How to play the CPI and more

Good morning! 👋

Welcome to all the new 5 with Fitzers and newly minted One Bar Ahead Family Members who jumped on board last week. If you’re reading this but still haven’t subscribed, join our community of savvy, smart, and irreverent investors around the world. 👉 Upgrade to Paid

Now, let’s get after it!

The markets are trying to mount a comeback from last week’s rocky trading ahead of tomorrow’s CPI report. There’s a lot of buying as I type, after an opening bell lull.

Good!

Keep your emotions in check and your FOMO at bay. As I noted on FBN this morning ahead of the bell, the next 24 hours will be “gamesmanship of the highest order.”

Here’s my playbook!

How to play the CPI

Tomorrow’s CPI reading could send new shockwaves through the economy at a time when consumers are already reeling. CNBC reports that warehouses and distribution centers are pushing rates higher, with storage prices up 11% YoY. Container usage fees are poised to explode, according to Paul Brashier, VP of drayage and intermodal of ITS Logistics. (Read)

But that’s not the question on everyone’s mind.

How to play it… IS.

Here’s my take with the fabulous Ashley Webster who asked me about that this morning ahead of the opening bell. (Watch)

OBAers: The temptation, as is the case with most things, is to overthink the situation. Remember something we talk about frequently and keep it stupid simple. Profits will follow, and are—I’ll have a few thoughts in today’s update.

Imagine that: the US could pay Unka Elon for access

President Biden is reportedly weighing a subsidy that’ll convince Musk to open his network to the competition. (Read)

Doh.

The US government tries hard and talks a good game, but let’s remember that these are the same folks who think Amtrak, the Post Office, and the IRS are well-run institutions. 🙄

Elon Musk built his charging network and kept it private for one reason… because he anticipated this outcome. It’s worth billions with a “B”!

$300 within 12–24 months, depending on the Fed, of course.

Cathie Wood has it right on Big Tech layoffs

I don’t often agree with tech maven Cathie Wood, but in this case I do.

Big Tech layoffs are not a sign of weakness like the mainstream press would have you believe. Companies are simply shifting the composition of their workforce to reflect new—mostly still confidential—changes in how they do business, most of which are likely centered on AI. (Read)

And yes, this is an existential event for Google. Upgrade to Paid

BTW, I suggested a pairs trade, Long MSFT/Short GOOGL, on February 7. The spread was $159.92 but is now at $168.53 as I type this morning, a quick 5.4% if you’re into that sorta trading. U-rah!

JPM Ukrainef

JPM CEO Jamie Dimon is exceptionally good at inding opportunity—and the fact that JPM is already in talks with Ukraine about rebuilding is proof positive that’s the case. All via private capital, of course. (Read)

Yet another reason to own the stock, to my way of thinking.

Now the US won’t rule out aliens??!!

I don’t know what’s more interesting… the fact that the US has apparently now shot down a 4th object or that the military is refusing to rule out aliens. (Read)

Hmmm.

My guess is that the wreckage will have US chips on board that have either been purchased on the open market or stolen from China’s “partners”—many of whom just happen to be US high-tech manufacturers with plants there. The only question is how the aliens came to possess it… sigh.

China will naturally claim that we’re doing the same thing, but absent any real evidence, probably fabricate it or “CGI” it in an attempt to sway world opinion.

Either way, this is China’s Francis Gary Powers moment.

Defense stocks are clearly the play here. My favourite has been on an impressive run lately, especially since we’ve been following this development and China’s involvement since late 2021.

Bottom Line

I thought I was pretty clear this morning when I posted a motivational thought for the day on Twitter: The world’s most successful traders and investors buy when most are selling. And sell when most are buying.

But @NickTomasAZ one-upped me with an amazingly clear metaphor: Jump in the pool when everyone’s out. Jump back out when the last of the pack is cannon-balling back in.

Please join me with a well-deserved 5 with Fitz golf clap for Nick 💯

Now, and as always, let’s get out there and MAKE it a great day!

Keith 😊