Straight to your inbox from Keith himself!

*Trusted by tens of thousands of savvy investors and traders around the world every day

☕ The Fed doesn’t have a rates problem, it has a fiscal problem

Apr 10, 2024

Good morning! 👋

The CPI reading isn’t out for another hour yet, so I’ll keep it simple:

if the reading is stronger – it will be interpreted as a sign that the Fed is likely to hold rates and a precursor to some selling
If the reading is weaker – it will be interpreted as a sign that the Fed is likely to cut rates because its Magic 8-Ball is working and set up some buying

Either way...

Chaos creates opportunity.

Here’s my playbook.

1 – The Fed’s between a rock and a hard place

My colleagues and friends, Maria Bartiromo, Carol Roth and Adam Johnson and I were almost uniformly aligned this morning.

The Fed, said Carol, “is between a rock and a hard place.”

Yep.

Team Powell has a fiscal problem, not a rates/labor problem, I observed. (Watch)

Adam noted that the economy and, by proxy, the markets are right where they ought to be based on earnings projections, valuations and more.

Again, I agree.

Quality “must-have” names only, stick to the big themes.

Apple, for example. Not Peloton if that makes sense.

2 – The end of Boeing as we know it

Now a whistleblower says there are safety problems with 777s and 787s that could lead to the aircraft coming apart mid-air. (Read)

Naturally, Boeing says not so.

Public and professional trust is wearing thin.
What’s more, China views this as an opening of epic proportions

MyPOV: I didn’t make any friends a while back when I said we may be looking at the end of Boeing as we know it. I still think the stock may drop to $150ish or so. Now, I’ll throw another spanner in the works... I believe we see Chinese-made aircraft in non-US flagged European carrier fleets within the decade. I expect the first purchases of Comac C919s any day now... on top of the 40 units already reportedly ordered by a Tibetan airline.

Short or avoid Boeing; if you wanna be gutsy, putskies.

3 – Should you worry or is it more clickbait?

There's a new article out from Motley Fool, AI stocks that can plunge up to 86%. (Read)

Scary stuff, right?

That's by design.

Motley Fool’s writers want you to click and read along, then subscribe. Scores of other well-written, doubt-inducing articles will follow in the weeks ahead.

Chances are money managers won’t read a-one-of ‘em.

Here’s the thing.

All investing involves risk but not all risks are worth the investment.

Technically any stock could go to $0.

Ai just happens to be a hi-vis topic at the moment so there’s more eyeball potential.

The question you need to ask yourself as an investor is twofold.

First, is it probable?

The way I look at the situation, digitalization is one of the largest, single most powerful, and dynamic trends ever. Various studies suggest that we have created 90% or more of all the data in recorded human history within the last few years; there’s simply no way that's going back in the bottle. It might be possible, but that’s very different from probable.

Second, what are you going to do about it?

If you are an investor – and I mean really an investor – then you understand the opportunity that comes from a longer-term perspective.

Sure, stocks are going to be volatile but that’s different.

And, odds are, an opportunity.

4 – Intel won't eat Nvidia's lunch anytime soon

Intel made headlines yesterday when it announced that its new Gaudi 3 chip is faster, more powerful, and more efficient than Nvidia’s H100 GPU.

Maybe that’s true, maybe it isn’t.

Intel’s too late either way.

The real competition is Nvidia’s new chip, the Blackwell (which leaves the Gaudi 3 in the rearview mirror apparently).

Stick with strength.

Meanwhile, I’ve heard from scores of investors who promised six ways to Sunday that they’ll buy Nvidia (and other stocks) on a correction. Well, here’s your chance.

5 – Pandemic 2.0: Here comes human spillover

The world is still burned out from Covid which makes what I am about to say all that much more challenging. It’s only a matter of time before another pandemic and the fact that “we” don’t want to deal with it opens the door to an even nastier challenge.

Human spillover.

Reports are circulating that that there are 17 farms in 6 states reporting H5N1 infections in their cows. And at least one case of human infection.

Big pharma stocks have been beaten down something fierce and are the clear path forward if this gets serious. Upgrade to Paid

Just sayin’