I don’t think I’ve ever even imagined writing a line like this: Wait to buy Brazil’s Natura & Co.(NTCO) until after we know that Brazil’s right-wing president won’t stage a coup to prevent an election loss.
On Tuesday U.S. natural gas prices tumbled after the operators of the Freeport liquefied natural gas terminal said production will resume in early to mid-November instead of October as earlier announced. The terminal, which handles almost 20% of U.S. LNG exports, was knocked out of operation by an explosion in June. The trouble at Freeport has been an especially big deal for European LNG shipments since the United States sends almost 75% of its LNG to Europe and that market has been scrambling to replace natural gas from Russia after that country’s invasion of Ukraine. Natural gas futures dropped 6.5% on Tuesday after hitting $10 per million BTUs for the first time since 2008. Today, Wednesday, August 24, natural gas futures for September delivery are up 2.09% as of 1:30 p.m. New York time.
After the close on Monday, August 22, Palo Alto Networks (PANW) reported fiscal fourth-quarter (adjusted) earnings of $2.39. a share. Analysts had projected $2.28 a share. Revenue climbed 27% to $1.6 billion. The company also announces a 3/1 stock split.
My one-hundred-and-sixty-eighth YouTube video Trend of the Week: “3 Tech Stocks for the Next Wave of Products” went up today. Tech has been hammered as of late, but there will always be new innovations and new products emerging to give these companies in this sector a long and profitable future–after this Bear Market is over. In this video, I look at why AAPL, AMD, and QCOM have solid growth stories based on new products in the pipeline.
When I added Alibaba (BABA) to my Jubak’s Picks Portfolio on April 29, 2022, and Tencent Holdings (TCEHY) to my Volatility Portfolio on January 3, 2022, I thought two things were about to happen in China. First, I thought that the People’s Bank would unleash enough stimulus to more than compensate for the slowdown in China’s economy. And, second, I thought that we’d seen the end of the regulatory crackdown on China’s big entrepreneurial technology companies. I got both trends wrong.
The chip boom is over–or at least coming to an end. Gartner has cut its outlook for revenue growth in 2022 to just 7.4%. That’s down from a forecast of 14% growth for chip revenue three months ago. Garner sees chip revenue falling 2.5% in 2023. And you don’t have to take the word of market watchers at Gartner.
Yesterday, August 11, U.S. liquefied natural gas (LNG) exported Freeport LNG said it was still pulling in small amounts of natural gas from pipelines at its shuttered LNG export plant in Texas to fuel a power plant. And, this is the important part, it still expects the liquefaction plant, which shut due to a fire on June 8, to return to at least partial service in early October. Thursday, U.S. gas futures jumped about 8% on talk of increased gas flows to the Freeport LNG plant, a drop in gas output, and forecasts for more demand for the fuel over the next two weeks than previously expected. The U.S. Natural Gas Fund (UNG) gained 6.06%.
Yesterday’s bounce on the better-than-expected July CPI inflation numbers–the annual rate dropped to 8.5% from 9.1% in June while economists surveyed by Bloomberg were expecting a drop to an 8.7% rate–looks to be fading today, August 11, but I’m going to squeeze in two more sells, Sangamo Therapeutics (SGMO) and Sunrun (RUN) for tomorrow to take advantage of this Bear Market rally. Both sells are out of my Volatility Portfolio. The high potential upside of these two picks has driven them to big gains in the Bear Market rally that began in July. That same volatility, on the downside, makes them stocks I don’t want to hold in any return of the Bear Market.
The long-term case for buying Tesla (TSLA) is easy to make (or easy to argue.) The company has created electric vehicle technology that delivers faster speeds, longer range, and greater efficiency than any of its emerging competitors. The company has done a superlative job of building out its global supply chain so that it has suffered less disruption due to raw material glitches or chip shortages than any of its competitors. The big long-term questions for Tesla are Can it drive costs out of its production system? and How long will it take for competitors to catch up with Tesla’s technology advantage? (Just for the record I come down on the “buy” Tesla side on these questions.) In the short term the buy/sell/hold case for Tesla is more complicated.
Despite today’s CPI inflation bounce and the continuation (flagging but still in business) of July’s Bear Market rally, my goal is still to sell into rallies. I don’t think this Bear Market is over and done with. I see another down leg when investors and traders admit that the Federal Reserve isn’t going to be able to get inflation under control with just another 100 basis points of interest rate increases (and, the other part of this hopeful scenario, to begin cutting interest rates by the middle of 2023.) So I’ll be making three sells today out of my Jubak Picks Portfolio to take advantage of the CPI bounce.
It’s hard making a profit on volatility trades in a market that’s as volatile as this one.
You’ve got to get the direction right, the timing, and the price. Miss one and get the other two and you can still wind up in the red. Which is where I find myself on the Nvidia Put Options (NVDA220819P00165000) I bought in my Volatility Portfolio on July 22 with a strike of $165 and an expiration date of August 19.
First, it was Nvidia (NVDA) cutting its guidance for revenue and earnings due on August 24. Today, August 9, it was Micron Technology (MU) warning that its revenue for the fourth-quarter revenue may come in at or below the bottom end of a forecast range provided in the company’s earnings call on June 30. Micron is scheduled to report on September 27. All this comes as the market is on edge anyway ahead of tomorrow’s report on CPI inflation. As of the close on Tuesday, August 9, shares of Micro Technology were down 3.74%. Shares of Nvidia were down another 3.97% after closing down 6.30% yesterday.
