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☕ Palantir, you ain’t seen nothin’ yet!

Sep 09, 2024

Howdy! 👋

The markets are ripping higher in early going as I type. Whether or not they’ll stay that way is another question entirely. They could, and easily at that.

What happens next depends on two things.

First, how much leverage remains in the system.

And second, whether big money traders are done scaring the pants off individual investors.

Both of which I mentioned specifically in last night’s thoughts from the garden. (Watch)

The key to beating Wall Street at its own game is deceptively simple and comes down to three principles you hear me talk about frequently:

Play your game, not theirs

Buy the best, ignore the rest

Use tactics that take away their advantage

Here’s my playbook.

1 – Apple's big reveal

Click here for a few of the hottest ideas.

I particularly like #3.

You? 😊

2 – Palantir: you ain't seen nothin’ yet!

Palantir will be included in the S&P 500 ahead of the opening bell on September 23rd. (Read)

Shares are +10.98% on the day as I type.

What’s more, shares have returned 96.88% YTD and 120.91% over the past 12 months.

Hooyah!

Technically speaking, the game will be on now so be prepared.

Institutional interest has been rising for some time exactly as I told you it would but there are still a lot of players offsides who will want in. Expect higher volatility in the weeks ahead as they try to shake out the weak hands.

Patience will be your friend, uncertainty your enemy.

$50.

Keith’s Investing Tip: Millions of investors wait for confirmation (like the S&P 500 inclusion) before buying which means they’re just now figuring out at $33 what I shared with you at $6-7 and repeatedly during the course of what is now a ~+450% ride. Companies like Palantir are rarer than hen’s teeth which is why, when you find one, that you want to latch on as early in the game as possible using tactics that ensure you can stay “in to win.”

My data, btw, suggests there are another 5-10 “Palantirs” out there at the moment in various stages of maturity. If that’s if interest, you know where to find me. OBAers already have “the list.”

3 – Big Lots bites the dust

It's a common tale.

Management didn’t recognize that the earth shifted under their feet (Covid, inflation) and doesn’t have the chops to survive... so it’s selling to Nexus Capital while initiating Chapter 11 proceedings. (Read) The stock was $70 in March 2021, last at $0.50 - a –99.286% decline. 🤦‍♂️

Contrast that with my long-time big box fav, Costco which just quietly rolled out another game-changing feature for mobile app users. (Read) Shares have returned 181.36% over the same time frame.

4 – No, the “carry trade unwind” narrative still doesn’t fit

Forex Strategist Kathy Lien suggests the risk of another sell off as the Yen continues to strengthen against the dollar if there’s another carry trade unwind. (Read)

Lien noted that she believes, “that there could be some periods of quite aggressive sell-offs in stocks this month, especially as the U.S. economy is moving in the direction that many of these central bankers fear.”

Carry trades, in case you are not familiar with the term, refer to a practice in which sophisticated investors borrow in a currency with low rates (aka “cheaper money”) like the Yen than invest that in higher yielding assets (with bigger profit potential) elsewhere like the USD.

Here’s the thing.

The narrative didn’t fit the first time around and still doesn’t fit this time.

Lien is super smart but her attribution is off base, imho.

Japanese financials had a disorderly unwind which is why most of the selling was concentrated in Japan, Asia, and US futures particularly during the overnight markets before bleeding into the early August rout (that I told you would likely be a speed bump).

Calling it a “carry trade unwind” makes for an easy explanation, but that’s about it.

If the carry trade phenomenon were true, the correlation between the MSCI Kokusai (which measures all global stocks outside Japan) would be substantial – probably at or close to “1.”

It’s not.

FactSet data as of 8/12/24 show the correlations between net JPY short positions and weekly S&P 500 price returns in USD and between weekly changes in net JPY short positions and weekly MSCI Kokusai price returns in local currencies are just 0.02 and 0.03 respectively from 6/16/2006 to 8/9/24.

You’ll have better luck finding the Loch Ness Monster than you will an actual carry trade unwind.

Keith’s Quick Tip: Data, not narrative!

5 – Porsche and Bosch back EV battery recycling facility

I am not sure what to make of this just yet but my guts and nearly 45 years of experience in global markets are telling me this is a lot bigger deal than you’d think. (Read)

On the surface, it appears to be clearly aimed at the EV industry which makes sense as the EU continues to press forward. However, I can’t help but wonder if there’s a bigger shift ahead... one beyond EVs.

More to come!