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Tree Topping Tuesday – S&P 500 Tests 4,800 Up 6.66% for the Month!

Wheeee, what a ride!

"THEY" have taken full advantage of the low-volume, holiday markets to bring the S&P up to new highs at just under 4,800 and we have Dow 36,272, Nasdaq 16,654 and only the Russell, at 2,264 is not at the all-time high – which was 2,460 back in November – so we're 8% below that level still.  

Does that mean we should bet the Russell to catch up and make all-time highs?  Not necessarily.  There's no way to know that these low-volume rallies can stick once the participants return and start selling so we're just in a "watch and wait" sort of mode at the moment – we did all our bargain-hunting during the dip – now we are reaping the rewards on our bullish bets.  

For example, on December 1st, I was on BNN's "Money Talk" and we announced our 2022 Trade of the Year play (IBM) along with 3 of our top runners up, with trade ideas for each one that were featured in that morning's PSW Report.  The runner-up trades were for Intel (INTC), Altria (MO) and Walgreens (WBA) and, prior to adding these trades, on December 1st, our Money Talk Portfolio looked like this:  

We begain the portfolio with $100,000 back on Nov 13th, 2019, so it's just over 2 years old and up 100% at the time is 50% a year – that's about what we shoot for and, by our calculations (all laid out in the 12/1 Report), the portfolio had another $235,336 left to gain – including our 4 new trade ideas.  

Here we are, not even a month later, and our Money Talk Portfolio closed yesterday at $226,914, up $26,914 (26.9%) in less than a month.  Now, we're SUPPOSED to make about $12,000 in a normal month – that's how we get to $235,000 so that's how far ahead of plan we are at the moment.  Knowing how much money you expect to make on each trade and knowing whether or not each trade is on track is the key to strong portfolio management.  We only adjust the Money Talk Portfolio when we're on the show (once per quarter) – so it's very important to make those adjustments count.  

And, by the way, the really cool thing about this portfolio is we're only using $67,310 of our CASH!!!, keeping $159,604 on the sidelines – so plenty of room for adjustments and new trades but these positions are going to make another 100% in two more years – so no need to do more than nudge them along if necessary.

We did a full review last month so let's just check on the new trades, though I'll note the ones that are great for new trades:

  • GOLD – Net $3,185 on a $20,000 spread means there's $16,815 (527%) of upside potential if GOLD goes up 50% over the next year.  It's a great inflation hedge and the worst-case is owning 1,000 shares at net $18.185, which is the current price – and that's only if you grossly mismanage the trade.  

  • IBM – Our Trade of the Year got off to a flying start and I am not a fan of chasing so sorry if you missed it (subscribing here would fix that in the future!).  Did our making the call on IBM cause the rally or did we call a perfect bottom?  Hard to tell….

  •  INTC – This was our 2021 Trade of the Year but we cashed it in early precisely so we could buy it again if it went back down, which it did.  Also ran up fast but not out of reach at net $2,900 on the $20,000 spread so still $17,100 (589%) of upside potential at $55 and, oh look, Intel is already at $52 so we have 2 years to make $3 and 589% – aren't options fun?  

  • MO – Also took off fast but net $5,248 out of a potential $15,000 still leaves us up to $9,752 (185%) of upside if MO can get to $50 by Jan, 2024.  If marijuana is legalized nationally, that target will be left in the dust.  

  • SPWR is priced like there will never be an infrastructure bill and solar energy is just a fad – great for a new trade!  This is a net $4,227 CREDIT on the $35,000 spread that needs SPWR to get back to $35 over the next two years but pays well on anything over $25.  

  • VIAC – I forgot, we threw out the old trade and now we have this so it was sort of pick number 5 last month.  I call VIAC tragically undervalued at $30 and, if I had $20Bn, I'd buy them myself!  I'm pretty sure someone else will so get in while you can at net $16,150 on the $60,000 spread.  That's $43,850 (271%) of upside potential at $40 and we're $20,000 in the money now!

  • WBA – Where do you get your shots?  Where do you get your tests?  Can this trade have been any more obvious?  This one went up so fast it's hardly worth playing anymore at net $7,529 vs our net $3,875 entry but it is an $18,750 spread so $11,221 (149%) of upside potential remains – even if you missed our entry last month.  It certainly looks a lot less risky now than it did then but not to us – we're value investors – charts don't scare us, they just point to opportunities.  

Keep in mind the reason we're able to make 26.9% in a month (and much more than that on our cash deployment) is because we waited PATIENTLY for the opportunity to add stocks at good prices.  We also took advantage of stocks that were too far ahead of our plan and cashed them out early – so we had money on the sidelines to take advantage of fresh opportunities.  

That's what proper trading is all about!  

 


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  1. Good Morning.




  2. 63 Spot-On Posts That Show How Dystopian Capitalism Has Gotten


  3. Comment content omitted because it is too long.





  4. Omicron Variant Triggers US GDP Downgrades



  5. Good morning!

    We are really pushing the boundaries on these indexes at this point. 

       

    Nikkei, DAX and Euro Stoxx are not at highs yet.

      

    Oil finally rejected at $77, $79.50 on /BZ

        
    SP500 +0.16%Dec. 28, 2021 10:55 AM ET8 Comments

    • Tech stocks are giving back a little of yesterday's gains, but the broader market is still higher.
    • The Nasdaq (COMP.IND) -0.1% trails the S&P (SP500) +0.1% and Dow (DJI) +0.4%, which is getting a led up from price gains in Boeing and UnitedHealth.
    • Nine of 11 S&P sectors are higher, but Info Tech is at the bottom. Communication Services and Industrials are the best performers.
    • The megacaps are mixed with Meta the best performer and Apple trailing as it still faces some resistance getting to $3T.
    • The S&P's 1.38% gain yesterday boosted hopes of a Santa Claus rally with the fifth-best day-after-Christmas performance since 1945, according to Bespoke Investment Group.
    • Small-caps are also looking to close out the year on strength, with the Russell 2000 (RTY) up more than 5% from its recent low on Dec. 20 and the Direxion Daily Small Cap Bear 3x ETF (NYSEARCA:TZA) down more than 16%.
    • "Looking ahead to next year, when Santa does deliver positive returns for those on the 'nice' list, forward SPX price returns over the following year have averaged 8.3% (median 12.4%)," Piper Sandler's Craig Johnson says. "When investors make the 'naughty' list and receive negative returns during the holidays, forward annual price returns are only 4.7% over the following year (median=2.8%)."
    • Rates are easing back a little. The 10-year Treasury yield is down 2 basis points at 1.46%.
    • Kinsale trading says it continues to "view the trend in yields as higher, although clearly there are headwinds on yields that include Omicron concerns (will it slow the recovery) and more aggressive global central bank policy."
    • "But we think the strength of the recovery and inflation (which we expect will remain high) will overcome those headwinds, and we continue to look for the 10-year yield to trade to, and through, 2.00% (which we think it would have done in 2021, if not for Omicron)."
    • Among active stocks, Carnival is the top gainer in the S&P, rebounding after a decline yesterday even with cruise lines in the spotlight for Omicron outbreaks.



  6. One day, this will suddenly matter:

    EGRNY +7.23%Dec. 28, 2021 10:43 AM ET

    • China Evergrande (OTCPK:EGRNF -1.4%) (OTCPK:EGRNY +4.2%) is poised to miss two more dollar bond coupon payments today, as the Chinese property developer has already missed some $82.5M in interest payments on offshore bonds in the past two months.
    • The company has $50.4M of interest due on a 7.5% 2023 bond and $204.8M more on an 8.75% 2025 note, according to data compiled by Bloomberg. Evergrande (OTCPK:EGRNF) has a 30-day grace period, which starts on Wednesday, to make the payments before those bonds are declared in default.
    • Fitch Ratings and S&P Global Ratings earlier this month declared the company in default after failing to make the coupon payments. Evergrande (OTCPK:EGRNF), burdened with more than $300B in debt, has been struggling to find cash to service its debt since the Chinese government tightened rules in the real estate sector to limit debt levels and speculation.
    • Previously (Dec. 6), China Evergrande draws up restructuring plan as coupon grace period ends

    PFE -2.53%Dec. 28, 2021 10:37 AM ET9 Comments

    • The Omicron variant of COVID-19 has become the dominant strain of the virus in the U.S., representing 58.6% of all sequenced cases through the week ending Dec. 25, the latest data from the Centers for Disease Control and Prevention (CDC) indicate.
    • The federal agency has revised down the prior estimate for the Omicron variant for the week ending Dec. 18 to ~22.5% from ~73%. Meanwhile, the Delta variant, previously the dominant strain of the virus, has made up ~41.1% of all sequenced cases during the past week.
    • The new data indicating the rising prevalence of Omicron comes at a time the country is grappling with a surge in COVID-19 cases. On Monday, the CDC relaxed its guidance for quarantine and isolation periods for COVID-19 as businesses face staffing shortages due to pandemic-related restrictions.
    • The leading vaccine makers, Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA), have said that an additional dose of their COVID-19 shots generates protection against the variant. Others, including Johnson & Johnson (NYSE:JNJ), AstraZeneca (NASDAQ:AZN), and Novavax (NASDAQ:NVAX), plan to develop Omicron-specific vaccines.



  7. Didn't realize it didn't post my comment.  

    Back on track now.

    DOCU -1.60%Dec. 28, 2021 10:25 AM ET3 Comments

    • Bleakley analyst Peter Boockvar said Tuesday that the valuations for stay-at-home stocks like DocuSign (NASDAQ:DOCU) and Zoom (NASDAQ:ZM) will likely still need to calibrate to a post-pandemic world, even with the recent sell-offs they have suffered.
    • "I think those companies will adjust [to a post-COVID environment] but I think the multiples within them are still pretty heady and still need to adjust," the chief investment officer at the Bleakley Advisory Group told CNBC.
    • Boockvar acknowledged that many of these companies have firmly established themselves and don't face collapsing fundamentals now that COVID restrictions are easing. However, he does feel that some of them remain "expensive" despite coming sharply off highs reached earlier in the year.
    • "These companies have established themselves, even in a world without any COVID, without any work-from-home situation," he said. "It's just a matter of where their valuations settle out."
    • Meanwhile, Boockvar noted that these stocks will also contend with an environment where authorities are removing their stimulus packages, with the Federal Reserve rapidly tapering its asset-purchasing program and signaling the likelihood of multiple rate hikes in 2022.
    • Looking at ZM and DOCU since early March, DOCU held up for much of the year, remaining competitive with the broader market into November. However, a disastrous earnings report sent the stock reeling, leaving it lower by 34% since March 1.
    • ZM began trailing off earlier, underperforming the S&P 500 for most of the year. The stock has fallen about 54% since the beginning of March:
     

    CO1:COM +0.55%Dec. 28, 2021 10:11 AM ET12 Comments

    • Per the OPEC+ oil production agreement, Russia's oil quota for December stands at 10,018kb/d, up ~100kb/d from the November quota of 9,913kb/d.
    • However, per Reuters sources, Russian production is likely to remain flat MoM in December, suggesting the oil powerhouse is unable to increase production from existing spare capacity.
    • This bodes well for oil bulls (CO1:COM) (CL1:COM) (NYSEARCA:USO) (NYSEARCA:XOP), as the OPEC+ agreement calls for another 100kb/d+ of Russian supply growth in January, a mark that will be difficult to hit without spare capacity.
    • Tempering the bulls, increased supplies from Venezuela, as the OPEC+ member has begun sourcing diluent from Iran in 2021, has allowed the Country to reach production of 1mb/d earlier this week, compared to a ~570kb/d average in 2020.
    • Some Russian oil companies are dialing up investments to drive production growth, though it remains unclear whether this spend is designed to offset declines elsewhere in Russia or grow aggregate production to take market share; assuming today's data point proves accurate, oil bulls are likely to feel confident Russia will maintain supply discipline at the OPEC+ meeting next week.

    NVAX +4.92%Dec. 28, 2021 10:04 AM ET14 Comments

    • Despite a decline in the pre-market, Novavax (NVAX +7.2%) is trading higher currently after the company joined Serum Institute of India (SII) to announce the emergency use authorization (EUA) granted for its COVID-19 vaccine in India.
    • Now, with the clearance for Drugs Controller General of India (DCGI), SII will manufacture and market the vaccine, NVX-CoV2373, under the brand name Covovax.
    • Novavax (NASDAQ:NVAX) also reiterated its plans to seek regulatory authorization for the protein-based COVID-19 vaccine in the U.S. before the end of the year.
    • Maryland-based biotech and its partner have secured a series of regulatory clearances for NVX-CoV2373 in recent weeks, including the Emergency Use Listing from the World Health Organization (WHO) and the conditional marketing authorization from the European Commission (EC).
    •  

      Read: In a bearish thesis on Novavax (NVAX), Seeking Alpha contributor Sarel Oberholster highlights, among other things, the supply chain risk for the vaccine.

    AAPL -0.19%Dec. 28, 2021 9:31 AM ET5 Comments

    • Apple (NASDAQ:AAPL) was in the spotlight, Tuesday, as it was back to knocking on the door of becoming the first company in history to reach a market cap of $3 trillion.
    • Apple (AAPL) shares rose 2.3% on Monday, to end the day at $180.33 and a valuation of $2.96 trillion. Apple (AAPL) needs to reach $182.86 a share to hit the $3 trillion market cap milestone.
    • Currently, Microsoft (NASDAQ:MSFT), with its $2.5 trillion market cap, is the only other company with a valuation of more than $2 trillion.
    • Last week, Wedbush analyst Dan Ives said that if Apple (AAPL) doesn't reach $3 trillion in market cap soon, it will likely do so next year thanks in part to what is expected to be the company unveiling an AR/VR headset which many have already dubbed "Apple Glasses."
    • Meanwhile, on Monday, Apple (AAPL) closed 16 of its retail store in New York due to rising COVID cases in the city.

    MGM -1.21%Dec. 28, 2021 9:27 AM ET8 Comments

    • GeoComply sports betting data gathered by Morgan Stanley shows NFL Week 16 online betting volumes decelerated meaningfully to +58% Y/Y growth from 100%/107%/96%/80% growth in weeks 12-15, likely impacted by having Christmas fall on a Saturday.
    • "Dec total games played in major US leagues has been scheduled to rise 119% y/y, and more games should continue to support strong weekly volume growth through January, barring Omicron-driven cancellations," writes analyst Thomas Allen.
    • Additionally, Allen notes that Week 16 was likely an okay week for sportsbooks as 7 of 15 underdogs covered. Gamblers generally bet on favorites meaning that sportsbooks realize greater profits when underdogs perform well.
    • Interested tickers: DraftKings (NASDAQ:DKNG), Flutter Entertainment (OTCPK:PDYPY), Penn National Gaming (NASDAQ:PENN), Caesars Entertainment (NASDAQ:CZR), MGM Resorts (NYSE:MGM)
    • Betting numbers continue to be impacted by the postponement and cancellation of professional and college sporting events.

    LEN +0.86%Dec. 28, 2021 9:01 AM ET5 Comments

    • October S&P Corelogic Case-Shiller HPI:
    • HPI Composite: – 20 (S.A.) +0.9% M/M vs. +1.0% consensus, +1.0% prior.
    • HPI Composite: – 20 (N.S.A.) +0.8% M/M vs. +1.0% consensus, +0.8% prior.
    • HPI Composite (N.S.A.) +18.4% Y/Y vs. +18.6% consensus, +19.1% prior.
    • In October, 18 of 20 cities posted increases before seasonal adjustments, while all 20 cities saw increases after seasonal adjustments.
    • "In October 2021, U.S. home prices moved substantially higher, but at a decelerating rate," said Craig J. Lazzara, managing director at S&P DJI. "October's gains were below September's, and September's gains were below August's."
    • Still, October's 19.1% gain in the National Composite is the fourth-highest reading in S&P Case-Shiller's 34 years of data, he said.
    • Phoenix, Tampa, and Miami continue to report the highest Y/Y gains among the 20-city index; home prices in Phoenix rise 32.3% Y/Y, Tampa +28.1%, and Miami +25.7%.
    • Homebuilder stocks are mixed in premarket trading. D.R. Horton (NYSE:DHI) falls 0.6%, KB Home (NYSE:KBH) dips 1.1%, and Lennar (NYSE:LEN) gains 1.4%.
    • Previously (Dec. 16), Housing starts surge 12% in November

    TSLA -0.99%Dec. 28, 2021 7:28 AM ET34 Comments

    • Tesla (NASDAQ:TSLA) +1.4% pre-market after Wedbush reiterates its Outperform rating and raises its price target to $1,400 from $1,100, citing catalysts heading into 2022 including strong Chinese demand and new factory openings in the U.S. and Germany.
    • "The linchpin to the overall bull thesis on Tesla remains China, which we estimate will represent 40% of deliveries for the EV maker in 2022," Wedbush's Daniel Ives writes.
    • Ives expects chip shortages to ease next year, allowing Tesla to better meet growing demand in China, while new factories should reduce global production bottlenecks.
    • The analyst sees Tesla delivering 1.4M-1.5M vehicles in 2022 with improving profitability.
    • Argus Research is also gets more bullish, bosting its target to $1,313 from $1,010.
    • "Our revised Target price of $1,313 implies a return of approximately 30% from current prices," Argus says. "We are raising our 2021 EPS estimate to $6.16 from $5.67 to reflect our modestly higher revenue and Automotive segment gross margin assumptions."
      • "We are also raising our 2022 EPS estimate to $8.66 from $7.68, implying 41% growth from our 2021 estimate."
    • Tesla shares have gained 55% this year, including a 20% spike over the past four trading sessions.


  8. Here's a lot of trade ideas:

    SPY +0.03%Dec. 28, 2021 6:57 AM ET50 Comments

    • The current market backdrop is unique with growth expected to be above trend in the coming quarter but investor positioning too bearish due to Omicron and central banks, J.P. Morgan says.
    • We "do not think the Fed is behind the curve and see a compelling case for inflation pressures normalizing in coming months and quarters," Dubravko Lakos-Bujas, head of U.S. equity strategy and global quant research, and team write in a note. "Also, as previously noted, we do not expect Omicron to impact the growth outlook in any significant way, but rather it is likely to accelerate the end of the pandemic by crowding out potentially more lethal variants."
    • "More so, performance in the hedge fund space has been poor lately with many giving back multiple quarters of gains," he says. "This resulted in forced liquidations and deleveraging at a time of low liquidity, triggering extreme stock price action, especially across the High Beta stock complex."
    • Don't fear equity concentration. The market-cap weight of the top 50 stocks is the third-biggest ever. The stocks today account for 56% of the S&P (SP500) (NYSEARCA:SPY) behind the dot-com bubble peak 2000 at 61% peak and the Nifty Fifty of 1972-73 at 65%.
    • Top 10 today
    1. Apple (NASDAQ:AAPL)
    2. Microsoft (NASDAQ:MSFT)
    3. Amazon (NASDAQ:AMZN)
    4. Tesla (NASDAQ:TSLA)
    5. Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL)
    6. Nvidia (NASDAQ:NVDA)
    7. Meta Platforms (NASDAQ:FB)
    8. Berkshire Hathaway (NYSE:BRK.B)
    9. JPMorgan Chase (NYSE:JPM)
    10. Home Depot (NYSE:HD)
    • Top 10 Dot-Com Bubble
    1. Microsoft (MSFT)
    2. Cisco Systems (NASDAQ:CSCO)
    3. GE (NYSE:GE)
    4. Intel (NASDAQ:INTC)
    5. Exxon Mobil (NYSE:XOM)
    6. Walmart (NYSE:WMT)
    7. Oracle (NYSE:ORCL)
    8. IBM (NYSE:IBM)
    9. Citigroup (NYSE:C)
    10. Lucent Technologies
    • Top 10 Nifty Fifty
    1. IBM (IBM)
    2. Eastman Kodak (NYSE:KODK)
    3. Sears Roebuck
    4. GE (GE)
    5. Xerox (NASDAQ:XRX)
    6. 3M (NYSE:MMM)
    7. P&G (NYSE:PG)
    8. Coca-Cola (NYSE:KO)
    9. Avon Products
    10. Merck (NYSE:MRK)
    • The "current episode is largely due to global investors’ search for safety/income/liquidity ('pseudo bonds') in a world where sovereign bonds are likely to deliver negative real returns in the foreseeable period," Lakos-Bujas says. "Also, the largest S&P 500 companies currently have proven track record of delivering organic growth, higher pricing power, and superior capital return."
    • "The companies have several advantages over prior leaders given most are platform companies with captive users, global reach, enviable tech stack, stronger balance sheet, and low asset intensity," he says. "During the TMT bubble, however, valuations for the largest companies were severely inflated due to the market’s unrealistic terminal growth assumptions of hyper growth stories such as CSCO, AMZN, INTC, and AOL."
    • "Even Nifty 50s, dominated by consumer stocks such as Polaroid, Avon, Disney, Black & Decker, had a lower moat compared to companies today."
    • "Concentration in mega-cap stocks today would be a risk for the market if rates were to move sharply higher or the governments legislate more restrictive policies (e.g., higher tax rates for multinationals, anti-trust)," he adds.



  9. Not much going on at all – just drifting along.  

       

    Gold and silver took a beating:

     

    Kind of the Dollar's fault but crazy day there too

    And I really want to short oil but too scary into New Year's

        


  10. NCLH -1.11%Dec. 28, 2021 3:24 PM ET7 Comments

    • The CDC is either investigating or observing 86 cruise ships after outbreaks of COVID-19 were reported on board.
    • The cruise lines impacted include Carnival Corp. (CCL -0.1%), Norwegian Cruise Line (NCLH -1.0%), Royal Caribbean Cruises (RCL -0.3%), and Disney Cruise Line (DIS +1.6%).
    • Most of the ships have yellow status, meaning they have met the threshold for a CDC investigation. None are at the highest color, red, which would warrant additional public health measures.
    • Several ships have orange status, which is below the threshold for an investigation. These ships are occupied by crew only.
    • Last week, Carnival CEO Arnold Donald called cruising one of the safest forms of travel amidst the Omicron variant.

    M +1.01%Dec. 28, 2021 3:43 PM ET1 Comment

    • Macy's (M +1.3%) is among today's top gainers after Cowen reiterates its selection of the company as its top retail pick for 2022, citing the department store chain's accelerating digital business, which could reach $10B in sales by FY 2023.
    • More broadly, Cowen analysts including Oliver Chen advise owning stocks tailored toward high-end consumers, such as LVMH (OTCPK:LVMHF -0.7%), Restoration Hardware (RH -1.9%) and Brilliant Earth (BRLT +1.1%), as well as stocks that provide "deep value" to lower-end consumers, such as Costco (COST +0.1%), Walmart (WMT +1.5%) and Grocery Outlet (GO +0.7%).
    • Investors should seek defensive stocks such as Costco that perform better during broad market recessions and offer solid returns during periods of inflation, which will be "significant and semi-permanent" in 2022, Cowen says.
    • Walmart and Target (TGT +0.6%) also have successfully merged their physical store operations with digital strategies, according to Cowen.
    • "Consumers' awareness and preference for health and wellness remain elevated," Cowen says, recommending Elf Beauty (ELF -0.2%), Olaplex (OLPX -1.7%), Sally Beauty (SBH +0.2%), Beauty Health <<SKIN >> and Ulta Beauty (ULTA -1.2%), which offer "innovation, pricing and generation Z" factors.
    • ETFs: XRTRETLIBUYONLNRTH
    • November retail sales rose by a less than expected 0.3%.

    MRNA -2.31%Dec. 28, 2021 3:12 PM ET17 Comments

    • Moderna (MRNA -2.4%) continues its losing streak for the sixth straight session recording its longest skid in over two years. The COVID-19 vaccine maker has lost more than 50% or nearly $100B of its market cap since reaching a peak in August.
    • The latest downtrend in vaccine makers such as Moderna (NASDAQ:MRNA), BioNTech (NASDAQ:BNTX), and Novavax (NASDAQ:NVAX) has coincided with the regulatory authorizations of COVID-19 pills in the U.S. last week.
    • A new survey conducted by STAT and The Harris Poll before regulatory authorization for the drugs indicates the degree of preference for oral therapies, especially among vaccinated.
    • According to the poll that involved over 2,000 adult Americans, 84% said they were likely to take Pfizer (NYSE:PFE) pill for COVID-19 if they test positive for coronavirus. That percentage jumped to 91% among vaccinated individuals, while only 52% of the unvaccinated people were willing to take the drug.
    • The antiviral from Pfizer (PFE) has the potential to reduce the risk of hospitalization and death due to COVID-19 by as much as 89%. And the rival drug from Merck (NYSE:MRK) can cut the risk by 30%, according to late-stage data.
    • Against such a backdrop, Moderna (MRNA) has lowered its full-year forecast for COVID-19 vaccine sales to $15B – $18B from $20B.
    • Making matters worse, Cambridge, Mass-based biotech faces pressure from its own shareholders over the pricing of its COVID-19 vaccine and the company’s reluctance to share its technology with low- or middle-income nations.
    • However, Moderna (MRNA) had added more than 100% over the past 12 months through yesterday. Yet, the analysts have become increasingly Neutral on its prospects over the period, as shown in the graph below.

    Dec. 28, 2021 2:53 PM ET6 Comments

    • Again Capital founding partner John Kilduff said Tuesday that oil markets could catch a "price fever" early in 2022, making it possible that crude reaches $100 per barrel.
    • Speaking to CNBC, Kilduff predicted that a snap of cold weather could combine with high demand for jet fuel to cause a spike in oil prices, possibly approaching the $100 mark. However, he expects prices to moderate from there.
    • "There's a chance for [$100-per-barrel oil] but I think the fireworks will come early in terms of the high prices and then I think we'll have to worry about whether the market gets sloppy again as you get deeper into the year," he said.
    • Overall, the Again Capital founding partner said the oil market has returned to a "strong demand mode" in recent weeks, recovering from the "one-two punch" caused by the Omicron variant and the release of crude from the U.S. strategic petroleum reserve.
    • He explained that oil came off its yearly highs in late October and early November after the Biden administration announced the release of oil from the SPR. It was dragged further lower by news of the emergence of the Omicron strain of COVID, which seemed to raise the possibility of another economic shutdown.
    • Characterizing recent trading as "all about Omicron," Kilduff said oil has reversed some of its recent losses on signs that the latest COVID strain "is something we can live with."
    XOP -0.77%Dec. 28, 2021 1:57 PM ET15 Comments

    • Next year is likely to be a volatile year for oil and gas investors as 1) the world gets its first glimpse at "normalized oil demand" following two years of suppressed consumption 2) OPEC+ ends the debate on spare capacity while US shale supply discipline is tested 3) capex discipline risks upsetting the shale oil's position on the cost curve 4) ESG sentiment towards the sector potentially reverses 5) the sector's position on the value-vs-growth spectrum proves to be a tailwind, in an inflationary environment.
    • Demand – for almost two years the world has consumed oil at below trend rates; however, if the global economy emerges from Covid controls in 2022 as many expect, the world will likely see a brief period of above trend oil demand. The spike from below trend demand to above trend demand during 2022 could equate to several million barrels per day of demand growth appearing over the course of several months; equivalent to adding the consumption of a large country like Brazil or Germany to global demand over a quarter or two. Investors will be forced to grapple with a rapid spike in demand as they attempt to construct normalized demand forecasts, likely leading to dispersion in expectations and creating volatility.
    • Supply – similar to demand, the world has not seen normal supply activity from OPEC+ or the shale patch for two years. As demand increases in 2022, OPEC+ will supply additional barrels, and the shale patch will continue ramping activity. However, following years of underinvestment in OPEC+ nations, there is an emerging narrative questioning the underlying spare capacity of the cartel. With oil demand growth followed by OPEC+ supply increases, analysts will look for any clues pointing towards the true spare capacity within OPEC+. Meanwhile stateside, following a cratering of the rig count, reduction in drilled-but-uncompleted-well inventory, several mergers, a narrative shift away from growth by industry leaders like Pioneer (NYSE:PXD), Chevron (NYSE:CVX) and Exxon (NYSE:XOM), analysts are struggling to anchor around 'normalized shale supply growth' from 2022 onward. In response to the last oil price spike, US shale responded with 3mb/d of production growth in short order; however, this time around many analysts claim the industry has changed its ways. As demand normalizes, analysts will look to the rig count for clues on producer discipline and normalized shale supply growth. In 2022 monthly OPEC+ production statistics and weekly rig count releases will offer a variety of clues into normalized supply and spare capacity; as the year progresses, analysts are sure to extrapolate differing conclusions, and drive volatility in oil price and oil-linked stocks.
    • Cost curve – since the oil price collapse of 2014-2016, analysts have looked to shale's position on the cost curve as the medium-term, market-balancing price for oil. In the event prices rose, shale could quickly respond, returning prices to the economic break-even level of the short-cycle producers. Conversely, when demand and prices fell, rig count would drop and natural, rapid decline rates would balance the market. With the likes of JPMorgan and Goldman Sachs calling for $100+ oil next year, it's clear these commentators are forecasting a short period of demand growth outperforming shale supply growth — as this period of supply-demand deficit comes to fruition, analysts will extrapolate, forecasting sustained deficits and developing a variety of new market-balancing price expectations. If shale's position on the cost curve is questioned in 2022, and the market begins to believe that global oil demand will sustainably grow faster than shale oil production can sustainably grow, it will create a very wide range of expectations for the sector's prospects.
    • ESG – the trend towards environmental, social and governance investing has not helped oil-linked equity valuations. However, a few significant events recently transpired that may turn the tide in favor of responsible oil and gas producer valuations 1) Engine No. 1 gained board access at Exxon with its promise to help the super-major change it's ESG ways; the activist approach being a shift from the past decade of ESG-justified disposals across the sector 2) Norges Bank Investment Management (the $1.4T wealth fund) introduced ESG screening criteria to differentiate between environmentally responsible energy companies and environmentally irresponsible energy companies; oil sands and coal are un-investable for the fund, while lower emission companies like Total (NYSE:TTE) and Shell (NYSE:RDS.A) (NYSE:RDS.B) are considered investable 3) countries at the vanguard of the energy transition in Europe have begun to pay a very high price for energy on the back of a very rapid start to the energy transition 4) the International Energy Agency, a group largely tasked with ensuring countries meet their Paris Agreement obligations, backed away from a forecast showing secularly declining coal demand, and is now forecasting five years of increased coal consumption - perhaps assuaging fears the world has reached peak demand for oil and other fossil fuels. In aggregate, these events point toward an investor universe that is more willing to be 'a part of the solution' by investing in oil and gas companies, while encouraging management teams to align goals with the Paris Agreement. A shift from the past several years of disinvestment and dis-association at any price.
    • Value characteristics – as interest rates have fallen ever lower over decades, the value of a dollar in the future is worth more than ever before. This, in part, has led growth companies with relatively few profits to outperform non-growth companies with large profit pools. With inflation now breaking multi-decade records, and Federal Reserve officials calling for reduced asset purchases and higher interest rates, it seems possible for the first time in several years that this trend could reverse and value stocks could outperform growth stocks. Energy, having under-performed tech by some 300% over 5 years, is likely to be a beneficiary of investors moving away from growth and towards value stocks. Particularly if oil prices are rising and investors are feeling more comfortable with the sector's ESG profile.
    • While prognosticating oil-linked equity performance (NYSEARCA:XOP) is a challenge, hopefully the above highlights many of the major factors and debates which will determine success, failure and volatility for oil stocks in 2022.

    AAPL -0.62%Dec. 28, 2021 2:43 PM ET28 Comments

    • Apple (NASDAQ:AAPL) is giving "significant" stock bonuses to certain engineers to help prevent them leaving the company and joining competitors, notably Meta Platforms (NASDAQ:FB) Facebook, Bloomberg reports.
    • Apple (AAPL) is giving some engineers in silicon design, hardware, and select software and operations groups restricted stock units that vest over four years as an incentive to stay with the Cupertino, California-based Apple, Bloomberg added.
    • The bonuses range between $50,000 and $180,000 and came as a "surprise" to the engineers who received them. Many of the engineers received amounts of $80,000, $100,000 or $120,000.
    • Apple (AAPL) shares are slightly lower on Tuesday, losing 0.5% to trade at $179.50. Apple has gained 38% year-to-date.
    • The company is fighting a war for talent, particularly in augmented and virtual reality, as Meta (FB) has hired 100 Apple (AAPL) engineers in recent months, while Apple has hired some of Meta's employees as well.
    • Both companies are poised to compete with each other, especially in AR and VR, as Apple (AAPL) gets set to launch its headset sometime in 2022. Shares of Meta Platforms (FB) surged on Monday as its Oculus virtual reality was a top gift over the holidays, according to app downloads on Apple's App Store.
    • Apple (AAPL) is nearing a $3 trillion market cap and may hit the milestone before year's end, Seeking Alpha reported earlier on Tuesday.


  11. SP500 -0.15%Dec. 28, 2021 1:57 PM ET3 Comments

    • Widely followed analyst Jim Paulsen said Tuesday that rising investor confidence will drive money towards cyclicals, small caps and international stocks in 2022, as worries about COVID and inflation subside.
    • Speaking to CNBC, the chief investment strategist at The Leuthold Group argued that worries about the economy pushed investors towards large-cap growth stocks in 2021, as they sought safety in reliable names.
    • As such, Paulsen described the 2021 market as being driven less by a fear of missing out and more by "a fear of being in."
    • The Leuthold analyst looked for this dynamic to change in the new year. He contended that investment strategies will diversify as the pandemic continues to ease and as supply chains untangle.
    • "If you're cautious and you're going to invest, where are you going to go? You're going to go to the largest, blue-chip companies," he said of the situation in 2021.
    • "If we finally get beyond that and confidence rises, I think we're going to see assets move to cyclicals to smalls and even to international investments," he added, describing his expectation for 2022.
    • To Paulsen's point about the structure of trading during 2021, small-cap and international stocks have underperformed their big-cap U.S. peers during the year.
    • Use the iShares Russell 2000 ETF (NYSEARCA:IWM) as a stand-in for smaller-cap stocks and the Vanguard Total International Stock ETF (NASDAQ:VXUS) as a proxy for markets outside the U.S. The IWM has climbed 14% in 2021, while the VXUS has advanced about 6%.
    • Meanwhile, the large-cap S&P 500 index has posted a 2021 gain of about 29%:
     

    W -2.68%Dec. 28, 2021 1:27 PM ET3 Comments

    • M Science estimates that Wayfair's (W -1.9%) Q4 sales will be approximately $3.26B, below consensus of $3.33B.
    • Analyst John Tomlinson writes that Y/Y sales trends slowed "notably" during Black Friday and Cyber Monday after a strong November showing. Lower sales volume is expected to offset that an expected higher average order volume when compared to Q3.
    • Tomlinson estimates 9.5% Q4 volume growth versus 20.8% in Q3. He also expects active customers to decline 10.2% compared to 1.9% growth in Q3 assuming orders delivered remains negative.
    • Sell-side analysts have an average price target of $272 on the stock with 12 of 32 holding Buy-equivalent ratings.
    BTC-USD -6.74%Dec. 28, 2021 1:17 PM ET17 Comments

    • In an effort to conserve power to avoid blackouts during the winter season, Iran bans authorized crypto mining centers from operating in the country, Bloomberg cites Iran Grid Management Director Mostafa Rajabi Mashhadi in an interview with state TV.
    • The ban, which will end on March 6, will save 209 megawatts of power for consumption in the household sector, Rajabi Mashhadi said. Additionally, regulators are clamping down on all scales of illegal crypto mining, he added.
    • Recall towards the end of May, Iran halted crypto mining operations on power shortage issues.
    • It appears Iran is not the only country that wants to free up power for the household sector. In mid-November, Swedish Financial Supervisory Authority Director Erik Thedéen and Swedish Environmental Protection Agency Director Björn Risinger said crypto's growing energy usage threatens Sweden's ability to meet obligations under the Paris Climate Agreement, according to a release.
    • Meanwhile, bitcoin (BTC-USD -7.3%) and ethereum (ETH-USD -7.2%) extend losses below key technical levels.
    • In mid-May, Tesla CEO Elon Musk questioned Bitcoin's energy usage.

    DAL +1.67%Dec. 28, 2021 12:25 PM ET1 Comment


  12. Good morning and Happy Holidays! Here is the link to today's webinar

    https://attendee.gotowebinar.com/register/7120910511516631823