections for global growth of 2.7% in 2023. That’s down from 2.9% back in July, and it’s down from 3.8% in January. We’ve also got a big escalation of the war in Ukraine leading to a worsening global energy crisis due to more extreme sanctions on Russian oil. On top of that, we have a new trade war with China hammering technology stocks. The question is, how do you get ahead of this? I’ve suggested selling Tesla (NASDAQ: TSLA) and ASML Holding (NASDAQ: ASML) on the assumption that China is going to retaliate by hammering U.S. companies that do regular business in China. Two more stocks that I’m looking at selling–or maybe protecting with Put options–are Nvidia (NASDAQ: NVDA) and Apple (NASDAQ: AAPL) as I try to get ahead of what’s going on in China.
October 5, 2022 | Daily JAM, Videos |
My one-hundredth-ninety-second YouTube video “A Bounce to a Rally” went up today. To turn a bounce into a bear market rally, we need two things- but before we get to that, let’s look a bit closer at this latest bounce we’re seeing in the markets. The S&P was up on Monday by 2.59%, the Dow climbed 2.66%, and the Nasdaq rose 2.27%. On Tuesday the S&P 500 gained 3.06%, the Dow 2.80%, and the NASDAQ 3.34%. Bonds are down again and 10 Year Treasuries, which had risen to nearly 4% last week, were down to 3.5% Tuesday. How do we turn this bounce of a couple of days, into a longer-term Bear Market rally that could go as far as the end of the year? Well, we need two things. Number one: we need good news – that is bad news – for the jobs number coming out on Friday. In August, unemployment moved up to about a 3.7% rate from 3.5% in July and if that trend continues, I think Wall Street will fall back on its favorite theory that the Fed will stop raising rates and therefore Buy stocks and bonds! The second thing we need is good inflation numbers, or at the very least, a continuation of a downward trend of headline inflation, leading investors to believe the Fed has inflation under control and will therefore stop raising rates. I think that belief is wrong, but that logic may lead us into a bear market rally until 2023.
October 4, 2022 | Daily JAM, Videos |
My one-hundred-and-ninety-first YouTube video: “Trend of the Week Housing Prices Fall, Finally” went up today This week’s Trend of the Week is “Housing Prices Fall, Finally.” We’ve recently seen a big increase in mortgage rates, but the housing market hadn’t really slowed, until July. According to the S&P CoreLogic Case-Shiller Home Price Index, the year-over-year housing prices went up 18.1% in June of this year, and 15.8% in July. While it’s still a big increase over last year, there is a noticeable deceleration. Month-to-month housing prices in the 20 cities in the Case-Shiller Index fell 0.4% in July, marking the first drop in month-to-month housing prices since 2012. If you look at Lennar Corporation (LEN), a good representation of the housing and building market, you can see the decline in mid-August where investors started to truly believe home and building prices are indeed going to fall. Watch the housing sector. It’s the first place where the Fed’s interest rate increase is having a tangible effect. We’ll continue to see housing prices fall as mortgage rates go up. And it’s an early sign that the Fed’s tightening is working to slow the economy.
September 28, 2022 | Daily JAM, Videos |
My one-hundred-and-eighty-ninth YouTube video: “From a Bear Market to a Global Financial Crisis” went up today. To me, it increasingly looks like we’re going from a bear market to a global financial crisis. The signs of an upcoming global financial crisis are there: volatility in the currency markets, the decline in nearly every currency against the dollar, the World Bank lowering its estimates of economic growth around the world, and global inflation due to food and energy. A good way to track the “progress” toward a global financial crisis0 is to look at emerging markets. The iShares MSCI Emerging Markets ETF (EEM) and iShares MSCI India ETF (INDA) both saw accelerated declines starting around September 12, and South Korea has been down since mid-August. Many key emerging markets rely on in-flows of foreign capital to balance their accounts but the flow of that money has slowed, as investors are risking less internationally and keeping their funds closer to home. Right now, we’re seeing a global “Whac-a-Mole”, where individual countries pop up as problems. But if more financial individual crises pop up simultaneously and at a more rapid pace, we’ll have a global financial crisis on our hands. Oh, goody. Something more to worry about.
September 22, 2022 | Daily JAM, JO, Videos, Volatility |
Today’s Quick Pick: JO (NYSEARCA: JO) otherwise known as Barclays iPath Bloomberg Coffee Subindex Total Return ETN Series B. As I’ve shown you in the video, I’m growing my own coffee plant to head off the coffee shortages we’re seeing now (first beans projected in 2028; enough for a cup? 2032), and will likely continue to see long-term. Brazil is the world’s largest producer of coffee but its inventory is projected to drop to about 7 million bags by March, (well below the comfort level of about 9-12 million bags.) A long-lasting drought is to blame for the shortages–and that dicey weather is likely to be with us for quite a while. Meanwhile, global coffee consumption is going up by 1.5% projected this year (2% last year). While JO is volatile since it trades on the commodity price, what interests me about it at the moment is that it’s NOT correlated to anything else like interest rates or inflation (though it definitely contributes to inflation as coffee drinkers well know.) This ETN will continue to go up, even if the market goes down. (JO is a member of my Volatility Portfolio on my subscription JubakAM.com site.)
