The best hope for stocks is the one that’s least expected

Good morning!

‍The markets are down after China threw a spanner in things (more in a moment) but that’s an overrated concern for reasons we’ll talk about in a moment.

Meanwhile, here’s my take ahead of the opening bell with the fabulous Stuart Varney.

How I’m setting up for this week’s action, what I’m watching, and why, all things considered, I think we could have a pretty good week. Plus a few thoughts on stock buybacks and Apple in particular. (Watch)

Here’s my playbook.

Which earnings really matter this week

We’ll get earnings from WMT, TGT, LOW and HD this week. Walmart has already warned, but I think the numbers are going to shock a lot of folks who have already forgotten about that.

Nothing to do with retail. Investors will dissect the results but the numbers themselves are moot. It's a Keynesian beauty contest. What matters is how everybody thinks the Fed will react to the numbers based on what they believe the impact is or isn’t on the consumer.

Best case scenario: For stocks to keep growing consistently at single-digit rates while the Fed sorts out monetary policy and the Beltway Boffins sort out the supply chain.

I prefer another retailer entirely, BTW.

Why?

Because it’s neatly sidestepping the concerns plaguing WMT and likely to hammer TGT when it announces this week. Members of the One Bar Ahead™ Family have been on board since August last year.

Well done, everyone!

Be in to win, or you won’t … win!

China’s economic numbers stink

The funny thing about numbers like this is that “everybody” knew they were going to stink but people didn’t want to set up for that until the numbers actually came out. Hence, the selloff. (Read)

Now, of course, Wall Street’s bozo-squad – meaning the same folks who told you the world was going off the edge of a precipice last June and who missed the summer rally - have suddenly changed their tune saying the “bear market rally” won’t last etc. Sigh.

What you need to watch instead: CEOs must make decisions based on real economic conditions and real money, which means they’re a dramatically better input when it comes to gauging future market conditions. Hence my concerns about WMT and TGT in #1.

Apple at $180 clears the deck to $200

Apple may be the single most widely held, widely owned stock in the world. Every major fund, institution, and endowment owns it as do millions of investors. That means “as goes Apple, so will go the markets.”

I’d love to see it take out $180 this week because that would clear the deck to $200 in short order.

Most investors could double their holdings, yet still not have enough! The company remains on track to $1 trillion in revenue by 2030, a 3X growth path from where it is today.

2 reasons Beijing really wants the algos

China recently reported that 30 of that nation’s top tech giants including Alibaba, Taobao and Baidu among others have submitted brief breakdowns of their proprietary algorithms. Stuff like how Taobao recommends products in their home feed, Meituan predicts delivery times, and TikTok recommends videos. (Read)

People here will assume that it’s Beijing simply making a land grab but, as is often the case, they’re missing the point.

China wants the goods for two reasons: 1) control over the methods, not the outcome and 2) because the algorithms are probably 100X better than even the best Chinese spy stuff.

Why you should care: I see US regulators and European companies being forced into the same box over time. Especially as AI becomes more prominent. The EU is already considering building policy around this thought, especially when it comes to autonomous vehicles, deliveries, mental health, etc.

And in the uncomfortable thought department: If you’re worried about China, ask yourself why billions of people have voluntarily poured the most intimate details of their lives into Facebook, Twitter, Instagram, TikTok and more.

Call your doctor or your computer?

At the risk of sounding like a broken record, there’s more tech in medical tech than medical. And it’s going to get worse … err, better.

Tel Aviv-based Diagnostic Robotics just raised $45m to continue developing a suite of AI infrastructure that is statistically indistinguishable from human programmatic medical treatment. The company has already made significant inroads and some of the initial results are super-impressive.

• Reducing ER visits by 75%
• Care plans that are so good as to be statistically indistinguishable from human clinicians
• Decreasing unnecessary specialist visits and steering patients to relevant PCPs saves $170-250M annually

Do NOT miss this train!

We’ve been tracking this in One Bar Ahead™ for several years and are already ahead of the game with key investments. If you’d like to get on board, I’d be honoured. (Learn more)

Bottom Line

There are loads of people who will criticize you in the markets. Most have no idea of the price you paid to get there. And if you're on that journey, let it feed your progress!

You got this – I promise!

Keith