Videos
December 19, 2022 | COST, Daily JAM, Jubak Picks, Videos, WMT |
This week’s Trend of the Week: Christmas? Bah Humbug! Harris recently did a poll for Bloomberg that showed 60% of the people polled said they would be buying fewer gifts for fewer people this year due to inflation. That same poll said that 60% of respondents said they’d be cutting back on holiday travel, and 33% said they were skipping gift-giving completely. We’ll skip the discussion about the spirit of Christmas, and look at how this is going to affect retail and airline earnings in January. Retailers like Costco, Wal-Mart, and Kohl’s have already warned Wall Street that sales will not be great for Christmas, but even with that warning, retailers could surprise investors with lower-than-expected numbers. Costco announced its fiscal first-quarter earnings on December 10 with sales going up 6%. Although they were warned that margins were going to be soft, Wall Street was expecting 6.9% same-store growth and punished the shares accordingly with a huge drop in the stock. Costco is a great retailer for this moment, with affordable pricing on a wide range of goods and gas sales bringing in traffic. If Costco’s trending this way, I think we can expect the same from companies like Walmart and Kohl’s. It’s likely the airlines will take a hit as well, with the drop in holiday travel. For now, drink your wassail and try not to think about impending January earnings!
December 12, 2022 | Daily JAM, Videos |
Today I posted my two-hundred-and-fifteenth YouTube video: Trend of the Week Nattering Nabobs of Negativity. This week’s Trend of the Week: Nattering Nabobs of Negativity. Spiro Agnew’s alliterative expression comes to mind as I listen to institutional Wall Street and big banks discussing the idea that we have not yet seen the bottom of this market and we could hit another big downturn in the first half of 2023. In the long term–February that is=–I agree. But I think we’re currently in a very short-term period where investors decide to ignore the long-term warnings and look to window dress portfolios (and maybe pick up some gains) before the end of the year. This short window of time will likely begin after the December 14 Fed meeting and run to the end of the year. As January and the new year rolls around, investors may finally come to grips with the warnings from banks and I’d bet that, true to form, they’ll try to beat the crowd to an exit. Pay attention very carefully to how you’re positioned over the next month.
December 8, 2022 | Daily JAM, Millennial, Videos |
Today I posted my two-hundred-and-fifteenth YouTube video: Quick Pick Pilbara Minerals. Pilbara is an Australian hard rock lithium producer. Hard rock lithium comes from mining spodumene deposits as opposed to getting lithium from brine. Turning lithium from brine into the Form of lithium that can be used in a battery requires more processing steps. That can make spodumene a lower-cost source if the deposit is rich enough. Currently, just about all lithium has to be processed in China before going to battery makers. American companies like Tesla hope to open processing plants of their own, and Pilbara has plans to build a test processing facility in Australia. The company will decide in early 2023 if it will go ahead with that plan. The stock is up about 26% for 2022. Pilbara recently released its fiscal first quarter 2023 results with gross sales reaching $1.04 billion, a number that’s nearly equivalent to the total revenue for all of the 2022 fiscal year. Clearly, the company is in the early stages of a growth ramp. I’m adding this stock to my Special Report: “Buy the Future for Pennies with These 10 Penny Stock Picks” on my subscription JubakAM.com investing site (as the # 9 Pick.) I’ll also be adding it to my Millennial Portfolio on that site on Friday, December 10.
December 7, 2022 | Daily JAM, Videos |
Today I posted my two-hundred-and-fourteenth YouTube video: Waiting for the Fed. We are about a week out from the Fed’s December 14 meeting, where another 50 basis point increase is expected. We’re now in the Fed’s quiet period, but last week Fed presidents were adamantly setting expectations for 50 basis points. A 50 basis point increase would be a step down from the previous 75 basis points, and many would see that as a sign that the Fed is tapering. However, the main thing to look at on December 14 is the Dot Plot of projections from the Fed itself. That will tell investors and traders how much longer the Fed now expects these raises to continue, and how where the peak might be in rates for this cycle. Wall Street is currently predicting a peak 5% benchmark rate. (We’re currently at 3.75-4%.) But I think the top is likely closer to 6%. If the Fed settles into a projection of 5%, the market will likely relax and head into an end-of-year rally that might end in the beginning to mid-January. If the Fed gives any impression that it’s looking looks at something closer to 5.5 to 6%, that would be enough to scare the market and lead Wall Street to lower projections of market gains for 2023. Right now the S&P 500 continues to teeter on the edge of resistance near the 4,000 ceiling set by previous highs of 4110 in September and 4080 at the end of November. If the Fed doesn’t come out with jarring news on the 14th, I think we can look for the index to break through 4000 until it heads back down in January 2023.
December 5, 2022 | Daily JAM, Videos |
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November 30, 2022 | Daily JAM, Videos |
Today I posted my two-hundred-and-eleventh YouTube video: The Fed Is Now On Message–Ask Why Today’s topic: The Fed is Now On Message, Ask Why. Last week I spoke about how confusing the Fed’s messaging had been recently, but this week, everybody has been on the same page. St. Louis Fed President, James Bullard, a fairly aggressive inflation fighter, suggested we need to take the Fed rate up to 5-7%, a hike from the current 3.75-4%. Loretta Mester, President of the Fed in Cleveland, agreed that the Fed isn’t near a pivot and John Williams, President of the New York Fed, came out with a detailed statement saying that more work is needed on inflation and unemployment may need to rise to 4.5-5% by the end of 2023. While Williams didn’t use the word, “recession,” it’s clear that you don’t reach those unemployment numbers without hitting a recession. So, why are these formerly out-of-sync Fed presidents suddenly aligned on message? The Fed is data-driven, and Fed members got new inflation and jobs numbers recently before the public release Thursday and Friday. Could be that these new data points have driven the Fed to the conclusion that we shouldn’t expect a pivot any time soon. Or maybe it’s just that the Fed goes into its quiet period soon before the December 14 meeting.
November 29, 2022 | Daily JAM, Millennial, PANW, Top 50 Stocks, Videos |
Today I posted my two-hundred-and-tenth YouTube video: Quick Pick Defiance Palo Alto Networks. This week’s Quick Pick is Palo Alto Networks (NASDAQ: PANW), the cyber security software platform company. During this bear market, it’s not surprising to see some stocks down nearly 50% and trading at 30% to40% discounts, but Palo Alto has managed to drop only 8% for 2022 and is trading at a relatively slight 15% discount to fair value, according to Morningstar. While Palo Alto has had its severe dips, it recently bounced back up after announcing very solid earnings. In the quarter sales were up 25% year over year and annual recurring revenue (from SAAS subscriptions) was up 67% and billings were up 27%. Palo Alto covers a lot of areas of cybersecurity, making it a more attractive alternative for enterprise corporations looking to consolidate their security software and move to a one-stop shop that can cover more aspects of their security needs. I’m reluctant to buy anything in this continuing bear market, but would suggest looking at this stock in February 2023 or so, especially if it dips again. Palo Alto Networks is a member of my long-term 50 Stocks Portfolio on my two investing sites. The stock is up 108% since I initiated that position on January 21, 2020. The stock is also a member of my Millenial Portfolio on my subscription site JubakAM.com. That position is ahead 41% since May 21, 2021
November 28, 2022 | Daily JAM, Videos |
Today I posted my two-hundred-and-ninth YouTube video: Is the Fed Confusing or Just Confused? Today’s topic: Is The Fed Confusing, or Just Confused? First, Mary Daly, president of the San Francisco Fed came out with a very mixed message about the Fed’s December 14 meeting. The market seems to have decided that the Fed will raise rates by just 50 basis points, she said, but that it’s still too early to decide and a 75 basis-points increase is still on the table. But, she then added, the Fed is worried about overcorrecting and causing a recession. Then, Loretta Mester, president of the Cleveland Fed, announced that she is open to slowing the rate of the rate hikes, but was unclear on what “slowing” would actually mean. I think the key to market direction after the December meeting is the Dot Plot Summary of Economic Projections. The last time the Fed released a Dot Plot was September and it’s already wildly out of date. The September projected inflation rate for 2023 was 2.6-3.5% and 5.3-5.7% for 2022. Both projections will likely be revised higher in December. Inflation isn’t coming down as fast as the Fed thought in September, but it is coming down. Big question for the financial markets, though: Is it coming down enough? Rate hikes of 50 or 75 basis points are on the table but does the Fed now think it can stop raising the rates? My conclusion is that the Fed sounds confusing because the Fed is actually confused.
November 21, 2022 | Daily JAM, Videos |
Today I posted my two-hundred-and-eighth YouTube video: Quick Pick NiSource. This week’s Quick Pick is NiSource (NYSE: NI). If you saw my last Trend of the Week video, you know that I believe the dip in utilities represents a good buying opportunity as utilities make the transition away from coal and natural gas with an eye toward the future of electricity. Investors have already started “rewarding” some utility stocks, like Eversource Energy (NYSE: ES) and NextEra Energy (NYSE: NEE), because they see these utilities starting that transition. Which means, of course, that these stocks have been bid up on that recognition. Eversource is rated by Morningstar as 6% overvalued and NextEra, which owns Florida Power & Light, is rated at fair value by Morningstar. The utility I’m looking at is NiSource, which largely services Indiana and Ohio—not generally considered bastions of cutting-edge green energy technologies. But! Goods going from coast to coast necessarily travel through those states, and as trucking companies make the transition to electric, the utility companies that service those areas will need to provide the power. NiSource is at the beginning stages of its own transition away from coal and toward renewable sources. The stock currently trades at a 20% discount, according to Morningstar, with a 3.65% dividend, higher than both Eversource and NextEra. NiSource says they’re expecting 6-8% annual earnings growth over the next 10 years and they’ve started investing in renewables in Indiana and Ohio. I think this is a stock that will start to get recognized as committing to the energy transition and I’ll be adding it to my dividend portfolio.
November 17, 2022 | Daily JAM, Videos |
Today I posted my two-hundred-and-seventh YouTube video. This week’s Trend of the Week: Time for Utilities? I think it is. Looking at Utilities Select Sector SPDR Fund (XLU), you can see the recent dip in utilities, which means yields are up. On top of that, I think utilities are a good long-term investment opportunity. Utilities make their returns by spending capital and putting those projects into their rate base so that regulators allow utilities to hike prices to earn a market return on that invested capital. Utility National Grid recently came out with a study predicting that by 2030, electrifying a typical highway gas station to handle just passenger EVs, will require the same amount of power that is needed for a pro sports stadium-well above the electrical supply they’re currently getting. In 2035 the demand growth looks even more dramatic after the study adds in demand from larger electric trucks. Then each highway gas station/truck stop will need as much electricity as a small town. And this demand won’t be averaged over the course of a day. There will be a need for spikes of power, as cars and trucks quickly recharge their batteries. Currently, we’re building electric cars faster than we are building the necessary infrastructure to charge them. Because of that, we’re going to see a lot of capital put into new infrastructure by utility companies. Which means a larger rate base and higher revenue for utilities.
November 16, 2022 | Daily JAM, Videos |
Today I posted my two-hundred-and-sixth YouTube video. Today’s topic: 10% More to this Rally? The S&P rose above 4,000 Tuesday morning leading investors and analysts to forecast this rally climbing about 10% higher. Looking at a chart of the S&P 500 for a full year shows a clear bear market trend. Each high is lower than the previous high and the market has never seriously threatened to take out the December 2021 high. The current rally might be able to match the August peak of 4280 since investors are trying to take advantage of the rally before the year ends. But I don’t expect gains to stick. Looking forward, I still see high interest rates and a slowing economy and the Fed is unlikely to pivot away from its interest rate increases as investors hope. If you want to take advantage of the rally, by all means, go for it! Just remember, a 10% gain isn’t enough of a gain to justify betting the house.
November 14, 2022 | COP, Daily JAM, Jubak Picks, PXD, Videos |
Today I posted my two-hundred-and-fifth YouTube video. This week’s Trend of the Week: U.S. Oil Production is Not Rising as Expected. Oil prices have averaged $100 per barrel over 2022–a figure that would normally lead oil companies to expand production and capital spending, but it hasn’t this time. According to the Energy Information Administration, U.S. oil production is only up about 3% from December 2021. Projections had the U.S. at 12 million barrels a day by the end of this year, but we’re currently only at 9.77 million barrels a day. Why is the production not going up? Oil shale fields deplete faster than traditional fields and we may have reached peak production in some of these oil shale basins. The best properties may have been exhausted and we’re now seeing companies move to their more inferior properties. The drilling and fracking may be happening at a steady pace, but we’re not getting as much out of the wells and properties currently being drilled. Companies that had a stock of drilled, but uncompleted have now worked through those “spare” wells and don’t have the motivation to drill new ones as Wall Street and investors would prefer high dividends instead of capital spent on a commodity that has an unclear future. The two oil companies I would look at are Pioneer Natural Resources Company (NYSE: PXD) and ConocoPhillips (COP) because of their mix of resources.
