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What an amazing time to be an investor!

Jul 18, 2023

Good morning! 👋

Some big names on the earnings calendar today.

Not to get mushy or anything, but I love what I do, which is why I can’t wait to charge into the office the moment I open my eyes, even at 0245!

Thanks for a) giving me a chance to do something I love and b) reading along! 😊

Here’s my playbook.

The next rate hike could be the last of the Fed’s follies

CNBC reports that skepticism lingers as “soft landing” data mounts. (Read)

Economists would have you believe that this is a tough call.

I maintain it’s a pretty simple equation.

The markets, as I have noted for months, are far more likely to be headed out of a recession even though legions of economists playing with busted models never called it that:

Q2 growth is tracking at nearly 2%+ while consumer sentiment continues to rebound at a time when unemployment is falling to only 3.6%.
The biggie, of course, is inflation, which is rising at “just” 3% year over year according to the latest CPI data. Down from 9%, mind you. (Read)
Meanwhile, the S&P 500 is flirting with new highs, having risen 29.5% off last October’s lows.

I think there’s a good case to be made that the next 25bp hike may be the last of the Fed’s follies.

Invest accordingly!

What most folks miss about volatility

I’m hearing from loads of investors right now who are scared that the “other shoe could drop” or that there will be more volatility ahead. That’s entirely understandable, but…

They’re missing something big.

Volatility these days has almost nothing to do with the underlying business case for owning the world’s best stocks. It’s a construct cooked up by mainstream media, scores of super-aggressive clickbait artists masquerading as financial journalists, and big traders who have a vested interest in separating you from your money by rigging the game in their own interest.

Don’t fall for it.

REMEMBER something we talk about frequently: The volatility many people fear is exactly what creates the opportunity for profit. So, sharpen your pencil and break out your “buy list” just in case there is some!

Big tech especially.

It’s the best start to any year in 40 years.

Apple has tacked on nearly 50%; Tesla, Shopify, and others I talk about regularly with the One Bar Ahead® Family have more than doubled YTD. Heck, Nvidia has tacked on 218% all by itself.

What an amazing time to be an investor!

Why Gensler is right about AI

Speaking yesterday at the National Press Club, SEC Chair Gary Gensler had some pointed words—and I’m paraphrasing here—about AI being used for the benefit of the AI systems at the expense of individual investors. (Read)

He’s on target.

Gensler observed (and I agree), “AI may heighten financial fragility as it could promote herding with all the individual actors, the downstream applications making similar decisions because they’re getting some signal from the base model or data aggregator.”

Wall Street is already using AI to rig the system, which is why focusing on the outcomes that it creates for investors is absolutely the right course of action rather than getting caught up in the technology itself.

MSFT, btw, is still “head of class.”

Lockheed Martin = the most important earnings today

Defense is at the very top of my list of things to pay attention to today.

LMT reports before the bell, which means the results may be out by the time you read this. I’m going to be watching three things very closely as I read between the lines:

Backlog
Production sustainability (LMT banks most of its money from production and ongoing maintenance rather than just selling defense products)
NGAD (Next generation air dominance, including hypersonic development and defense)

The S&P 500 has tacked on roughly 18% YTD, but LMT has lost -2.38% over the same time frame.

Me thinks that it’s time to do some shopping.

LowBall orders or Selling Cash Secured Puts could be very attractive ways to add shares today, particularly if the volatility I’ve just mentioned rises as a function of earnings-driven headlines.

Hooyah!