September 20, 2024

What You Need to Know Today:

PCE inflation “tame” in June

PCE inflation “tame” in June

The Personal Consumption Expenditures index, the Federal Reserve’s preferred measure of inflation, rose by just 0.% month-over-month in June, the Bureau of Economic Analysis reported this morning. The core personal consumption expenditures price index, which strips out volatile food and energy prices, increased 0.2% from May. The annual rate of core inflation was just 2.6%. Economists had projected a core annual rate of 2.5%. With the Fed set to meet on interest rates on July 31, inflation continues to move lower towards the central bank’s 2% target. These numbers support the Wall Street consensus calling for the Fed to begin cutting interest rates at its September 18 meeting.

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Viking Therapeutics up 28% today as obesity drug moves to Phase III trials

Viking Therapeutics up 28% today as obesity drug moves to Phase III trials

Viking Therapeutic (VKTX) has announced that its subcutaneous obesity drug candidate VK2735 is moving into Phase III development. Viking is currently preparing for an end-of-Phase II meeting with the Food & Drug Administration later this year. Just as significant–maybe more?–pharmacokinetics data for VK2735 continues to show the potential for once-a-month dosing. The market-leading GLP diabetes/weight-loss drugs from Eli Lilly (LLY) and Novo Nordisk (NVO) require weekly injections. That dosing advantage gives VK2735 the potential to be the best-in-class obesity drug. (Viking is also at work on an oral version of the drug.)

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U.S. economy grew at 2.8% annual rate in second quarter

U.S. economy grew at 2.8% annual rate in second quarter

The U.S. economy grew at a stronger than expected 2.8% annualized rate in the second quarter. The growth rate for the quarter that ended in June was double the 1.4% rate in the first quarter. Consumer spending and business investments drove almost all of the second quarter’s growth. But below the top line numbers I can see a slowdown in some fundamental trends from the first quarter.

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China cuts interest rates in a new attempt to jump start economy

China cuts interest rates in a new attempt to jump start economy

On Monday, July 22, the People’s Bank of China lowered its benchmark lending rates and an important short-term policy rate.

The precise timing was a surprise although leaders at the recently concluded third plenum had flagged continuing problems in the real estate sector and soft consumer demand. This is a hugely important change in policy for the People’s Bank, which had recently shied away from cutting rates in an effort to prevent further erosion in the yuan versus the U.S. dollar, and to lower inflation caused by higher prices for imports. The move, I think, signals the hugh level of anxiety in the Beijing leadership at the economy’s refusal to respond to previous stimulus moves.

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Live Market Report (20 minute delay)

Need more GLP? Buying Viking Therapeutics on trial results

Need more GLP? Buying Viking Therapeutics on trial results

Yesterday, February 28, development-stage biotech Viking Therapeutics (VKTX) announced results from a Phase 2 training of its GLP-1 weight-loss drug candidate that that showed the potential for the VK2735 compound two move to be best in class in the $36.5 billion (revenue) market for GLP diabetes-control and weight-loss drugs. I will add Viking Therapeutic to my Volatility Portfolio and to my Jubak’s Picks Portfolio today, February 29, with a target price of $150.

Special Report: 7 Steps to Take Now to Protect Your Portfolio While You Still Reap Market Gains–Steps 1-5

Special Report: 7 Steps to Take Now to Protect Your Portfolio While You Still Reap Market Gains–Steps 1-5

Can you have your cake and eat it too? That’s basically the question stock investors and traders face now. Is there a way to build a strategy that will put profits in your pocket if the rally that set in at the end of 2023 continues? And that will hedge the downside so the your portfolio won’t tumble if the market does? Or that will at least lose less? Or that might even make some money on its downside bets. I think there is. And that’s the subject of this Special Report. Today Steps 1-3

Economy looks good, economists say, but real estate credit market is scary bad

Economy looks good, economists say, but real estate credit market is scary bad

This probably isn’t a part of the credit market you watch–even if you watch the credit market. But 8.6% of commercial real estate loans bundled into collateralized loan obligations (CLOs) were classed as distressed in January, according to a report by analytics firm CRED iQ, Bloomberg reported Friday. That’s a 480% increase in distressed loans in CLOs since February 2023. The culprit, again, is real estate loans that have gone bad.

Nvidia lifts most but not all tech boats

Nvidia lifts most but not all tech boats

Yesterday, Thursday, February 22, Nvidia (NVDA) gained 16.40% at the close after beating Wall Street expectations on earnings and revenue after the market close on Wednesday. And then raising guidance for the rest of 2024. But what most interested me on Thursday were what tech stocks Nvidia carried higher with it–and which stocks it didn’t.

Please Watch My New YouTube Video: Doldrums from now through April

Today’s video is Doldrums from now through April.. Doldrums are, “a state or period of inactivity, stagnation, or depression” or, in nautical terms, the places where tradewinds converged and ships were left stagnant on the ocean until a storm or the wind picked up to get the vessel back in motion. The recent stock plunge of 26% from Palo Alto Networks (PANW) certainly doesn’t feel like a market that is stagnant or waiting for a change in the winds, but I think that’s what we’ll see going forward. After Nvidia’s report, there aren’t any big earnings reports expected until April and we’ll likely be moving sideways until the Fed sets the market sailing with a rate cut. The odds of the Fed not doing anything at the March meeting according to the CME Fedwatch are up to 90%. That rate cut expectation has now moved solidly to June or July with the CME Fedwatch polling at 75% for June and 90% for June or July. Until those rate cuts happen, and with little to no market-moving earnings reports expected in the months between, the stock market will be drifting in the doldrums while we wait for the wind to pick up.

Yes, I’d buy Palo Alto Networks today–with these caveats

Yes, I’d buy Palo Alto Networks today–with these caveats

After yesterday’s earnings report–the company beat Wall Street estimates for the quarter–and radically lower guidance for next quarter and the rest of 2024–total billings for next quarter will grow by just 2% to 4% and revenue for all of 2024 will grow by just 15% to 16% from 2023–shares of Palo Alto Networks (PANW) took a big hit right between the eyes. The stock fell 28.44% at the close and lost $104.12 a share to $261.97. What do I recommend? I’d say “buy” with a couple of caveats. Why buy?

Palo Alto takes a beating after it lowers guidance; preview of Nvidia tomorrow?

Palo Alto takes a beating after it lowers guidance; preview of Nvidia tomorrow?

t should be a familiar story in this priced-to-perfection market: Company beats big in current quarter but lowers guidance and stock takes a dive. Latest victim? Palo Alto Networks (PANW). The stock is down 14.09% at 4:30 New York time today. And with Nvidia scheduled to report tomorrow after the close, you can bet the market will be on edge tomorrow.

Don’t stand in front of the Nvidia train right now–shorts lose $3 billion and counting

Get ready for the Nvidia circus

Can you hear the barkers yelling to the crowd? It’s Wall Street analysts rushing to raise their target prices for Nvidia (NVDA) ahead of next week’s quarterly earnings report. On February 21, after the close, Nvidia is expected to report earnings of $4.18 share, up from $0.65 a share in the quarter a year ago, on revenue of $20.5 billion. And even though the stock is up 47% for 2024 as of the February 15 close and up 219% for the last year, Wall Street analysts are rushing to increase their target price on the shares.

Please Watch My New YouTube Video: Quick Pick Cheniere Energy

Please Watch My New YouTube Video: Quick Pick Cheniere Energy

Today’s Quick Pick is Cheniere Energy (LNG). Cheniere is a liquified gas supplier  and the stock was down about 7.5-8% this year. Much of that drop was a reaction to the Biden administration’s decision to delay permits for new LNG export facilities in order to put pressure on the industry to decrease their methane emissions. However, this is essentially a non-issue for Cheniere since the company’s most recent expansion had already been permitted. The company is on track to go from a capital-intensive/debt heavy stage to putting billions into new sites and export facilities to a generator of free cash flow from those completed facilities.  The current dividend is only 1.05% but the total yield, (dividends plus stock buybacks) is about 6.05%. Management has said they believe there will be enough free cash flow to raise the dividend rate by 10% a year from now until the mid to late 20s. In my opinion, demand for LNG is shifting as markets like Japan and China are transitioning to nuclear or solar and wind, but there is still growing demand from places like India, which is looking to transition away from coal. Cheniere is predicting 3% annual revenue growth and I think that’s reasonable and enough to keep the cash flow and dividends moving. I will be Cheniere to my Dividend Portfolio on those future yield prospects.

Another day, another hotter than hoped inflation number

Another day, another hotter than hoped inflation number

The Labor Department reported Friday that its producer price index—which tracks inflation before it reaches consumers—rose 0.3% from December to January. The index had dropped -0.1% in December. Measured year over year, producer prices rose by 0.9% in January. But the month to month increase in producer prices and at a higher month to month rate is the latest sign that getting inflation the “last mile” down to the Federal Reserve’s 2% target rate is going to be harder and take longer than expected.

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