I’m glad I sold Ford but here’s one way to buy it back

Good morning! 👋  

Futures were showing some green after what is being interpreted as “tame” inflation data ahead of the Fed’s decision on Wednesday but have since shifted to red as prices fall for the big three indices. 

I’m more interested in the US 10YR Treasury which had dropped to 4.222% on the news. 

Here’s why. 

Powell can say any dang thing he wants but the cost of money (which is a reflection of risk, not return like people think) is the ultimate “tell” – meaning it’s going to hold the key. 

If the markets perceive that Jerome “JPow” Powell is done hiking rates, the cost of money will go down, leverage will go up and – you guessed it – big money traders will get on the gas. 

If that doesn't make sense, think about it this way. 

The lower the 10YR rate, the lower the “vig” – meaning the cost of money. That emboldens big institutions to take on more leverage as a way of boosting their returns so they do. And then, they go on a buying spree, usually starting with the biggest, most liquid stocks they can get their mitts on… big tech. 

My guess is that the Nasdaq may be green by the time you read this, in fact. 

You can fight this if you want – many investors do because they don’t know how the markets actually work – or you can beat ‘em at their own game. 

Here’s my playbook.  

1 – Oracle’s big miss 

This is unfortunate. 

The company reported fiscal Q2 results that missed expectations in 3 of 4 key segments. EPS though, meaning earnings per share, grew and “beat.” (Read) 

Normally I’d tell you to remain focused on the bigger picture here but not all big tech is the same. 

Oracle is one of those names that has carried the day for years but lately just can’t seem to get out of its own way. I see the stock struggling in much the same way that Intel has gone from being a must have darling to merely a player, and a second or third tier one at that. 

On a good note, Oracle also mentioned that it will be turning on 20 data centres connected with Microsoft’s Azure public cloud and that it has also picked up some business from Microsoft (which is views as a competitor). 

Oracle shares have returned 41% YTD but I’d rather own Microsoft which has returned 54.98% (and do). The S&P 500, by comparison, has turned in 21.31% according to Yahoo!Finance. 

MyPOV: Many investors are making a fundamental mistake in assuming that all tech is the same. Not so by a country mile. As much as I like CEO Larry Ellison and the company he built, I see it falling farther behind and, with it, the company’s stock performance. 

“Buy the best, ignore the rest!” 

2 – I’m glad I sold Ford but here’s one way to buy it back 

The rules of money are changing and that means, with it, so are many once stalwart household names. 

Ford’s another one. 

Like Oracle, it’s got some challenges, the most recent of which is an announcement that the company will be cutting F150 Lightning production in half. (Read) 

Not be a smart-ass but so much for the whole EV thing. 

Management insisted up, down and sideways that all things EV would be the way to go last March when it split the company into Ford Blue (for piston clankers) and Ford Model e (for EVs and connectivity). 

I think the numbers get a lot worse before they get better. What’s more, the UAW strike is gonna haunt shareholders for some time to come. 

Thinking a really aggressive LowBall Order at $5 might be interesting. 

Meanwhile, there are bigger, better fish to fry. <<Upgrade to Paid>>> 

3 – Ruh-roh: Federal jury rules Google’s app store is an illegal monopoly   

A Federal jury ruled unanimously against Google saying that the company’s practices harmed Epic Games which alleged antitrust behaviour. (Read) 

Most people will focus on the two companies involved – Google and Epic Games – but the real canary in the coal mine here is that the jury decided that Google has illegal ties between the Google Play apps store, Google Play Billing payment services and distribution. 

Now you might be wondering how Apple has escaped unscathed. 

Epic lost its fight with Apple a few years back because the judge determined that the fight had nothing to do with the apps. This was a trial by jury and one that involved secret revenue sharing deals Google execs viewed as a way to keep competitors down. 

MyPOV: People are going to make hay from the ruling saying that this will negatively impact apps stores and the companies that run ‘em; I don’t think so. Google slipped up and got careless because of secret agreements and a trial by jury. Apple, Microsoft, and others appear to have sidestepped that, at least for now anyway. 

4 – Nacho-flavoured booze  

Wine and whiskey can make a very compelling choice when it comes to alternative assets. 

But this just sounds….  

Gross. 

PepsiCo has partnered with Empirical to create a – get this – Nacho Cheese Dorito flavored alcoholic beverages. Reportedly there is a 2(¾) oz bag in every bottle of the alcoholic beverage. (READ) 

Doritos reportedly has no current plans to extend the collaboration once the run is sold out, but Empirical’s CEO says that there is a “very strong possibility we will renew.” 

Seems to me that the more profitable partnership would have been with some sort of cannabis company but what do I know??!! 

At the risk of dating myself, where’s Spicoli when you need him! 

5 –  The real AI market is healthcare  

People are focused on AI as a tech offering but I’ve long maintained the real mojo will be in medical devices and technology. In fact, the medical AI market may be 3-5X the anticipated tech market itself. 

Stuff like this is why. 

Fox is reporting that doctors are using AI-driven devices to detect seizure activity in patients.  

Previous state of the art tech like EEGs took anywhere from 15 minutes to 60 hours of monitoring. New tech from Ceribell takes as little as 15 minutes. (Read) 

According to Roop Reddy of “Content Detector” the AI-driven healthcare market may be USD $187.95 billion by 2030. I think that’s low and $200B+ is far more likely. 

It’s hard to find winners, though. 

AI-companies are a dime a dozen; most will not survive.  

Seems to me the bigger and more profitable bet is to run with the big dogs who have the fortress like balance sheets, scope, and scale. 

Bottom Line  

Most investors fail because they lack the long-term vision to get past short-term chaos. 

As always, let’s MAKE it a great day.  

You got this – I promise! 

Keith 😊