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.
QCOM
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.
Pick #8 Qualcomm in my “10 New Stock Ideas for an Old Rally” Special Report
Today I added Qualcomm as Pick #8 for my Special Report “10 new stock ideas for an old rally.” The stock is already a member of my Volatility Portfolio. Here’s what I wrote
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.
Watch My New YouTube Video: Hot Button Moves NOW–AI Woodstock
Today’s Hot Button Moves NOW video is AI Woodstock. Nvidia’s big AI update on March 18 has been dubbed “AI Woodstock” by Bank of America. Nvidia will update its pipeline and prospects for new projects and report on where it sees the AI market going. It will likely create volatility throughout the AI sector as investors try to get out ahead of the company’s projections. Tuesday, Bank of America raised its target price for Nvidia from $925 to $1100 and upped its estimate of the size of the AI accelerator market from under $250 billion to $250-500 billion in 3-5 years. This wide gap in both market size and time makes me a little nervous, but for now we can focus on the next few days. Nvidia will be discussing its new B1000 and N100 chips, ethernet switches, and AI at the Edge for PCs and smartphones. Keep an eye on stocks like Broadcom (AVGO), Qualcomm (QCOM) and Super Micro Computer (SMCI) for reaction to this news. The volatility in the reaction could open up a good place to get in on these AI stocks.
Please Watch My New YouTube Video: Quick Pick Qualcomm
Today’s Quick Pick is Qualcomm, (QCOM). I always look for product momentum in technology stocks, and Qualcomm’s pipeline is very promising. The company reported a good first quarter for 2024 but I’m focused on growth for their Snapdragon chip which is used in cell phones, cars, and the internet of things. Qualcomm has recently renewed its chip agreements with Apple and Samsung. Samsung’s Galaxy 24 is the first cell phone to include AI technology powered by Snapdragon and sales are up 13% year over year from 2023 and 47% from 2024. It’s likely more companies will be looking to add AI to their phones and I think Qualcomm has a leading position in that market. A new Snapdragon product, X-Elite, will put AI on PCs and is coming out this year. In 2023 the Snapdragon chip was also installed in infotainment modules for 75 new car models and the company’s automotive revenue is up about 12% this quarter. The Internet of Things is growing more slowly but is still growing. Morningstar says the stock is trading at a 22% premium, but I find that to be very, very conservative. While this stock isn’t a bargain at the moment this is a decent time to get in on an AI stock with promising pipeline momentum, and I don’t see it being more reasonable any time soon. I added Qualcomm to my Jubak’s Picks Portfolio on January 15, 2024. The position is up 23.5% since then as of the close on March 12.
Special Report: 10 Great Growth Stocks that Are Getting Greater–today my 10th (and final) pick QCOM
GREATER Growth Stock Pick #10: Qualcomm (QCOM). I think the market and the current stock price are missing a good prt of the growth story for Qualcomm. Which is why I find the stock undervalued enough to buy here. Right now the market disagrees. However, I’ll be adding the stock to my Jubak Picks and Volatility Portfolios on Tuesday, January 16.
Adding Qualcomm to my long-term 50 Stocks Portfolio tomorrow
Today, October 6, I made Qualcomm the #6 Pick in my 10 Perfect Stocks Special Report. As of October 7, I will be adding Qualcomm to my long-term 50 Stocks Portfolio.
Jim’s Stock Alerts
Download Jim’s eBook for Free
