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HD: Buy or bail?

May 16, 2023

Good morning! 👋

Home Depot just biffed it badly—and, yep, debt ceiling fears are roiling markets.

Yellen says, “Waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.”

For once, I agree with her.

Here’s my playbook.

Home Depot worst revenue miss in 20 years

I told you during an appearance on Monday morning that I’d be watching retail earnings very closely because of what they’ll tell us about the state of the economy and consumers in particular.

The first shoe has dropped.

Home Depot just posted the worst revenue miss in 20 years, citing consumers who are delaying purchases to cope with inflation and generally poor economic conditions. (Read)

They may as well have said, “The dog ate my homework.”

Two things...

A. Management didn’t properly gauge the economy or prepare for it; and,

B. Consumers are STILL pinched no matter what the buffoons inside the Beltway say and what the Fed’s economically illiterate PhDs happen to think.

Investing takeaway: The markets are all about psychology right now, so information like this is gonna weigh on the major indices.

Use it to your advantage and get your pencil ready to buy big names as they’re put on sale. And, of course, keep your hedges in place because anybody playing just one side of the markets is missing half the profit potential!

And on a related note...

I never owned the stock in the first place but know that there are a good many who do.

Chances are they’re wondering, “Buy or bail?”

Walmart’s the better bet, but I’d rather own another major retailer tied to “must have” goods and services rather than discretionary spending. And do.

OBAers, you’ve got this covered if you’re following along as directed!

More evidence China protects its own

Alibaba, Tencent, and other companies are in the headlines as foreign investors tippy-toe back into the country.

Be careful.

China has a long history of smiling to your face, then punching you in the back of the head when you’re not looking.

Case in point, China’s regulators have forced Futu Holdings and Up Fintech Holdings to remove their apps from online stores in China’s mainland... in response to what Chinese regulators are calling “rectification requirements.” (Read)

That’s bull feathers.

Several Hong Kong banks offer similar capabilities, but just coincidentally (wink, wink), their apps are not as popular. Moreover, both apps offered Chinese consumers the ability to invest in US stocks while making cross-border transactions.

China wants to protect its own, pure and simple.

Remember: It’s better to invest because of China than in China.

Influencer creates AI “girlfriend” version of herself & makes $70k... in 1 week

Caryn Marjorie, a 23-year-old Snapchat influencer, has used ChatGPT-4 to create an AI version of herself to comfort lonely male internet users and has raked in $70,000 in her first week. (Read) Her prognosis, according to the article: “as much as $5 million a month once fully up and running.”

I’ve said it before, and I’ll say it again.

AI may be the single largest investment trend in human history—and you better take a seat at the table now if you want to be among the winners.

Most investors are still trying to approach this as a matter of diversification, but they’re going to get left behind. Thinking thematically is what you want to do to ensure you have enough concentration.

We’ve already got several companies benefiting from the shift. Upgrade to Paid

EU crackdown on crypto

The EU is launching new, stricter regulations on cryptocurrencies in order to avoid a rerun of the FTX debacle. (Read)

Good?!?!

Depends on your perspective.

Starting from January 2026, Europeans involved in crypto transactions will be stripped of their anonymity, no matter whether they’re transferring peanuts or billions. Senders and recipients of crypto assets must provide their name along with other presumably identifiable information.

The move cuts to the core of something we’ve talked about for a while.

Central banks across the world are gearing up to launch their own Central Bank Digital Currencies (CBDCs). Despite the dismissive attitude in public, most view cryptocurrencies like bitcoin and Ethereum as formidable adversaries, and their growing panic is evident, which is why they will stop at nothing to eliminate the competition.

I’m glad I got out.

I suggest you consider doing the same or at least hedge your bets.

The USD isn’t perfect by any stretch of the imagination, but there are precious few alternatives now... which is exactly what the world’s power brokers want.

Yeesh. 🤦‍♂️

Buy this bank, not that bank

Wells Fargo agreed to pay $1 billion to settle a lawsuit. The bank is being accused of defrauding shareholders about its progress in recovering from a series of scandals over its treatment of customers. (Read)

Since 2018, WFC has had to operate with consent orders from the Federal Reserve and two other financial regulators requiring that it improve governance and oversight.

Since then, the stock has returned -25.18%. Meanwhile, JPMorgan (JPM) has returned +48.11%, according to Eikon.

I know which bank I want to own going forward... and do!

I hope I’m smart enough to buy more.