March 11, 2025
What You Need to Know Today:
Government shutdown avoided–until March 14
From the Washington Post: President Joe Biden signed a congressional spending bill into law on Saturday morning, putting to bed the threat of a potential Christmastime government shutdown and kicking the issue for a new Congress and a new president to address in the spring.
This market has an AI problem–AI companies aren’t making money
Remember the good old days–say, 2023–when all you had to do was slap AI in the name of a company and the stock would soar? I kept waiting for AI Burgers made from AI cows, or AI Shoes, which used AI machine learning algorithms to tell you what size shoe you needed. This investor embrace of all things AI led to the fear that there was an AI-stock market bubble that would send the entire stock market into a very painful bear market when it broke. The appetite for AI stocks is still huge–witness the rebound in Nvidia (NVDA) shares that added $400 billion to the stock’s market cap in a four-day recovery from the “sky-is-falling, we’re-headed-to-a-recession stock market retreat. But this stock market still has a big AI problem. We will find out how big when Nvidia reports earnings after the close tomorrow, August 28. Here’s the problem: Most AI companies aren’t making money.
Consumers more confident–but more worried about jobs
U.S. consumer confidence rose to a six-month high in August. The Conference Board’s gauge of sentiment increased to 103.3 from an upwardly revised 101.9 a month earlier, data out Tuesday showed. The median estimate in a Bloomberg survey of economists called for a reading of 100.7. But…
The argument for adding more gold even now
Gold hit a new all-time high today of $2554 an ounce on the Comex for December delivery. Gold’s 20% or so gain in 2024 to date (as of August 26) is a result of strong central-bank buying plus Asian purchases plus anticipation that the Federal Reserve was about to cut interest rates. Now that Fed chair Jerome Powell has just about promised a cut at the Fed’s September 18 meeting it looks like gold will climb further in 2024 on the fundamentals. Bullish Wall Street targets say $2700 to $3,000 by the end of 2024. That’s a decent reason to hold gold. But the very scary geopolitical landscape over the next six months makes me anxious to add more gold even at the record nominal high for the metal.
Saturday Night Quarterback says (on a Sunday), for the week ahead keep your eyes on two different events…
It wouldn’t hurt to be a crab this week so you’d be able to independently rotate your eyes to look in two different directions. With one eye this week, investors and traders will want to watch the Wednesday, August 28, earnings report from Nvidia (NVDA) to see if tech stocks can continue to regain the momentum they lost in the market tumble of early August.And with the other eye, watch for reaction to Fed chair Jerome Powell’s Friday Jackson Hole speech that promised an initial interest rate cut at the Fed’s September 18 meeting. Now market attention shifts to how many rate cuts there will be in 2024. Anything less than full 100 basis points at the September, November, and December meetings will disappoint some bond traders.
No surprise! Powell says Fed will cut rates at September 18 meeting
Speaking at the Kansas City Fed’s Jackson Hole central bankers gab fest, Jerome Powell, the chair of the Federal Reserve, clearly said on Friday that the central bank was poised to cut interest rates at its September 18 meeting. “The time has come for policy to adjust,” Powell said. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.” He then added: “We will do everything we can to support a strong labor market as we make further progress toward price stability.” All this shifts market attention from WHEN the Fed will begin cut interest rates to HOW FAST those cuts will be.
Special Report: Your 10 best moves for the rest of 2023–Part 1, 10 trends for the rest of 2023
In this Special Report I’m going to start by sorting out the data that the market’s moves will likely depend on for the rest of 2023. That’s today’s post, Part 1 of this Special Report. Then I’ll try to handicap the likelihood that the data will zig or zag. And give you a sense of how far away from the current consensus the actual result might fall. And then finally, I’ll give you 10 moves for the rest of 2023 that are the most likely, in my opinion, to result in profits and that won’t wind up costing you big if the data winds up throwing investors a curve.
Live Market Report (20 minute delay)
PCE inflation picks up the pace in January; stocks stumble
The Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation gauge, rose in January at its fastest pace since June. Consumer prices rose 0.6% from December to January, up sharply from a 0.2% increase from November to December, the Commerce Department reported on Friday, February 24. Year-over-year prices rose at a 5.4% rate, up from a 5.3% annual race in December. Core inflation, which excludes volatile energy and food prices, rose 0.6% from December, up from a 0.4% rise in December from Movember. Year-over-year core inflation was up 4.7% in January, versus a 4.6% year-over-year rate in December.
Please Watch My New YouTube Video: Quick Pick U.S. Natural Gas Fund
Today I posted my two-hundred-and-forty-first YouTube video: Quick Pick U.S. Natural Gas Fund Want to grow your portfolio and protect it too? In the toughest investing market in 40 years? Grab my eBook, Your Best Investing Strategy for the Next 5 Years: Free download for subscribers to JubakAM.com. Just click on the image in the right margin. Today’s Quick Pick is United States Natural Gas Fund (NYSEARCA: UNG). The chart for UNG is horrendous, with a peak in August and a steady plummet after that. For 2022, the stock was up about 12%, thanks to late summer surges in price, as natural gas was bid up under the expectation that the war in Ukraine and sanctions on Russia would cause Europe to run out of natural gas. But year to date for 2023, it’s down 44%, as Europe proved better at replacing Russian gas than anyone had expected. As the end of winter approaches, European natural gas stockpiles are at about 65%–above normal for this time of year. UNG has a pattern of up years following down years–in 2020 UNG saw a 43% decline, and in 2021, a 35% increase. As the price of natural gas goes down, demand spikes as buyers look for the cheapest fuels and purchase more natural gas, which sends the pendulum swinging back upward for natural gas providers and funds that track the commodity. Between now and mid-March is a good time to get in on natural gas as we look for the upswing when China and Asia start looking at cheaper natural gas prices and Europe looks to get its stockpile back to 100%.
Adding Pioneer Natural Resources to my Dividend Portfolio on 11% annual yield
Wednesday, February 22, Pioneer Natural Resources (PXD) reported better-than-expected adjusted earnings for the fourth quarter of 2022 while revenues came up short of Wall Street estimates. Revenue was still up 18% year-over-year to $5.1 billion. Fourth quarter net income nearly doubled to $1.48 billion or $5.98 share, from $763 million, or $2.97 a share, in the fourth quarter of 2021. The company declared a quarterly total dividend of $5.58/share, made up of a $1.10 base dividend and a $4.48 variable dividend. The total annualized dividend yield is approximately 11%.Which is why I’m adding the shares to my Dividend Portfolio today.
Intel cuts dividend by 66%, stock drops just 2.26% on the day
So it wasn’t much of a surprise to most investors–although some of us were hoping that Intel (INTC) would hold its dividend steady after a big bond offering in the last few weeks. But today Intel cuts its dividend by 66% to 12.5 cents a share from a prior 36.5 cents. The stock dropped only 2.26% on that big news.
Please Watch My YouTube Video: 6% Yes, 8% No
Today I posted my two-hundred-and-fortieth YouTube video: 6% Yes, 8% No. Today’s topic is: 6% Yes, 8% No. I’ve been saying that I think 6% is the peak for interest rate increases from the Federal Reserve this cycle. Inflation is not coming down as fast as the Fed would like and it’s going to have to keep raising rates until it can bring inflation down to an acceptable level. But what’s acceptable to the Fed? According to the Taylor Rule, which looks at unemployment to calculate where interest rates should be in order to control inflation, we’re heading toward 9% interest rates. I don’t think that’s going to happen in this cycle–not because the economics are wrong, but because the politics don’t work. Mohamed El-Erian recently argued that what is really needed is 8%, but if the Fed did that, he noted, it would cause a massive recession. Instead, he thinks the Fed will declare victory when inflation reaches 3% to 4%, (and we’re 4.5% to 5.5% now, depending on what inflation measure you choose). The idea is that the Fed will settle for a higher inflation rate and blame the green energy transition, geopolitical challenges, and changes in the labor market. Look for a 6% interest rate peak as a good buy point into this market.
Financial markets aren’t happy with Fed minutes from February 1 meeting
Minutes from the Federal Reserve’s February 1 meeting show a central bank anticipating Federal Reserve further increases in interest rates in order to bring inflation down to the Fed’s 2% inflation target. “Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2%, which was likely to take some time,” according to the minutes of the February 1 meeting released today February 22.
Shares of Palo Alto Networks pop on earnings
After the market close on February 21, cyber security company Palo Alto Networks (PANW) reported fiscal second-quarter 2023 year-over-year revenue growth of 26% to $1.7 billion. Billings in the quarter also rose by 26% to $2.0 billion. The rock-solid consistency of revenue and billings growth in this quarter and as projected for the rest of the year got a cheer from the market. In after-hours trading shares gained 8.56%.
Treasury yields continue to creep higher
Today, February 21, the yield on the 10-year Treasury rose 14 basis points to 3.95%. Other Treasuries dropped in price and showed higher yields as well.
Please Watch My New YouTube Video: Quick Pick Cameco
Today I posted my two-hundred-and-thirty-ninth YouTube video: Quick Pick Cameco Today’s Quick Pick: Cameco (NYSE: CCJ). I’m not a fan of nuclear power. Relying on an energy source that produces waste that will remain radioactive for thousands of years when we have no real solution for long-term disposal, is, to me, not the best idea. However, we’ve waited so long to deal with climate change and we still haven’t upgraded the grid so that wind and solar can replace current baseload power sources, so nuclear power will remain in the mix longer than expected. And might even see an increase in its share of the electricity market. Cameco is one of the largest producers of uranium in the world. The company has a lot of capacity that it can bring back into production since it shut down a number of mines when demand for uranium was down. The stock is up about 35% in the last year, 30% year to date, and 16% in the last month. For the trailing 12 months, the company was actually profitable ($116 million), following a loss in 2021 and 2020. You may want to wait for another dip in the general stock market for this one, or dollar cost average into it, but for global warming solutions, this is a good play since we’ve dragged our feet until we’re in an emergency that will require non-optimum, shall we say, solutions. I’ll be adding the stock to my Jubak Picks Portfolio tomorrow, February 22.
Walmart’s caution a red flag on consumer spending: stocks fall today
Today, February 21, Walmart (WMT) reported s 76% year-over-year jump in earnings to $1.71 a share. Wall Street analysts had forecast earnings of $1.52 a share for the fourth quarter. Revenue rose 7.3% to $164 billion. Comparable store sales gained 8.3%. All that pushed the company’s shares higher today with the stock up 0.59% at the close. But Walmart’s cautious guidance for the rest of 2023 helped send the general market lower.
Special Report: 7 AI Stocks to Own Now–with a couple of speculative picks to come on Thursday
You can understand the gold rush: One AI stock is up 105% (and 78% in the last month) in 2023 as of the February 17 close.
But are shares of that company, the software artificial company C3A (AI), the stock you want to own, or is this stock simply a beneficiary of hot money jumping on anything that sounds like artificial intelligence? As one market observer put it on Seeking Alpha recently, “The ticker is more valuable than the company.” This doesn’t mean that the current revolution in artificial intelligence isn’t real. And here I give you my 7 picks for investing in the latest AI revolution
Saturday Night Quarterback (on a Monday) says, For the week ahead, expect…
The big event of the week will be Friday’s report on the Personal Consumption Expenditures (PCE) inflation index. This, rather than the CPI, is the inflation measure that the Federal Reserve watches.
Please Watch My New YouTube Video: You Can Get 5% in a CD
This week’s Trend of the Week is: You Can Get 5% in a CD. Thank you, Jerome Powell and the Federal Reserve. Recently we’ve seen a huge rally in short-term yields. Right now, you can get a 5% CD from Capital One with a $0 minimum. As far as money market accounts go, you can get one from CFG Community Bank at 4.45% with a $1,000 minimum. For a fund, PIMCO Enhanced Short Maturity Active Exchange (NYSEARCA: MINT) is an actively managed fund that shifts among Treasury and corporate bonds and some other income assets, and currently, you could get more than 4.5%. One thing to think about in this environment is whether or not you want to hold a fund or buy bonds from TreasuryDirect, knowing that the debt ceiling crisis could cause Treasury prices to go down. If the Treasury prices do go down, bond funds will get hurt. You’ll be better off holding a Treasury bond to maturity. My suggestion is to buy the Treasury, if it rallies, you can sell, otherwise, keep it and get a guaranteed yield. For more on this, go to JubakPicks.com or JubakAM.com to find a complete, in-depth look at all these options.
The best way to get a 5% yield–my choices and their pluses and minuses
Remember the good ol’ days when Treasuries paid 0% or so and you had to give a bank your toaster to open an account, paying 0.01%? Right now you can find a CD paying 5%–and it doesn’t require locking up your money until the sun goes super-nova either.
Today, the 12-month Treasury closed with a yield of 4.99%. And the 6-month bill paid an even higher 5.02? You can find a bond ETF with an SEC yield of 4.63%. And even a money market fund paying 4.45%. What’s the case for stashing some of your cash in something “safe” as the stock market looks like it’s about to go into one of its periods of volatility? And what’s the best choice when you’ve suddenly got so many vehicles offering to pay you 5% or so? In today’s post, I’ll sketch out the pluses and minuses of these alternatives.
Just as Wall Street starts to get comfortable with more 25 basis-point interest rate increases, some on the Fed start talking about a return to 50
The comments come from two of the Federal Reserve’s most hawkish members on the need for higher interest rates to combat inflation, so the remarks aren’t exactly a surprise. Nonetheless, the language does push the envelope on thinking about where the Fed’s interest rate peak for this cycle of interest rate increases might be.
More on Wall Street see a Federal Reserve interest rate increase in June
Economists at Bank of America and Goldman Sachs now see the Federal Reserve extending its interest-rate increases through the June Fed meeting.
Is soaring credit card debt and rising defaults a threat to the consumer economy?
In the fourth quarter of 2022 credit card balances rose to a record high of $986 billion. The $61 billion increase from the third quarter was the biggest in data going back to 1999. The increase pushed Americans’ total credit card debt past the previous high of $927 billion, which was set in the fourth quarter of 2019, according to the New York Fed’s Household Debt and Credit Report. And it’s not just rising balances. Borrowers are missing payments too and delinquency rates have passed pre-pandemic norms.
Special Report: 7 AI Stocks to Own Now will go up on Monday
Sorry for the delay on my Special Report: “7 AI stocks to Own Now.” The Special Report will be posted Monday
Please Watch My New YouTube Video: Sell! Time to Take Some Rally Profits
Today’s topic is: Sell! Time to Take Some Rally Profits. Wednesday’s rally had all the earmarks of a blow-out-the-top rally. Though it wasn’t a huge jump, the markets went up on a goldilocks reaction to stronger-than-expected retail sales for January. The S&P was up 0.28% and the NASDAQ Composite was up 0.92%. The interesting part of this jump is the stocks that saw the big action – not Microsoft, Amazon, or some of the big stocks, but some more speculative things. One of them was Quantumscape Corporation (NYSE: QS), a tech company that is in the process of creating a solid-state lithium battery- though it’s not expected until 2025. They reported losing less money than they expected, and their stock shot up 32% in one day. Wayfair (NYSE: W) is up in the last month by about 58% and was up 10.4% yesterday. These are both examples of a big jump in 2023 and an even bigger jump on a blow-out day. These kinds of numbers are not sustainable, especially with more interest rate hikes from the Fed on the way and an impending debt ceiling crisis. This really is not likely to last too long. If you want to learn more about what I’m selling now, you can go to my latest post on JubakPicks.com and JubakAM.com for a detailed breakdown of what I’m selling and why.
Wednesday’s rally in the market’s most speculative stocks is the last straw for me: I said I’d be a seller into any post-Fed rally–but what specifically would I be selling? Here are the 12 stocks I’d sell now
The rally on February 15 sure looked like a speculative blowout of the kind that often signals a market top. For me, it was the last straw and I’m selling into the rally. This post tells you what I’m selling and how I arrived at these decisions. But first, a few words on Wednesday’s move.
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