- Sugar, sugar: More to stocks than stimulus
- Robert Williams on investors “paying a premium”
- Social media inexplicably kicks butt and takes names
- Key stocks… ahead of earnings season
- (Hmm) Spitballing about choppy Bitcoin
- A reader gives Glubb (and The 5) a drubbing… Another says: Free Assange and Snowden… And more!
“I don’t believe the Federal Reserve alone explains record-breaking stock prices,” says our resident futurist Robert Williams.
We pick up our team’s 2021 forecasts where we left off with Nomi Prins yesterday. It is true, as she asserts, the Fed’s “dark money” is pumping up stocks.
But Bob says something else is equally true: “We’re moving away from the analog world forged by the baby boomer generation… a world epitomized by stacks of photo albums at your parents’ house, record players, answering machines and checkbooks… and we’re moving toward a fully digital world.”
Result? “The soaring stock market is telling us that investors are willing to pay a premium to ensure their portfolios are positioned for this transformative shift,” says Bob.
He sees Dow 50,000 as a real possibility. It’s about 31,000 now. (By the way, the Dow-Bitcoin parity he predicted in our virtual pages on Dec. 29? It arrived within days.)
Maybe Dow 50k won’t be a 2021 thing… but he ventures it won’t be a 2030 thing, either.
But let’s stick with our 2021 outlook here. Bob sees four sectors ripe for the picking this year…
Begin with “HealthTech.” Bob believes the launch of Amazon Pharmacy last November is just an opening gambit by the Bezos behemoth.
“Amazon,” he predicts, “will launch a comprehensive health care offering to its 150 million Prime members — code name ‘AmazonCare’ — to directly compete against the largest health care providers in the United States.
“Amazon’s Alexa personal assistant is already certified to provide sensitive medical information under the Health Insurance Portability and Accountability Act (HIPAA).” It’s able to answer about 80,000 medical questions.
The takeaway: “Any company whose product removes friction from America’s cumbersome medical system — especially in the areas of telehealth, robotics, biometrics and AI-assisted drug discovery — will flourish.”
Up next: “Fintech companies will make a historic leap into mainstream finance,” Bob ventures.
They’ll obtain federal bank charters, which gives them direct access to payment systems. They’ll offer FDIC-insured services. They’ll even borrow through the Fed’s discount window.
And why not? “Younger Americans are unlikely to choose a bank based on its physical location and even less likely to buy goods from brick-and-mortar retailers, which continues to fuel the rise of digital banks and online payment processors.
“Many key areas of fintech are enjoying annual growth in excess of 25%, signaling that the industry is prime for another banner year in 2021 — especially for companies developing blockchain, mobile payments and AI-enhanced risk-management technologies.”
Then there’s lidar. “Lidar technology gives any device — i.e., automobiles, drones, robots, iGlasses, smartphones, etc. — the gift of 360-degree sight,” says Bob. He believes it will be the most important technology of the 2020s.
“Not only is lidar a breakthrough for the ages, but lidar’s useful applications are virtually limitless. In 2021 alone, lidar has the potential to disrupt the robotics, health care, transportation, video game, augmented-reality, smartphone, indoor mapping, retail, mineral exploration and defense technology markets.”
And talk about bending the cost curve: A lidar unit’s typical price has plunged in recent years from $80,000 to… a little over $1,500.
Finally, battery tech: “Advancements in battery technology represent an existential threat to traditional energy companies,” says Bob.
“In order to survive, the world’s largest oil players — Exxon Mobil, BP, Chevron, Valero — will transform themselves into ‘technology’ companies with deep interests (and investments) in renewable energy.
“Demand for battery technologies from the automobile industry alone is expected to quadruple by 2025… and battery demand from the shipping industry could increase 15 times over.” And don’t forget the political tailwinds for “green” energy now.
There’s a name we can share here without doing a disservice to Bob’s paying subscribers: Tesla.
Is it volatile? Yes. Is it pricey? Yes. But recall what Bob said above about investors willing to pay a premium to get a piece of the cutting edge. And it’s not just TSLA’s battery ambitions. As Bob told us last year, Tesla aims to dominate self-driving technology in the same way Amazon set out to dominate online retail a generation ago.
[Ed. note: If you’re looking for ways to play these trends with the most explosive profit potential, Bob directs your attention to a hidden subniche of the stock market.
It gets next to no media coverage… but it’s where you find some of the fastest-moving stocks we’ve ever seen.
Bob clues you in right here. His exclusive presentation is available to watch from now through midnight tonight.]
The major U.S. stock indexes are stabilizing after they took a spill from record highs yesterday.
At last check, the Nasdaq was up a third of a percent at 13,079. The Dow and the S&P are both up about two-tenths of a percent. Gold is treading water at $1,843.
Not sharing in the modest stock rally today are Facebook and Twitter. Both are adding to yesterday’s losses after they “deplatformed” the sitting U.S. president Friday night in the name of “preventing offline harm.”
At least for the moment, the Street doesn’t like that the two companies are shedding users left and right — some with their accounts getting nuked, others abandoning the platforms in outrage. (Our macroeconomics maven Jim Rickards figures he’s lost about 8,000 followers on Twitter.)
What’s more, it appears the purge is not limited to MAGA Nation…
Meanwhile, Twitter has suspended the account of Red Scare — a heterodox left-of-center podcast whose hosts supported Bernie Sanders last year. Again, no explanation.
At this rate, the only acceptable opinions on social media come Inauguration Day will be those held by the NPR tote-bag crowd…
“I expect a lot of big moves for a handful of key stocks this earnings season,” says our Zach Scheidt.
Earnings season gets underway later this week. “And if you’re invested before the news hits, you can benefit when a positive report sends a stock surging higher.”
If you have some idle cash sitting around, Zach has three suggestions where you could put it to work…
- Delta Airlines Inc. (DAL). “If Delta’s management team tells us that travelers are already starting to book more flights for the year ahead, the news could spark a new sense of optimism on Wall Street and send shares surging higher.” DAL reports before the opening bell Thursday
- J.B. Hunt Transport Services Inc. (JBHT). J.B. Hunt stands to gain from the rebound in manufacturing. “I expect the management team to confirm that shipping volumes are picking up,” Zach tells us. “And hopefully, they’ll provide some color about customer reservations in the months ahead.” JBHT reports a week from today
- Citigroup Inc. (C). “Rising interest rates are helpful for banks,” Zach reminds us, “allowing them to charge higher rates for loans.” As noted here last week, the yield on a 10-year Treasury is back above 1% for the first time since March. Citi reports before the market opens Friday.
Just spitballing here, but the cryptocurrency sell-off in recent days might have to do with the regulatory hammer looming overhead.
Late last year, the Treasury Department’s Financial Crimes Enforcement Network published a proposed rule. It would force custodians and exchanges to collect and report data on crypto transactions greater than $3,000. Warrant? The feds say they don’t need no stinkin’ warrant.
The rule would apply to all crypto wallets — even if they’re “self-hosted” outside financial institutions or held outside the United States. As always, the justification is preventing money laundering and such.
FinCEN truncated the public comment period from the usual 60 days to only 15 — a span that mostly fell over the holidays. Still, about 7,000 comments poured in, many accusing the feds of “midnight rulemaking” by the soon-to-depart Trump Treasury Department.
“Everyone who touches crypto realizes that this rule is substantively flawed,” says Gus Coldebella of the crypto venture capital firm Paradigm to the Financial Times.
It wouldn’t surprise us at all if casual crypto enthusiasts learned about the proposal only after the public comment period was over a week ago Monday — and they sold in a panic. Bitcoin peaked on Friday near $42,000. The big fall came Sunday and yesterday.
As we write this morning, it goes for $35,352.
“Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation.”
So declares Bill Dunkelberg, chief economist at the National Federation of Independent Business. He’s referring to the NFIB’s monthly optimism index — which is in free fall.
At 95.9, the number tumbled hard in December to its lowest in four years — apart from the initial corona-crash last spring.
On the “single most important problem” portion of the survey, taxes have vaulted into a first-place tie with finding qualified help. Both are cited by 21% of survey respondents.
To the mailbag, and an oddly delayed reaction to our post-riot reckonings last Thursday…
“Regarding the ‘250-year empire cycle’: IMO, America can’t be thought to be an empire prior to 1945, if then. If it was, it was certainly not a dominant one. So according to Mr. Glubb’s estimate we should have about 175 years to go.
“I doubt we have that long, what with the idiocy gaining political power here and the self-service holding precedence in corporate boardrooms, but I gather you’ll be most disappointed at the extended expiration date.
“Yes, the bogus ‘stolen election’ narrative is the hill they chose to die/rally on. Why, wouldn’t that be the same bogus stolen election narrative that you guys have been rallying on for two months? Why, yes, I do believe it is. But now, in your infinite cynicism (being only critics, after all), all your previous repetition and perpetuation of unsupported myth? All forgotten. All’s forgiven. Sniff. Silly people. Where do they conceive of such foolish ideas. Oh, my. What are the markets doing, dear?
“I guess they’re rising, due to Fed printing, no doubt. Wouldn’t that be the Fed printing that Donald Trump railed over Jerome Powell about starting back in early summer of 2019? You know, the man you’ve been trying to support in his efforts to overthrow the election, apparently so that he could… uh, confront the rioters with law and order? Uh, force monetary policy back into a box? Uh, cut taxes for the wealthiest? Uh, confront deficit spending? Uh… what was it you guys were saying you wanted? I get so confused.
“Finally, there weren’t 17,000 Union deaths during the Chancellorsville campaign. Actually, there were fewer than 1,700. I guess you meant casualties. But if you can’t get that right, what can you?”
The 5: We’re not sure where you get off thinking we were attached to the bogus stolen-election narrative. As early as Nov. 20, we were comparing the “stop the steal” effort to the Dems’ ludicrous 2016 accusations of “Russian government interference.”
Also, more than once during his term we savored the irony of Donald Trump imploring the Fed to continue blowing up the “big fat ugly bubble” he warned about in 2016.
But our pox-on-all-of-’em approach doesn’t comport with the binary with-us-or-against-us spirit of the times, so people simply see what they want to see. Que sera sera.
Meanwhile, every time we bring up Glubb’s 250-year empire cycle, someone questions the starting point at 1776. It’s an interesting parlor game. The Truman Doctrine in 1947? The Spanish-American War in 1898?
We daresay there’s a case for 1787. That’s when the Hamiltonians got their way and the 13 “free and independent states” described in the Declaration were to be subsumed into a European style “fiscal-military state” — to borrow a term from the Revolution historian Gordon S. Wood. (In that sense, the Constitutional Convention is far more deserving of the “coup” moniker than the farce last week.) Even then there were visions of an empire that would be at least continental in scale.
Finally, we stand corrected on the Battle of Chancellorsville — which we quoted from our source material. Goes to show you can’t always believe what you read, even in dead-tree books published two decades ago.
“I hope this doesn’t offend you but God bless you and The 5!” reads a more charitable take.
“Your analysis of the ‘mostly peaceful protest’ at the Capitol was clairvoyant beyond the realm of mere mortals. Well done! Including the Matt Taibbi tweet in the piece was pure genius. No buts!
“I would only add that I believe there are few coincidences in politics. Psyops is used around the world by a number of governments, a variety of interests and actors. Agitating a crowd that has been locked up (businesses teetering or destroyed) for nine months would not be too difficult.
“Pardon all the enemies of the deep state…Snowden, Julian Assange, et al.”
The 5: People on both sides of the political divide will recoil at the comparison (there we go again)… but the riots last summer also likely would not have happened without the economic privation occurring under lockdown. We made that very point at the time.
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. One more: “Kudos to The 5!! Your best issue yet (and I have been a follower for years). I think you guys are a study of proper journalism: examine both sides of the issues taking no side.
“Keep up your fine work.”
Nothing to say other than, “Thank you.”
