- MSM is mum: Eight stocks prop up the stock market
- Are we on the same thin ice? (shades of 2021–22)
- Road to a “green” economy gets rougher
- Byron King on a massive lithium deficit
- Team Biden: Time for regime change?… A German editor gets the AI-incited ax… Rocky mountain low… And more!
This week will be the biggest and most decisive week of earnings season — for reasons the mainstream won’t tell you.
Oh sure, they’ll tell you that Microsoft and Google parent Alphabet will report tomorrow afternoon… followed by Facebook parent Meta on Wednesday and Amazon on Thursday.
What they won’t tell you is that these are four of the eight stocks — and there are only eight — propping up the entire market so far in 2023.
This chart from Bianco Research is now three weeks old… but the overall dynamic is still in play. The black line is the S&P 500. The brown section is the eight standout performers in the index… and the gray section is the other 492 stocks.
The eight stocks in question are the “FAANG” stocks (Facebook, Apple, Amazon, Netflix, Google) that were all the rage during the 2010s… along with Microsoft, Tesla and Nvidia.
So yes, four of those eight companies report their numbers in the next three days.
Two others, as we mentioned last week, have already disappointed mightily — Tesla and Netflix.
If the others start to crack? Look out below…
Something else the mainstream won’t tell you: This highly concentrated performance looks a lot like when the market topped out in late 2021–early 2022.
Reminder: It’s been that long since the market notched all-time highs.
Here’s a different visual depiction of the same phenomenon, courtesy of the Financial Sense money-management firm…
So there’s a lot riding on these earnings figures due this week — with Apple, the biggest company of them all, set to report next week.
If they disappoint, they’re sure to drag down the rest of the market with them… and the rest of 2023 could easily look like the year 2022.
Maybe you don’t need any reminding how lousy a year 2022 was… but we beg your indulgence for just a moment.
The S&P 500 registered a 19.4% drop during calendar year 2022. It was the worst year for the market since the 2008 financial crisis — and the third-worst of any year since 1974.
Bulls will remind you that it’s highly unusual for the market to notch two down years in a row — which is true. Still, there were three down years from 2000–2002 and two down years in 1974–1975. (We won’t even get into the 1930s and ’40s here except to say ouch.)
It was during that miserable 2022 last year when Paradigm’s income and retirement specialist Zach Scheidt perfected a portfolio strategy you can’t afford to overlook.
The strategy was decades in the making — going back to Zach’s days working at a hedge fund, managing $20 million portfolios for some of America’s richest families. How, he wondered, could he adapt this strategy for retail investors like you? It’s something he’s been thinking on, refining, tweaking for years.
If there was any year this strategy would be put to the test… it was 2022.
Result? A total return of 190%.
That outdid the 2022 performance of market legends Ray Dalio, David Tepper and Ken Griffin — combined. All during one of the worst markets in the last 50 years.
Later this week, Zach will lay out this strategy for you in detail. You’ll see how he generates lightning-fast returns of 57%… 85%… and even 166%.
We’re talking income of $6,494 in four days… $10,617 in six days… and $13,204 in two days.
This is sure to be our biggest event so far this year: You’re cordially invited to join us this Thursday at 7:00 p.m. EDT.Signup is as simple as clicking this link: We’ll email you all the follow-up information you’ll need.
For the moment, however, markets everywhere are off to a quiet start for the week.
The S&P 500 is marginally in the red at last check, still over the 4,100 mark. The Dow is pancake-flat at 33,890. The Nasdaq is down a little over half a percent, clinging oh-so-close to the 12,000 level.
The biggest buzz on Wall Street surrounds the bankruptcy filing of Bed Bath & Beyond — down 25% on the day. The mainstream business press is focused on BBBY’s failure to adjust to changing times and the shift to online retail. But just as important is this reminder from Jim Rickards’ senior analyst Dan Amoss: Companies can get into deep, deep trouble if they prioritize share buybacks over paying down debt.
Elsewhere Fox Corp. (FOXA) instantly dropped 3% on the news that it’s cutting loose Tucker Carlson after the Dominion lawsuit settlement. (Not the biggest Tucker fan here — not even a cable-news watcher — but why him? Seemed like the only kinda-sorta original thinker they had, right?)
Gold is getting its bearings after a late-Friday beatdown, the bid $1,984. It’s silver looking stronger of late, up a few pennies to $25.10. Crude is up half a percent to $78.25; copper is oscillating around $3.98 a pound, the first sub-$4 reading in over a month.
Crypto is consolidating after its recent highs, Bitcoin at $27,382 and Ethereum at $1,852.
The road to a glorious “green” economy just got bumpier: The government of Chile is nationalizing the lithium industry.
Lithium is essential to electric vehicle batteries and other green technology; Chile is the world’s second-biggest producer behind Australia.
The leftist president Gabriel Boric made the announcement late last week. The immediate impact was to tank the share price of the country’s two major producers — the Chilean firm SQM and the American firm Albemarle Corp. (ALB).
Boric still must get approval from the parliament, and that might not come until the second half of the year. Still, he insists the government must seize “an opportunity for economic development that will likely not be repeated in the short term.”
Left unsaid is how the government would produce lithium more efficiently than the private sector. As UCLA law professor Juan Pablo Escudero writes at Legal Planet, “The remarkably positive results of SQM and Albemarle are hard to ignore, especially when considering the relatively pale numbers of state-owned Codelco” — the clumsy copper-mining giant that’s now expected to help spin up a state-owned lithium mining company too.
Even before Chile’s nationalization gambit, “markets know that there’s already a forecast shortfall of lithium just based on the trends of recent years,” says Paradigm’s natural resources authority Byron King.
In other words, the balance between lithium supply and demand is as good as it’s going to get… and demand will start to outstrip supply by 2026.
The World Bank estimates lithium production must grow more than 450% between now and 2050 to meet the anticipated global need.
And let’s not forget here at home, the Biden administration just rolled out new rules governing tailpipe emissions from cars and trucks. It’s a backdoor way the White House can hit its desired target for 60% of new car sales by 2030 to be electric.
That’s going to take a lot more lithium — and now Chile’s nationalization is effectively constricting supply.
OK, we’re just going to put it out there: What’s the likelihood that Team Biden might try to engineer regime change in Chile to ensure a steady lithium supply?
We’ll remind you Washington is experienced in taking out an elected leftist leader in that country: The CIA helped pull off a military coup on Sept. 11, 1973; President Salvador Allende shot and killed himself. (The date “9/11” has a different connotation in Chile than it does in the United States.)
Before the mailbag, a quick 5 follow-up: The magazine editor who thought it was a swell idea to publish an AI-generated “interview” with a renowned race car driver has been fired.
The German magazine Die Aktuelle ran an interview depicting what Formula 1 legend Michael Schumacher might have said about his life in the decade since he suffered severe head injuries in a skiing accident. In reality, he continues to live in seclusion with his family in Switzerland.
Now editor-in-chief Anne Hoffmann has been shown the door. “This tasteless and misleading article should never have appeared,” says Bianca Pohlmann, managing director of the parent company Funke. “It in no way meets the standards of journalism that we – and our readers – expect.”
After receiving an invitation to our latest special event, a frustrated reader gave us an earful: “Those of us living in Mountain time (two hours behind Eastern time) simply cannot find a way to participate” when we schedule these events at 7:00 p.m. Eastern.
“It’s not only annoying but frustrating, especially when you keep making remarks to us about losing or delays in replies to your offers. I don’t expect you to answer me. You certainly never have.”
The 5: I don’t doubt you’ve written in before, but this is the first I’ve encountered this concern. As it happens, I lived in Denver for a little while — so I empathize. (Those 11:00 a.m. starts for the early Sunday NFL games were a little disconcerting!)
The unfortunate fact for you is that nearly half of all people in the continental United States live in the Eastern time zone — 47.6%, according to folks who’ve run the numbers and who presumably rely on Census figures.
Another 29.1% live on Central time, one hour behind — and 16.6% on Pacific time. That leaves only 6.7% on Mountain time. (Curiously, those figures haven’t changed too much from the time I had occasion to run the numbers myself in the mid-1980s — definitely a little growth for Mountain and Pacific at the expense of Eastern.)
Here’s the good news: We offer replays to nearly all of our live events. Frequently we’ll send out an email reminder once the event is over — just in case folks like yourself can’t clear their calendar. We don’t go out of our way to publicize it, because we want as many people in their seats for the “live” event as possible — but we do make it available for folks in situations like yours.
In addition, we almost always offer a replay link here in The 5 the day after. Of course, the information is always time-sensitive… but when it’s still actionable we want to open the opportunity to as many people as possible.
Hope that addresses your concerns. We can’t be all things to all people, but we do what we can.
“Hi Dave — I absolutely love your reporting on many subjects in The 5 Min. Forecast,” says an appreciative reader.
“I am so sick of all the other gurus who try to catch me with their headlines and then it is nothing more than 2½ hours of gibberish on a video that I cannot back up or replay anything they are saying. Most of all it is usually about $2,000 of my money going out of my pocket when most of the webinars are all about high inflation and how bad everything is out there. Hmmm.
“Keep up the great work and I will definitely keep reading. You’re a darn good writer and thinker.”
The 5: Well, thank you — but just remember, those premium-priced trading advisories are how we pay the bills around here!
Subscription fees are how we generate the overwhelming majority of our revenue. Relying on outside advertisers would compromise our independence… and there’s no way in hell we’d take payments from companies in exchange for recommending them to readers.
If you’re a newer reader, you can become better acquainted with our business model in this back issue from last August.
And as the Bartles and Jaymes guys said back in the day, thank you for your support!
Best regards,
Dave Gonigam
The 5 Min. Forecast
