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Recession or not, I can see this company’s shares 26%+ higher

Mar 24, 2023

Good morning! 👋

I wish I could tell you that today’s selloff was a surprise, but you know that’s not true if you’ve been reading along for any length of time.

The banking crisis is not over and won’t be for a while.

There’s simply too much counterparty risk and too much juice in the system.

Here’s my playbook.

Morgen! Hier kommt die Eurobankenkrise V2

Imagine that.

Deutsche Bank shares hit the skids, sliding 14% as the cost of insuring against its default.

For most people, this is where the thinking stops.

For big traders, this is where the game begins.

There’s blood in the water now, which means the sharks won’t be far behind.

Big traders may walk away from the bid as a way of testing the German government’s willingness to back DB. The goal will be to press hard and fast to the downside while simultaneously clipping DB stockholders, bond holders, and anybody else caught offsides.

Most retail investors won’t be equipped to play the game, but they will feel the repercussions as ETFs, mutual funds, and the likes get clipped.

I don’t know about you, but I love having my hedges and a few putskies at work!

Which stocks I like right now w/ Charles Payne

I stopped by for a conversation with the fantabulous Charles Payne yesterday who asked me what stocks I like and why. Here’s why I’m moving up the value chain and which names look particularly attractive to me at the moment. (Watch)

My alter ego, Keith “Dividends” Fitz made an appearance, BTW. 😊

Why I can see MSFT 26% higher or more

The UK’s Competition and Markets Authority dropped a few of its concerns about the Microsoft/Activision tie-up, saying that it no longer believes the deal would lead to a substantial lessening of competition in the console games market. (Read) Sadly, and predictably, US regulators still want to grind an axe and play politics, but that’s a story for another time.

What’s far more likely is that UK regulators have realized what we’ve known all along.

Big Tech is big for a reason.

There is plenty of competition, and the markets will figure that out on their own.

I can easily see $350 a share 24–36 months from now, an implied 26.56% higher than where it’s trading as I type, at $276.55 a share.

Long-dated calls (LEAPs) could be a super alternative, too. Upgrade to Paid

MSFT ticks all the boxes.

Gundlach agrees

I told you in January that the Fed would likely find itself backed into a corner by midyear and be forced to cut rates. The mainstream media didn’t buy it, nor did Fed lackeys. Heck, nor did most people who thought all three of my remaining brain cells had short circuited!

That narrative is steadily changing.

The latest guest to join our party is none other than billionaire investor and DoubleLine Capital founder Jeffrey Gundlach. He tweeted recently that he believes Powell will cut rates “substantially” soon. (Read)

Trade idea: This’ll be tough to time, but one trade to keep an eye on is the tech explosion that will happen when Team Powell blinks and trillions come rushing off the sidelines in an instant. People tell me all the time they’ll wait for confirmation—but computerization, indexing, and modern market mechanics make that wishful thinking. These days, you have to be in the fight before it begins, or you will miss most of the run.

Meanwhile, I can see selling deep in-the-money covered calls or even buying bullish calendar spreads on the S&P 500. Volatility will crater at the same time, so it’s important to think that through, too.

Musk to car salesmen: Hit the road, Jack

You’d think people would have learned by now not to bet against Elon Musk, but they just can’t help themselves.

I’m grinning ear to ear.

Now he’s done it again by launching a remote test drive program for new car buyers. (Read)

Think about it for a second.

You make an appointment to test drive the Tesla of your choice and retrieve the car from a parking lot not connected to a dealership, most likely an electric charging station.

No showrooms, no slimy blowout promotions, no high-pressure sales tactics.