Author: Andrew Packer

Economy

QTR’s Fringe Finance: All Hat and No Cattle

Posted on by Andrew Packer

One of the top tech stories of the past decade has been the rollout of electric vehicles. Even as recently as 2010, it seemed unlikely that they could be produced at mass scale. Or provide a consistent driving experience for daily use.

However, that all changed with Tesla Motors (TSLA). The EV manufacturer not only developed several EV models, they were stylish, accelerated speedily, and are fun to drive. Of course, Tesla’s larger-than-life CEO, Elon Musk has done far more.

With startup SpaceX, Musk has found ways to significantly lower the cost of orbital launches. Between that and buying Twitter, the co-founder of PayPal (PYPL) has at times been the world’s wealthiest man.

Part of that wealth creation has come from the easy money policies of the past 15 years. Most of the growth of Tesla and SpaceX has come amid a world of near-zero percent interest rates. That low-cost capital has made financing less expensive than it would otherwise cost.

Capital markets allow companies to expand. Usually smaller companies start with borrowing.

That trend has slowed in recent years as interest rates have started to rise. For Musk and Tesla, SpaceX, and privately-held Twitter, that makes the cost of financing this empire from growing further. And Musk could continue to face challenges from the publicly-traded Tesla.

That suggests that investors may have a rockier ride with tech stocks going forward, even with interest rates starting to trend lower now.

 

To read the full analysis on Elon Musk’s empire and the challenges ahead, click here.

Economy

Swordfish Trading: It’s Time for Bonds

Posted on by Andrew Packer

Markets continue to trend higher. That includes stocks, but also gold. Rising asset prices leave markets a bit extended right now. That suggests a possible pullback ahead of the election.

For now, investors may want to look for assets that haven’t gotten overbought yet. That’s a tough opportunity to find right now, with so many assets near their highs. However, conditions appear ripe for, of all things, bonds.

Why? For starters, bond prices are structured to rise as yields fall. The Federal Reserve has started to lower interest rates. Just as raising rates in 2022 and 2023 led to falling bond prices, the opposite should occur now.

With the 10-year U.S. Treasury yield still near 4%, today’s buyers can get a reasonable rate. It’s also one of the highest rates over the past 15 years. As yields decline, the price of the bond should rally to adjust the yield lower.

Corporate bonds offer higher yields. And they should also rally with interest rates trending lower. But unlike government bonds, corporate bonds carry some company-specific risks to them. That’s why they tend to have higher yields to begin with.

For those in a high tax bracket or high tax state, municipal bonds could be valuable for their tax advantages now as well.

 

To get the details on why now may be time to lock in bond yields, click here.

Income investing

Dividend Growth Investor: Eight Dividend Growth Companies Rewarding Shareholders With Raises Last Week

Posted on by Andrew Packer

Markets tend to rally over time. That’s because the economy continues to grow over time. And as companies increase their earnings, they can also reward shareholders.

Many do this by paying a dividend. These cash payments to the company owners reward them for their investment. Over time, the U.S. stock market has managed to provide steadily increasing dividends for investors. That’s a recipe for investment success.

The best part about dividends is that a company pays out in cash. It can’t be restated like earnings.

That cash can be reinvested in the same company, or used to invest in a new company. Or just about any other purpose. All while still holding shares.

Several companies have raised their dividends recently. That includes Canadian Natural Resources Limited (CNQ). They develop oil and natural gas products.

CNQ recently raised their dividend payout by 7.1%, and today’s buyers can get a 4.3% dividend. Over time, however, growing earnings and dividends can mean a far higher payout.

Another recent dividend raiser is Agree Realty (ADC). This retail property real estate investment trust (REIT) just raised their payout by 1.2%, marking the 12th consecutive year of dividend increases.

Shares pay a 4.1% dividend, and unlike many other dividend-paying stocks, Agree Realty pays out on a monthly basis.

 

To view the full list of dividend growth plays now, click here.

 

Economy

Bravos Research: Nobody Will See This Coming

Posted on by Andrew Packer

Currently, the global economy is on track for a “soft landing.” That means that inflation is moderating, thanks to interest rate hikes by central banks. But the economy has escaped a recession.

That’s good news. But it’s also an idea that was floated in 2000 and 2007. Those dates preceded hard landings for the economy. A soft landing often looks attainable. But it’s also possible that the softening data could coalesce into a recession.

Meanwhile, the media is currently looking at a soft landing. So it’s likely that we’re nearing a point where a recession could start. Most interest rate hike cycles end before the start of a recession. A soft landing is a much rarer event.

Consequently, investors likely won’t see a recession coming. That could mean being unpleasantly surprised by markets. While it seems unlikely with stock near all-time highs, similar market peaks occurred in 2000 and 2007.

The key sign for a recession is unemployment. It’s currently on the rise. The recent growth of government jobs is hiding a deteriorating private sector. However, with the overall rate still low, this could mark a rare occasion for a soft landing.

A soft landing could still mean weaker market performance in 2025. Investors may want to lighten up on their strongest-performing positions and take some profits into the end of the year.

 

To view the full video, click here.

Cryptocurrencies

The Pomp Letter: Bitcoin’s Network Poised For the Bull Market

Posted on by Andrew Packer

Since bitcoin’s halving in the spring, the cryptocurrency has traded in a sideways range. Despite some attempts to move higher, it’s yet to near its all-time highs from the spring. However, the fourth quarter of a halving year tends to be a period of strong performance.

What’s more, prices are starting to perk up on a technical level. The past few weeks has seen some moves higher, then met with healthy pullbacks.

What could push prices higher? Halving years reduce new supply to the market. With over 90% of all bitcoin already mined, there isn’t much supply left.

Meanwhile, bitcoin wallets have held steady. Existing owners aren’t ready to sell in the mid-$60,000 range. Data suggests that about 65% of all bitcoin hasn’t moved in 12 months, near the high of 70% set in December 2023.

Over the past two years, half of all bitcoin in circulation hasn’t moved. Prices are clearly trending higher at a time when supply is tight and existing owners aren’t ready to sell.

Even with the sideways performance over the past few months, bitcoin is still up around 50% this year. With bitcoin setting up for a further run higher, it should continue to outperform. And that outperformance should last well into 2025.

And once bitcoin starts to take off again, other cryptocurrencies should rise with it.

 

To read the full analysis, click here.

Stock market strategies

Tastylive: It Took us 15 Years to Uncover this Options Trading Technique

Posted on by Andrew Packer

Investors have a variety of tools for trading in the market. Many of those tools employ options. Most investors think of options as a directional bet. They buy a call option to bet on rising prices, or a put option for falling prices.

However, for shorter-term timeframes, traders can use options to bet simply on declining option values. Since an option has a limited timeframe before expiration, several tools exist to take advantage of this.

One such tool is the vertical spread. This uses two options, expiring on the same date, but with different strike prices. One option is bought, one is sold.

Typically, an investor will look to sell the higher priced option. This results in a credit, or cash added to an investment portfolio. The option that is bought helps hedge the movement of the sold option.

This significantly reduces the risk of selling an option outright, which could require a significant cash outlay.

Plus, traders who use spreads as far as 45 days out can see significant income as option premiums decline. They may be able to hold until expiration, or could roll the trade, as conditions warrant.

This trade can be used to generate small, but consistent, profits across even small investment accounts.

 

To look at the full backtest of this strategy, click here.

Stock market strategies

The Lead-Lag Report: You Can’t Ignore Utilities

Posted on by Andrew Packer

Investors looking for safe income have shifted heavily into U.S Treasury bonds over the past two years. With the 10-year Treasury bond yielding about 4%, it offers about half the historic return of the stock market. But it does so with none of the risk of investing in stocks.

However, yields are on track to trend lower. While the Fed started with a half-point cut, it’s likely to follow up with quarter-point cuts.

Over time, that will still drive yields down. That means investors may have to look elsewhere for income. And utility stocks can fit that niche of safe, relatively high-income right now. Even better, utility stocks also offer some growth potential here.

That’s because utilities are usually slow-growth plays. But the rise of AI technologies means an increased demand for power. And the need for stable base power to ensure that technologies like electric vehicles can function smoothly.

That could mean bigger growth, and also offers the potential for growing dividends.

Investors have plenty of options from individual utility stocks like Next Era Energy (NEE), operating in the fast-growing Florida market, to the Utilities Select SPDR Fund (XLU) to grab the industry as a whole.

Either way, utilities still offer investors a relatively high income, a reasonable value now, and growth potential.

 

To read the full analysis, click here.

Commodities

Heresy Financial: China, the Fed and the Middle East War – ALL Pushing Prices Higher

Posted on by Andrew Packer

The inflation story is dead, even after inching slightly up in this week’s latest data. Yes, inflation isn’t quite down to the Federal Reserve’s 2% target level. But, it’s under 3% compared to a high of over 9%.

The central bank is now shifting gears to prevent the labor market from unwinding. With that shift, interest rates will trend lower. That could help make it easier for businesses to expand and consumers to borrow. In turn, that could mean inflation ticks higher.

That likely won’t mean a return to inflation rates over 5%. But inflation could stubbornly hang out near 3% for a prolonged time.

However, other factors could help push inflation up.

China recently unveiled a stimulus plan to get its slowing economy moving higher again. That could mean higher prices, and a push higher for commodities that China needs to grow.

Plus, in the Middle East, there’s a potential for an escalating conflict. That could cause key parts of the world, such as the Strait of Hormuz, to move off-limits.

That could help push oil prices higher. Higher energy costs will quickly show up on inflation measures as energy is a key component for manufacturing. And higher gas prices mean consumers have less money to spend on other activities.

 

To look at the full list of factors that could lead to resurgent inflation, click here.

Economy

Bravos Research: 3 More Months Until it Begins…

Posted on by Andrew Packer

With the start of an interest rate cut cycle, the bond market has started to readjust to lowering rates. Part of this process is the overall yield curve un-inverting. That’s where longer-dated bonds now start to have a higher yield than shorter-dated ones.

Typically, an un-inverted yield curve has occurred either during or just ahead of a recession. Yes, this time could be different due to pandemic-related polices being unwound.

However, as one of the strongest macroeconomic indicators, with a flawless record, it shouldn’t be ignored. With the 10-year and 2-year U.S. Treasury bond yield in particular un-inverting now, it’s a sign of danger ahead.

Bond yields are still somewhat volatile. They’ve even risen somewhat since the Fed cut interest rates. That’s because last week’s unemployment data indicated a strong labor market.

Even with that short-term move, investors likely have just a few more months left before conditions deteriorate.

Yes, GDP growth remains healthy too, in line with the labor market. That suggests that we still have some time left for markets to peak.

Each yield curve un-inversion is different. And the start of a recession as the yield curve un-inverts can change. With the curve entering a danger zone, investors may want to lighten up on their most aggressive trades going into the end of 2024.

 

To view the full video, click here.

Cryptocurrencies

Bitcoin Magazine: Maximizing Bitcoin Gains with ETF Data

Posted on by Andrew Packer

Bitcoin prices closed September on a strong note, rallying nearly 10%. Bitcoin prices topped $66,000 for the first time since July, after first dropping to the $50,000 range.

October tends to be a strong month for crypto, especially in the years after a halving. In fact, the entire third quarter tends to see excellent returns for bitcoin. Given bitcoin’s volatility, however, traders may want to use data to find ways to better trade.

The start of new bitcoin ETFs earlier this year provide substantial amounts of data. First, investors can track the overall flow of bitcoin into these ETFs. That creates a simple way to determine whether the big money is buying or selling.

Investors who buy bitcoin when ETF data shows strong inflows are likely to get in ahead of bullish moves higher. Those who sell when big money starts to exit the trade can sidestep a pullback.

Again, this takes advantage of bitcoin’s inherent volatility. Locking in smaller gains from trading can take some of the sting out of buying and holding a volatile asset.

Since late September, investors have heavily started buying bitcoin once again. That suggests, along with bitcoin’s monthly average history, that a further move higher is likely in the next few months.

 

To read the full analysis, click here.