☕ Underestimate China’s latest move at your own risk
Apr 09, 2024Good morning! 👋
I’ve got my hands full this morning as I work on an exciting new project closing in on launch so I’m up super-early to get this in your hands rather than leave you hanging today!
Here’s my playbook at 0300 hrs.
Might be a ☕☕☕ day.
1 – March inflation data on deck: focus!
This is so scripted that it almost defies the imagination.
The 10YR yield is down as traders await the data which:
- if stronger – will be interpreted as a sign that the Fed is likely to hold rates and a precursor to some selling
- If weaker – will be interpreted as a sign that the Fed is likely to cut because its Magic 8-Ball is working and set up some buying
Don’t hold your breath either way.
The Fed’s data is more cooked than a Christmas goose and about as useless as it gets.
Stay focused on what’s probable, not possible.
Like, oh I dunno, the fact that there’s almost never a bad time to buy great stocks (if you know what you’re looking for, why and using the right tactics, of course). Upgrade to Paid
2 – Goldfinger lives... in Hong Kong
Goldfinger’s a 1964 James Bond romp in which tycoon Auric Goldfinger smuggles gold around Europe by molding his Rolls Royce Phantom III body panels out of the shiny stuff.
Today, Hong Kong announced that they’ve made the largest smuggling bust ever... 146kg of gold worth an estimated $10M on a plane bound for Japan... disguised as air compressor parts. (Read)
Makes me wonder if a) money is so desperate to get out of China or b) that criminal elements in Japan are so desperate to have it in country that they’re willing to run the risk.
Either way, wow.
Also makes me wonder if it’s worth speculating on a gold pullback if for no other reason than desperation can be a powerful contrarian input.
Hmmm.
3 – Pfizer’s RSV ready for prime time?
Sure would be nice to see given how badly the stock has been beaten up.
The shot, known as Abrysvo, is presently approved for adults 60+ and expectant mothers but new data shows it could have broader application for adults 18-59 at risk of respiratory syncytial virus. (Read)
We are on the cusp of customizable medicine so keep that in mind.
4 – Oil prices up as cease fire hopes fall
I laid out the case for $100 a barrel oil last year when Russia/Ukraine accelerated, and again when Hamas/Israel erupted.
Brent’s trading at $90.66 a barrel this morning while WTI is $86.67. (Read)
My favorite oil company has returned just 0.18% over the past 12 months but logged more than 30 years of dividend growth and total returns of 74.84% over the past 3 years.
Makes sense.
Free cash flow is growing by more than 10% a year, a trend that I see continuing for at least the next few years. If you have this covered, excellent – well done – because most investors do not.
Keith’s Investing Tip: Oil has been a 4-letter word for the past few years, yet scientists estimate that it’ll take decades to shift away from petroleum-based products even if there were a perfectly fungible alternative today. Dinosaur juice rocks.
5 – That didn’t take long - China starts air service to Saudi Arabia
Saudi Arabia’s greenlighted China Southern Airlines passenger and cargo service starting April 16th from Beijing, Guangzhou, and Shenzhen to Riyadh. (Read)
So?
This comes at a time when US airlines are expecting a 32% drop in planned aircraft deliveries that are widely anticipated to negatively impact operations, crimp flight schedules and jack prices.
China, of course, views this as an opening of epic proportions.
The C919, as I noted recently, is a competitor to Boeing’s troubled 737 platform and it’s emerging at a time when the global market is increasingly up for grabs.
Most investors are totally underestimating the risk this poses to their airline stocks.
Bottom Line:
The markets are great at making you uncomfortable in the short-term if you’re in ‘em, and the best in the world at making uncomfortable longer-term if you’re not.
You got this – I promise - MAKE it a great day!
Keith 😊
