January 12, 2025
What You Need to Know Today:
25% tariffs for Mexico, China, and Canada: This won’t be the last time Trump talks tariffs
Yesterday in social media posts President-elect Donald Trump said that he would impose tariffs on his first day back in office, targeting the United States’ three largest trading partners, of 25% on all goods from Canada and Mexico until drugs and migrants stopped coming over the borders, and an additional 10% tariff on all products from China, saying that the country was shipping illegal drugs to the United States. (The Biden Administration had already imposed its own higher tariffs on China and, in additional, it had kept tariffs on China from the first Trump Administration in effect.)
Look at the leaders in yesterday’s strong rally: Look familiar?
It’s not just that stocks soared Thursday, September 19 with the Standard & Poor’s 500 climbing 1.7% to set its 39th record in 2024. It’s what stocks topped the leader board in the advance and what stocks lagged.
Investors add 2+2 after Fed rate cut and lower initial claims report–and stocks roar higher
The number of Americans filing new applications for unemployment benefits dropped to a four-month low last week. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 219,000 for the week ended September 14. That’s the lowest level since the middle of May, the Labor Department said on Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week. And stocks soared.
The Fed cuts by 50 basis points–don’t make too much of the dip in stocks today
The Federal Reserve lowered its benchmark interest rate by 50 basis points Wednesday. The vote for a 50 basis point cut was 11-1 with the only negative vote–for a 25 basis point cut rather than 50–the first dissent in the Jerome Powell era. The Fed’s dot plot showed a narrow majority, 10 of 19 Fed officials, favoring at least an additional half-point in rate cuts at Fed’s two remaining 2024 meetings. The Federal Open Market Committee to lower the federal funds rate to a range of 4.75% to 5%, after holding it for more than a year at its highest level in two decades. It was the Fed’s first rate cut in more than four years.
Think about gold and gold miners as two different asset classes right now
I think you want to own gold–through something like the SPDR Gold Shares ETF (GLD) right now to profit from decreasing interest rates at most of the world’s central banks, from global macro uncertainty, from the possibility of domestic violence in the United States around the election, and from what sure looks like a train wreck in U.S. fiscal policy.
In the short term. Say six to nine months–maybe even a year–from now. The SPDR Gold Shares ETF is up 24.84% for 2024 as of the September 16 close. In that same time period I think shares of gold mining companies are likely to lag the gains in gold. Shares of Barrack Gold (GOLD), the world’s second largest gold producer, are up just 15.09% in 2024.
Mr. Softy raises dividend by 10% and announces new buyback program
Microsoft (MSFT) raised its quarterly dividend by 10% and unveiled a new $60 billion stock-buyback program, matching the size of a repurchase plan three years ago. Shares were up as much as 2.4% today, September 17, before closing ahead 0.87%.
Special Report: 10 Penny Stock Home Runs Pick #5 VWDRY
My 10 Penny Stock Homeruns Pick #5: Vestas Wind Systems (VWDRY).
Technically, the Vestas Wind Systems ADR (VWDRY) isn’t a penny stock. By the strict definition, a penny stock sells for $5 or less and the Vestas ADR closed on $9.06 today, February 14. But I included Vestas in my previous penny stock list back on July 11, 2022, even though the stock closed at $7.80 that day. With the company reporting a return to profitability for 2023 in its fourth quarter earnings report released today, I think Vestas has (finally) turned the corner. And, frankly, I just don’t want drop it from this list just as things get good again for the company and its investors. (Vestas is a member of my Jubak’s Picks Portfolio. The position is up 65.6% since initiation on March 4, 2019.) Tomorrow, February 15, I’ll also add Vestas to my long-term 50 Stocks Portfolio.
Live Market Report (20 minute delay)
Selling utilities Duke and NiSource on higher yields elsewhere
Today, in my Special Report: 8 steps to Protect Your Portfolio from the Globlal Debt Bomb, I advised raising some cash my selling two utility stocks, Duke Energy (DUK) and NiSource (NI) out of my Dividend Portfolio tomorrow.
Buy (more) of the ProShares Short Russell 2000 ETF to short small caps in this credit crisis
Today I’m adding the ProShares Short Russell 2000 ETF (RWM) to my Jubak Picks Portfolio.
Special Report: 8 Steps to Protect Your Portfolio from the Global Debt Bomb–complete 8 steps
I’ve hi-lighted the key characteristics of the coming global debt bomb explosion that investors MUST include in any plan to protect a portfolio from the explosion of this bomb.
The technicals look increasingly awful for stocks
I know the bond market is getting most of the headlines at the moment. And it should be. By some measures, volatility in the Treasury market, you know, the old safe haven Treasury market, exceeds volatility in equities. And then there’s the drama of watching the assault on 5% yield on the 10-year Treasury. The drama isn’t just theatrics either. Above 5% yield on the 10-year Treasury there’s an increasing likelihood that something in this over-stretched credit market will break. But…you can’t ignore the stock market. The technical picture is increasly scary. Here too something looks like it could break–and not in a good way.
Please note I’ve just posted an update to my Special Report: Your 10 Best Moves for the Rest of 2023
The update to my Special Report: Your 10 Best Moves for the Rest of 2023, Part 2–10 of 10 Moves (revised on 10/22) includes the last one of my 10 picks, plus updated performance numbers for the stocks in the original post.I’m pleased to say that I think the advice is still what I would give today.
Saturday Night Quarterback (Part 2) says, For the week ahead expect…
Investors see a ton of third-quarter earnings reports this coming week with news from Microsoft, Amazon, Meta Platforms, and Alphabet quite capable of moving the entire market. We’ll also get more consumer company (Coca-Cola and Kimberly-Clark for example) reports to show whether last week’s higher revenue but lower volume pattern continues. And Wall Street is expecting negative new from oil companies ExxonMobil (XOM) and Chevron (CVX) when they both report on Friday.
Saturday Night Quarterback (Part 1), says, For the week ahead expect…
The U. S. economy, economists project, grew at the fastest rate in nearly two years in the third quarter. The actual figures from the Bureau of Economic Analysis get released before the market opens on Thursday, October 26. Gross domestic product grew at a 4.3% annualized pace in the quarter, according to the median projection in a Bloomberg survey of economists.
The 5% yield barrier on 10-year Treasuries is going to fall–soon
The yield on the 10-year Treasury closed at 4.99% yesterday. Bond prices are up a bit today, Friday October 20, and as of 1 p.m. New York time, the yield on the 10-year had retreated 8 basis points to 4.91% I don’t think this changes the trend line–which is clearly pointing toward yields above 5%. I’m watching that level carefully for two reasons.
Abbott earnings look to make successful reset from Covid sales boom–and to overcome GLP-1 fears
Yesterday, October 18, Abbott Laboratories (ABT) reported third-quarter 2023 adjusted earnings of $1.14 per share. That beat the Wall Street consensus projection of $1.10 a share. This was an important transitional reset quarter for Abbott
Another day, another 8 basis points
Today, October 18, the yield on the 10-year Treasury rose to close at 4.91%. That was a gain in yield of another 8 basis points. The yield on the 10-year Treasury is up 61 basis points in the last month.
Procter & Gamble, like PepsiCo, reports higher revenue on lower volumes
There’s a pattern here: If you’re a big enough consumer goods company with the ability to raise prices and not hurt sales, then the just-ended quarter was a pretty good quarter. Today, October 18, Proctor & Gamble reported fiscal first quarter net sales of $21.9 billion, up 6% from the prior year vs.a Wall Street consensus projection of $21.62 billion.
Good news on growth from China
Today China reported third quarter GDP rose by 4.9% year over year, according to the National Bureau of Statistics. That’s better than economics had expected and it’s within striking distance of Beijing’s goal of 5% growth for the year. Economists are still expecting growth to slow to 4.5% in 2024.
Retail sales stronger than expected; Treasury prices fall and yields surge (some more)
Retail sales in September roe by 0.7% from August, the Commerce Department reported today. That was more than twice the All Street projector of 0.3% growth. I would note that these retail sales numbers are not adjusted for inflation. So yes, they may be surprisingly strong, given that Wall Street was expecting 0% growth once you subtract inflation. But they hardly indicate a “Nellie, bar the door” economic expansion.
Notes You Need for October 16: Amazon Prime Day sales, chip turnaround, diabetes scourge, another unicorn disappears
In my daily trawling through the market I come upon lots of tidbits of knowledge that I think are important to investors but that don't justify a full post. I've decided to start compiling these notes here each day in a kind of running mini blog that I'm calling Notes...
Add Italy to your list of Global Debt Bomb worries–maybe it should be at the top of the list
The last thing global financial markets need right now is another Euro Crisis. But that could be what Italy is about to put in motion
Special Report: 10 Contrarian Bargains to Buy Now–My third of 10 Picks is Barrick Gold
A few days ago I recommended selling positions in the SPDR Gold Shares (GLD) and in the VanEck Gold Miners ETF (GDX) on the grounds that with bon yields rising, gold wouldn’t move higher. (This was all, of course, before Hamas attacked Israel and sent markets running for safety. On Friday, October 13, Comex gold for December delivery was up 3.11%.) So what I am I doing today recommending Barrick Gold (GOLD) as the third pick in my Special Report “10 Contrarian Bargains to Buy Now”?
Saturday Night Quarterback says, For the week ahead expect…
Look for a big earnings test for regional banks and a feW clues about consumer goods, airlines, and autos. Last week ended with great earnings reports from Big Banks JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C). Big Bank earnings continue this week with Bank of America (BAC) and Goldman Sachs (GS) reporting on Tuesday. But the important news for the financial sector will come from the dozens of earnings reports from regional banks.
JPMorgan Chase starts off big-bank earnings by knocking it out of the park (Go Phillies!)
Maybe JPMorgan Chase (JPM) CEO Jamie Dimon felt his bank’s earnings report was so good that he had to pour a little cold water on investors. “This may be the most dangerous time the world has seen in decades,” Dimon said in a statement Friday. He also issued a caution about the records set in the third quarter. “These results benefit from our over-earning on both net interest income and below normal credit costs, both of which will normalize over time.” But the caution aside, it’s hard for me to find anything not to like in the big bank’s report.
Special Report: 10 Contrarian Bargains to Buy Now–My second of 10 Picks is Nidec
Today, October 12, I’m making Nidec, the Japanese company that is the leader in the market for small electric motors and a growing presence in the market for motors and drive trains for electric vehicles, the second pick in my Special Report: 10 Contrarian Bargains to Buy Now.
U.S. electric vehicle sales up 50% year over year in the third quarter, but Tesla loses market share
In the third quarter electric vehicle sales in the United States jumped to more than 300,000 for the first time, Cox Automotive reported today. Electric vehicle sales were up 50% year over year in the quarter. And electric vehicles made up 7.9% of total industry sales. It’s not surprising that as vehicle sales volumes have surged, market leader Tesla (TSLA) has lost market share.
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