Drill baby, drill pledge sends oil prices down today
Oil slid as U..S President Donald Trump promised to boost U.S. crude production. Brent crude retreated almost 1% to near $80 a barrel.
PYPL
Jobs surprise–economy delivers stronger than expected performance in December
In December U.S. economy in December added the most jobs since March and the unemployment rate unexpectedly fell. Nonfarm payrolls increased 256,000, exceeding all but one forecast in a Bloomberg survey of economists. The unemployment rate fell to 4.1%, while average hourly earnings rose 0.3% from November, a Bureau of Labor Statistics report showed Friday. For 2024 as a whole, the economy added 2.2 million jobs—-below the 3 million increase in 2023 but above the 2 million created in 2019. The data almost certainly assured that the Federal Reserve would not cut interest rates at its January 29 meeting. As of 11 a.m. New York time, the yield on the 10-year Treasury had climbed another 5 basis points to 4.74%.
China’s deflation problem got worse in December
China’s consumer price index rose 0.1% in December from a year earlier, in line with the median forecast of economists surveyed by Bloomberg. Factory deflation extended into a 27th month, though the producer price index recorded a slower drop of 2.3%, the National Bureau of Statistics said Thursday. For the full year, consumer prices only inched up 0.2% from 2023, well short of the 1.1% gain economists had predicted at the beginning of 2024.
Fed’s December minutes another nail in the coffin for early interest rate cuts
In minutes from the Federal Reserve’s December 17-18 meeting released on Wednesday, January 8, Federal Reserve officials clearly decided to move more slowly on cutting interest rates in the quarters ahead. “Participants indicated that the committee was at or near the point at which it would be appropriate to slow the pace of policy easing,” minutes from the Federal Open Market Committee showed. “Many participants suggested that a variety of factors underlined the need for a careful approach to monetary policy decisions over coming quarters.” Please note the reference to “quarters” and not “months.”
More bad news for stocks from the bond market today
The 20-year Treasury bond, a laggard on the government debt curve since its re-introduction in 2020, topped 5% Wednesday for the first time since 2023. The move looks to be fueled by concern that President-elect Donald Trump’s policies on tariffs and tax cuts will lead to wider deficits and rekindle inflation.
Stocks fall as they begin to price in no rate cut until July
The Institute for Supply Management’s index of services advanced 2 points to 54.1 last month. That show of strength in the economy–readings above 50 indicate expansion–was enough to push stocks lower as the markets began to price in a delay in the next interest rate cut from the Federal Reserve until July The measure of prices paid for materials and services rose more than 6 points to 64.4, suggesting that the drop in the inflation rate in the service sector–about 70% of the U.S. economy–might be over.
Special Report: “10 New Stock Ideas for an Old Rally”–all 10 picks
The Standard & Poor’s 500 Index had a banner first half of 2024 with the index climbing more than 17% as of June 30. But two-thirds of that gain is attributable to just six stocks: Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Amazon.com (AMZN), Meta Platforms (META), and Apple (AAPL.).Track the performance of equal-weighted version of the S&P 500–rather than the commonly tracked index where the contribution of any stock to the index is weighted by market cap–and the index was up just 3.9% in the first half of 2024. For the second half of 2024 and looking ahead to 2024, I’m not so much worried about the fundamentals of this extraordinary rally as I am by a failure of market imagination Everybody owns the same 6 stocks. Hey, I get the excitement around these stocks and the boom in Artificial Intelligence. I share it. Which is why I own shares of Nvidia, Amazon, and Alphabet in my online portfolios. But there are 494 other stocks in the S&P 500. And 2000 stocks in the small-cap Russell 2000.(Up 9% in the first half of 2024.)After a rally that has recorded 30 new record highs for the S&P 500 just the first half of n 2024, some of that other 494–or 2000–are actually better stock buys, and likely to out perform the 6 stocks everybody owns from their current record high prices. But which ones? That’s what my Special Report: “10 New Stock Ideas for an Old Rally” is all about.
Please Watch My New YouTube Video: Stock Pick of the Week Stripe
Today’s Quick Pick is Stripe. Stripe isn’t public yet but will likely go public in late 2024 or in 2025. This is an alert to prepare for this IPO. Stripe started in 2011 and is the “Paypal of its time.” I use both platforms and I find Stripe the more powerful and more user-friendly payment platform. Stripe recently did a private, series H deal that valued the company at $65 billion. Paypal, its major competitor (along with Square), has a market cap of $65 billion. I think this will be a very hot, oversubscribed IPO share you can make a quick profit by flipping the shares on IPO day. The recent Series H offer means that Stripe probably won’t go public until the last half of 2024, at the earliest, or more likely 2025. Which give you time to get your ducks in a row in order to put in a bid for some shares in the offering. Talk to your broker now to ensure you sign all the right paperwork and meet eligibility requirements for IPO offers. If you get that started now, you’ll be able to place an order for IPO shares when they’re available. Stripe revenue is at $14 billion with about 19% of the market share versus 42% for PaylPal. The company has just turned EBITDA profitable, a major milestone. This is an appealing IPO and something to start preparing for even though it may be a little ways down the road.
This week is last stand for growth stock earnings hopes
Going into this earnings season, the hope was that strong, surprisingly strong perhaps, earnings from the big growth stocks would put a stop to the selling. Earnings would be strong enough to convince investors that the market wasn’t over-valued since at these growth rates stocks would be seen to be quick growing into current extended valuations That hasn’t exactly worked so far. But this week the earnings story from growth stocks hits its stride. If the companies reporting this week can’t make the case for growth stock earnings, there probably isn’t a growth stock story to be made in the light of Federal Reserve interest rate increases, supply chain disruptions, and fears of a recession.
Watch my new YouTube video: QuickPick–For bank disruptors, buy Square
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My thirty-fifth YouTube video “QuickPick–For bank disruptors, buy Square” went up today.
New buy-on-the dip targets (as of May 14) for the Dip-O-Meter
Last week’s sell off and rally, which left the Standard & Poor’s 500 down 1.4% for the week, resulted in farther dips in many of the Dip-O-Meter stocks. The picture that emerges is much more complicated than simple advice to “Buy on this dip.”
Dip-O-Meter update for April 9–time to give “buy on the dip” a rest for a few weeks
Looking at the recent performance numbers on the 20 stocks I’m tracking in my Dip-O-Meter as of the close on Friday April 9, I have to conclude that for most of these stocks it’s time to take a pause on any “buy on the dip” opportunities. What I’m seeing in this sample is a general weakening of the upward bounce on rally days from these stocks–and without a strong bounce on a good day there’s not much reason to buy on the dip.
Jim’s Stock Alerts
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