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Why you need dinosaur juice even if you want EVs

Jun 29, 2023

Good morning! 👋

Negative nellies are doing their best to hang on, but it’s super important to maintain the perspective that we talk about frequently... when in doubt, zoom out!

The markets are very close to pulling off a hat trick of epic proportions:

The S&P 500 has tacked on 14% YTD.
The Nazzy is up a jaw-dropping 30% and on the cusp of achieving the best first half since 1993.

Naturally, the permabears are cautioning about 2nd half volatility, but what they fail to grasp in their click-bait-induced frenzy is that volatility cuts both ways.

I think there’s a good case to be made that tech—Big Tech in particular—may rip 10–15% higher after earnings, a sentiment my colleague, the fabulous Dan Ives of Wedbush, shares, BTW. (Watch).

Here’s my playbook.

Bank stress tests: I call bull feathers

Bank stocks were up in premarket trading on reports that banks have passed the Fed’s stress tests with flying colors. (Read)

Reuters reports that “the average capital ratio for the 23 banks was [even] higher than last year when the central bank had reviewed 34 lenders against a slightly easier scenario.”

Apparently, none of the whiz-bang PhDs at the Fed have read the children’s parable by Danish author Hans Christian Andersen, The Emperor’s New Clothes.

According to The Street, the move higher is being led—or at least was earlier—by two of the powerhouses, Morgan Stanley (MS) and my favorite, JPMorgan (JPM). (Read)

Investing Takeaway: People constantly hunt around the edges because they think buying small companies or small-cap stocks is the way to make big bucks. That was true for a long time, but no longer. These days, you want to “buy the best, ignore the rest.” Not for nothing, but banking on Jamie Dimon (pun absolutely intended) is a lot like banking on Elon Musk... both get the job done, whether you like ‘em or not.

Chaos continues at US airports

Thousands of 4th of July holiday travelers are stranded at US airports, with nowhere to go and “running out of money and options.” (Read)

According to the latest numbers, 30,000 flights have been delayed and 2,000 canceled... and it keeps getting worse: Another 52,500 flights are scheduled for today, which reportedly will be “the busiest day of the holiday weekend.”

This is why I’m staying away from airline stocks these days—incompetence, mismanagement, and bad infrastructure all play a role in the kind of drama that is playing out in front of our eyes right now.

Personally, I’m also trying to curb my flying as much as possible. Not for nothing, but motorcycles are a LOT more fun—so there is that. 😊

Why you need dinosaur juice even if you want EVs

Asia needs to reach net zero carbon before the rest of the world can do so, says Tengku Muhammad Taufik, who happens to know what he’s talking about because he’s the CEO of Malaysia’s state-owned company Petronas.

He also said, “Encompassing fossil fuels as part of the energy base, at least for the first half of the century, is needed if the world wants to move itself away from energy shocks.” (Read)

I agree.

We’re going to need dinosaur juice a lot longer than people realize—which, of course, means that smart investors will want to make sure they’ve got plenty in their portfolios. At least IMHO.

Meanwhile, my fav energy stock is up 16.9% from its 52-week low and down -18.3% from its 52-week high... what I call “Goldilocks territory” for stocks I want to own. Upgrade to Paid And I love the dividend, too!

Attention on deck: Powell’s inbound

The markets want to run higher and, just like clockwork, Powell throws a spanner in the mix and mucks it up by warning of tighter monetary policy ahead. Options include more rate hikes at consecutive meetings, changes in language, and other buffoonery.

He is still as wrong about labour and rates as he was about transitory.

The S&P 500 is up more than 6% this quarter, which, if it finishes like I think it will tomorrow, puts it on track for the 3rd positive period in a row. Q1 GDP data was just revised from 1.3% reported to 2%.

I called this last October and was very fortunate to get it right when I said that a) the markets were ready to run, and b) that Big Tech would return to the head of the class.

Contrary to what Team Powell wants us to believe, growth really is good.

Not greed.

Growth!

And yes, I know that sounds like Gordon Gekko, which, if you’re a certain vintage like I am, is a reference you will totally get.

Key Takeaway and Unpopular Thought: There is still a ginormous amount of money on the sidelines playing catch-up. FOMO won’t be far behind, which means that everybody already “in to win” could benefit from a nice tailwind.

Anybody who’s used a PDF may want to take notice

I don’t own Adobe (ADBE), but I’m starting to think about it.

The company is best known for creative programs like Photoshop and Illustrator, but chances are good that you’ve used their products if you’ve ever opened a PDF. They were one of the first to shift to a subscription-based model and have just announced an AI-driven creative engine.

I’m not exactly sure yet how that translates to the top line, but it seems to me anybody in the creative business who needs to meet deadlines better, faster, and more profitably than ever before could benefit.

Hmmm.