Excited to expose the truth about Monday's market - Yen carry trade...
FYI - the VIX went to 68%, it's priced using options, not end of world.
See, when traders have to unwind (especially leveraged players borrowing yen - they further leverage buying not stock, more futures and options) in the options market, it makes huge moves. VIX prices using those options, so a false signal suggest the end of the world.
How exciting! I was in studio with Maria Bartiromo talking about the topics of the day. Nothing beats being studio a feeling the energy live.
First, we hit earnings for Pepsi. The firm just can't grow more than 4%. While that could be a red flag for the consumer - not being able to acclimate to higher inflation - the other host suggested it could be slow erosion from weight loss drugs. Probably a little of both.
Then we discussed the banks - one of my favorite topics. I keep banging the drum on private credit risk.
On top of that I'm sticking to my position that the Fed won't cut until the eelction is over and we have some visibility as to the fundamental growth prospects. Remember, the election is an economic fundamental when you think about policies. Wall street disagrees and seems to think artificial intelligence is all that matters.
Wow - what a treat to do a totally unscripted, unfiltered, no tie required.
Remember - this podcast/video is geared towards younger investors, and yes - sometimes I need a little fun where I can let my hair down and blast away. It’s summer in NYC and I dress accordingly.
“In this episode of Stocks in Translation, Portfolio Wealth Advisors chief investment officer Lee Munson discusses the history of traditional investing philosophies before pronouncing those strategies as dead. According to Munson, "the game has totally changed." Yahoo Finance's Stocks in Translation master statistician, Jared Blikre, is your guide with essential conversation cutting through the market mayhem, noisy numbers, and hyperbole to give you the information you need to make the right trade for your portfolio.”
Back in the studio with Kelly Evans - a lot of energy and telling it like it is!
I spell out why the election is an underrated risk. Interest rates are the tell. We get into the main economic differences between the two candidates. Then we discuss the amazing earnings of the mega cap stocks and why that drives me nuts.
While ostensibly the topic is about Amazon competing with Temu and Shein, it's really a story about growing commerce in China. I worry this is going to be dangerous as we continue to apply tariffs. I prefer a firm to continue to grow in the US.
I comment on the Fed's bank stress tests, but the real danger is private equity - something we don't talk about enought.
Then the question will come up - the election. The market is telling us a Trump presidency is good for growth. That is just the market's opinion.
I go through my thoughts on Fed Ex, Paychex, and General Mills.
My concern about Fed Ex is the lack of growth and the inability to harmonize their ground unit versus what we traditionally think of as Fed Ex - you know, the letter packages. They are organized as two totally separate units, and you know this if you ever had an issue getting a package. However, the next day the firm surprised to the upside. Hopefully for their investors they can keep it up.
Paychex is simple. It's hard to grow when employers are not hiring as much and employment is tight.
General Mills is a big slow growing firm. While I love that they decided to sell their yogurt division (can't compete, so stop trying), I would rather look at higher growing stocks. I can buy a value ETF if I want a slow growing names.
I was so excited to do a hit with Kelly now that she is back in the studio. While we always like to have of mix of buys and sells - today was mostly stuff to stay aways from.
Dropbox, I love the service personally, but they lost 50k subscribers last year and their AI offering isn't out and unclear it will move the needle. When the CEO blames tech layoffs, it tells me they lack value.
Then we got to ZipRecruter - but it's just a job board! Other firms like Manpower have upskilling programs or higher skilled customers. The CEO says there is nothing they can do until the "macro" improves.
As for Sphere - you know, the big marble in Las Vegas - it would be a wonderful speculation on a one trick pony, but half the revenues come for MSG Networks, a regional sports network with declining earnings trying to make a go of streaming. Better to see a concert than buy the stock.
This just shows that household names are no sure thing.
A nice mix of a company with everything going for it in the macro aerospace industry yet can't seem to execute, one firm that has a strong monopoly but the stock is tied to consumer spending, and the last one has some interesting expansion plans that could actually move the needle.
What makes this group interesting is how some stocks can be at the right place at the right time, and still not be able to perform. Whereas some firms have headwinds yet are able to find ways to increase revenues in untapped areas of their industry.
Maria Bartiromo and her co-hosts asked my opinion and strategy regarding inflation and oil, and why not gold while we are at it. As I expected, the CPI prints are still coming in hot. This dashes hope of of Fed cuts earlier in the year. Why investors think this was going to be easy is beyond my understanding. Shelter is high, services inflation is sticky, and let's not get into food and fuel.
My prediction since nobody really knows, is that the current inflation scare could be the trigger for a mild selloff in stocks to what should be a pretty decent year of earnings in the US. Time will tell.
I used to own OXY for myself and a few clients who like to have some individual stock exposure. My thesis was in part based on the ownership of Berkshire Hathaway and Warren Buffet's strong opinions on the management skills of CEO Vicki Hollub. But, I do my own research and like when management is clear on strategic direction.
In the end, I didn't like that management said they had no need to do more acquisitions and several weeks later they did the opposite. On top of that, I'm unclear on the strategy on carbon capture and it's lack of profits. For my money and the money of those I represent, I saw a glimpse of what Peter Lynch might call "diwrosification." I'm no expert on everything relating to gas and oil - I'm an expert on people who do what they say they will do. When they don't, it's time to consider moving on.
Most people are afraid of doing something they think is against the grain or selling a position that famous billionaire owns. But let me tell you - you never really know why a legendary investor owns something - or really, if they own it that day. You get a 13F from the SEC that tells you what a big manager owned at the last day of the quarter. You don't know if they have side deals, own derivatives, own debt, have other reasons for owning beyond just the stock going up. No great investor is going to call you to tell you when they buy or sell or why.
The point of keeping an eye on the GOATs is simply for idea generation. But I find in general that GOATs are just that - people who made a lot of good decisions in the past, when they were younger, more aggressive, and now have a lot of money they don't want to lose.
