How to play OPEC’s next nastygram
May 23, 2023Good morning! 👋
Futures are down as traders around the world watch for debt ceiling progress. Or, as is the case this morning, a lack thereof. 🤦♂️
No matter.
There is ALWAYS a way into the fight!
Sometimes that’s “security selection”—meaning which stocks you buy to control risk even as you pursue profits. Other times, it’s tactics.
Here’s my playbook.
Lowe’s biffs it big, cuts guidance
No surprise here after Home Depot’s flub.
Lowe’s has cut full-year sales forecasts as spending on DIY projects weakens. (Read)
Shares have dipped in the pre-market.
Millions of investors will be tempted to do some bottom fishing here, but the story isn’t going to change for a while.
Meanwhile, the path of least resistance is down.
Trading/Investing Idea: Putskies or at least bearish spreads. But if you’re jonesing to buy—and I get that you might be—consider letting the air out of the balloon and capitalizing on the increase in stock-specific volatility that’ll come with that. Selling Cash-Secured Puts at $180ish may be worth a punt.
Saudi oil minister tells oil speculators to watch out
This is potentially a serious spoiler.
Saudi oil minister Prince Abdulaziz bin Salman Al Saud told oil speculators to “watch out” earlier today during an energy panel in Doha, Qatar. (Read)
This comes on the heels of several production cuts and price spikes that have since been surrendered thanks to falling global consumption, banking shenanigans, and recessionary fears.
Reading between the lines, my guess is that OPEC+ et al. are sufficiently p-o’d that they want to make cuts stick for the simple reason that doing so means more money in their wallets.
I’m also thinking they’re going to shift payment to yuan as a way of sticking it to the West.
Why?
Global demand may exceed supply by as much as 2 billion barrels this year.
It’s ECON 101...
Increasing demand + reduced supply = higher prices.
Sign me up.
My favourite choice has returned 89.60% over the past 3 years versus 42.20% from the S&P 500 over the same time frame. Plus, it’s just acquired proven new reserves for about $7 a barrel. Upgrade to Paid
I LOVE this business! 😊
REIT investors beware, or you will be sorry
We’ve been talking about this for months, and people are finally waking up... commercial real estate is about to take a header.
JPM CEO Jamie Dimon says very diplomatically that, “there is always an off-sides.” (Read)
My take is considerably blunter.
The you-know-what will not be evenly distributed when it hits the fan.
OBA Implication: Many REIT investors who depend on the income those things kick off are gonna get shellacked when the commercial and Class A real estate they’re relying on fails. That’s too bad, especially since we’ve been way ahead of that in One Bar Ahead® and know that there is a considerably more stable, potentially far more profitable alternative.
Banks, especially the regionals, are also at considerable risk.
Keep it on the fairway!
Yelp… raiders or activists
Yelp, the social/crowd source rating app, is under pressure, just not like you’d think.
Shares were up in the pre-market.
Activist investor TCS Capital Management has confirmed reports that it’s built a stake of more than 4% in Yelp. Naturally, TCS is asking execs to explore strategic alternatives, including a sale.
Activist investors are kinda like that, which is why they use tactics like the open letter to the Yelp board of directors to stir up public opinion.
I’d sell into strength myself if I owned it, but I don’t.
That’s why I’m more inclined to look at the pop as an opportunity to harvest any short-term negative action when the bloom comes off the proverbial rose.
You?
Please watch this and tell me Elon won’t be able to solve self-driving cars
‘Nuff said.
Bottom Line
If you want to run with the big dogs, you’ve got to get off the porch.
As true in life as it is in the markets.
Woof!
Now let’s get out there and MAKE it a great day.
You got this.
Keith 😊
