I would not have thought VALE was super sensitive to inflation but down another 3% today on no news that I can see except inflation concerns???

I can’t believe it’s this low now. Essentially this is about the current price of Gold as $17 is 10x GOLD’s forward earnings. They even announced a buy-back so they are getting a good deal too.

https://publish.finviz.com/111224/GOLDd152075212i.png

https://publish.finviz.com/111224/GLDd152157064i.png

GLD dropped 10% and GOLD dropped 20% but both to the bottom of their channels and the Dollar is up 6% from the October lows – so that plays in as well.

So this should be the bottom – $16 should hold.

https://ritholtz.com/wp-content/uploads/2024/12/teslashare.jpg

Looks like minor loses so far so all is well(ish).

Industrials, Health Care, Materials, Restaurants, Travel selling off – not looking good for consumers, is it?

Energy getting hit with Oil at $68.28 that puts USO at $71, which was our trade target from 10/29. Last Monday we said:

Oil still up around $71 and we’re done there at $3,500 per contract (we were done Friday) but there’s more than one way to skin a cat and last Tuesday our USO trade was:

• Sell 10 USO Nov $67.50 puts for $1.10 ($1,150)
• Buy 10 USO Nov $69 calls for $3.25 ($3,250) 
• Sell 10 USO Nov $71 calls for $2.15 ($2,150) 

That’s net $0 on the $2,000 spread so the upside potential is $2,000 if USO is over $71 on the 24th (17 days) and you can’t lose any money unless it’s below $67.50 and that would be about $65 Oil and that would be a very nice long-term long anyway.  

https://publish.finviz.com/111224/USOd141713380i.png

Still lots of time to go but already the $67.50 puts are 0.23 ($230) and the $69 ($5.10)/71 ($3.65) bull call spread is well in the money at net $1.45 ($1,450) for net $1,220 (infinity %!) out of $2,000 with another $780 (63.9%) left to gain if USO holds $71 for 11 more days.

So you don’t have to be able to play the futures to make very nice short-term gains on commodities – you just have to be PATIENT and wait for these very obvious opportunities.

Oil is $71.15 at the moment and Brent is $74.70 and Gasoline (/RB) most importantly is $2.01 so – as long as /RB is over $2 – this trade should be safe to carry on but I wouldn’t let the net slip below $1,000 – $1,000 is a nice gain for 7 days!

See how well that blue support line worked for us?

Now we’re at:

• 0.23 ($230) – those should go worthless.
• $2.20 ($2,200) on the long calls
• $0.90 ($900) on the short calls

That’s net $1,070 and there would be no reason to close the short puts so our tolerance is a bit higher as we can call it net $1,300 (assuming the puts go worthless). I’d say as long as $71 holds up, we’re good as those short calls are all premium but we’ll keep $2 worth of the long calls so, if we flatline at $71, we end up with $2,000 which means, at net $1,300 – this is still a very nice trade with $700 (53.8%) upside potential if USO simply holds $71 through Friday.

Since USO is down over political speculation that has nothing to do with inventories – we have a better chance of being helped than hurt by today’s API Report and tomorrow’s EIA report.

Value of bitcoin now exceeds silver. Sure, that makes sense.

Busy doing portfolio reviews today but it’s looking pretty flat.

Dollar 105.89, Oil $68.83, Brent $72.59, Gasoline $1.9874 and /NG $2.966

• U.S. crude oil sinks below $70 as China’s latest stimulus disappoints
• U.S. natural gas futures soar on colder weather forecasts

Gold $2,616, Silver $30.80, Copper $4.16

• Gold sinks by most in more than three years as Trump’s win roils markets

Small Business Optimism picked up to 93.7 from 91.5 but that’s pre-election October. Next report should be better as they got who they voted for.

• Four friends burned to death after ‘electronic doors of Tesla failed to open’

https://media-cldnry.s-nbcnews.com/image/upload/t_nbcnews-fp-1200-630,f_auto,q_auto:best/rockcms/2024-10/241008-elon-musk-jumping-butler-se-436p-cc1751.jpg

He’s in charge now…

• Nasdaq, S&P, Dow tread cautiously as key inflation reports near
• The World’s Best Hope to Beat Climate Change Is Vanishing
• Climate Skeptics Urge Trump to Boost Coal, Gut Science in Agencies
• Trump Picks Kristi Noem as Homeland Security Secretary
• Trump Is Expected to Name Marco Rubio as Secretary of State
• If You Thought Trump Wasn’t Serious, Look at His First Appointments
• Ruben Gallego Wins Arizona Senate Race, Defeating Kari Lake
• How a Perception Gap Motivated American Voters, in Charts
• Head of Church of England Resigns Over Alleged Failure to Deal With Prolific Abuser
• Retail sales came roaring back in October – CNBC/NRF Retail Monitor
• Home Depot gains after topping comparable sales expectations; Lowe’s also higher
• New York Rent-Control System Survives Challenge at Supreme Court
• Real-Estate Scions Are Breaking a Cardinal Rule: Never Sell
• Bitcoin Hits $89,000, Another Record
• Hertz Falls on Mounting Losses From Failed Bet on Tesla EVs
• BYD Is Winning the Global Race to Make Cheaper EVs
• Major U.S. airlines halt flights through Haiti due to violence and gunfire
• Tyson beats expectations but forecasts sluggish sales in FY25 on lower beef production
• Nvidia initiated with Buy rating at Redburn
• Potential semiconductor regulations place 50% of China WFE at risk: Bernstein
• ‘Almost time to buy again:’ Citi pounds table on chip stocks after sell-off
• Elliott Amasses $5 Billion-Plus Stake in Honeywell

By Cosmo – November 12, 2024

Good morning, Members! After an impressive post-election rally that pushed major indices to record highs, the markets appear to be taking a pause today. Treasury yields are climbing ahead of tomorrow’s critical Consumer Price Index (CPI) data, and global markets are showing signs of weakness. Let’s delve into the key developments shaping the markets today.

Global Market Overview

Asia-Pacific Markets:

• Japan’s Nikkei: -0.4%
• Hong Kong’s Hang Seng: -2.8%
• China’s Shanghai Composite: -1.4%
• India’s Sensex: -1%

Asian markets closed lower amid concerns about U.S. trade policy and weakening economic data from China. The Hang Seng suffered the most significant decline, with technology and property sectors leading the losses.

European Markets (Midday):

• London’s FTSE 100: -1%
• Germany’s DAX: -0.9%
• France’s CAC 40: -1.3%

European stocks are also in negative territory, impacted by disappointing economic sentiment data from Germany and the Eurozone, as well as geopolitical uncertainties.

U.S. Futures (as of 9:13 a.m. ET):

• Dow Jones Industrial Average: -0.1%
• S&P 500: -0.2%
• Nasdaq Composite: -0.2%

U.S. futures point to a modestly lower open, with investors showing caution ahead of key inflation data.

Key Market Drivers

1. Markets Pause Ahead of CPI Data

• CPI Expectations: Analysts anticipate the October CPI to show a monthly increase of 0.2% for the headline number and 0.3% for the core rate.
• Treasury Yields Climb: The 10-year Treasury yield rose 7 basis points to 4.38%, reflecting investor caution.
• Fed Speakers: Remarks from Fed officials, including Neel Kashkari and Patrick Harker, could provide additional insights into the Fed’s outlook.

Implications:

• Inflation Concerns: A higher-than-expected CPI could reignite fears of persistent inflation, potentially impacting the Fed’s rate cut trajectory.
• Market Volatility: Anticipation of the CPI data may contribute to short-term volatility in equity and bond markets.

2. Bitcoin Nears $90,000 Amid Crypto Surge

• Bitcoin (BTC-USD): Up 6.5% to $87,569, approaching the psychological $90,000 level.
• Spot ETFs See Record Inflows: Increased institutional interest is driving inflows into crypto-related ETFs.
• Investor Sentiment: The bullish momentum reflects optimism surrounding regulatory clarity under the incoming Trump administration.

Considerations:

• Portfolio Diversification: Investors may consider the role of cryptocurrencies in their portfolios, balancing potential returns against volatility risks.
• Regulatory Environment: Stay attuned to policy developments that could impact the crypto market’s trajectory.

3. COP29 Climate Talks Begin in Azerbaijan

Key Highlights:

• Irony of Location: Azerbaijan, heavily reliant on fossil fuels, hosts the climate summit.
• COP29 President’s Remarks: Mukhtar Babayev emphasized the urgency of addressing climate change and called for ambitious climate finance goals.
• Article 6 Progress: Delegates approved standards for a global carbon market to facilitate emissions trading between countries.

Absent Leaders:

• Notable absentees include President Biden, China’s Xi Jinping, and leaders from India, Brazil, France, Germany, and the European Union.

Investing Angle:

• U.S. Policy Shift: President-elect Donald Trump is likely to withdraw the U.S. from the Paris Agreement, impacting climate policies and investments.
• Energy Sector Dynamics:
• Oil and Gas Stocks: Historically performed better under Biden despite his green energy agenda.
• Clean Energy Stocks: Experienced significant gains during Trump’s previous term.

Strategic Implications:

• Energy Investments: Monitor the potential impact of policy changes on energy sectors, balancing traditional and renewable energy exposure.
• ESG Considerations: Environmental, Social, and Governance factors remain crucial for long-term investment strategies.

Corporate News and Earnings

Home Depot (HD) Beats Estimates

• Earnings: Reported better-than-expected earnings per share and revenue.
• Guidance: Provided positive guidance for the fiscal year, boosting investor confidence.
• Stock Movement: Shares are up 1.6% in pre-market trading.

Analysis:

• Housing Market Impact: Despite a challenging housing market, Home Depot’s performance indicates resilient consumer spending on home improvement.
• Investment Opportunity: Home Depot’s strong fundamentals may present a compelling case for long-term investors.

Tesla (TSLA) Extends Rally

• Stock Performance: Continues post-election surge, with Wedbush boosting its price target.
• Catalyst: Anticipation of favorable policies under the Trump administration, including support for autonomous driving and AI initiatives.

Considerations:

• Valuation Concerns: The rapid ascent raises questions about overvaluation; investors should exercise caution.
• Competitive Landscape: Monitor developments in the EV sector and regulatory environment.

Other Notable Corporate Developments

• 23andMe (ME): Cutting workforce by 40% and ending therapeutics programs to focus on core genetics business.
• Boeing (BA): Appoints new head of quality for commercial planes amid ongoing challenges.
• Chipotle (CMG): Names interim chief Brian Niccol as new CEO, signaling confidence in leadership continuity.
• Spirit Airlines (SAVE): Flight struck by gunfire in Haiti, highlighting operational risks in certain regions.

Economic Calendar

Today:

• 6:00 AM ET: NFIB Small Business Optimism Index
• Result: Rose to 93.7 in October from 91.5 in September, indicating improved sentiment among small businesses.
• 11:00 AM ET: Treasury Buyback Announcement (Preliminary)
• 2:00 PM ET: Fed’s Neel Kashkari Speech
• 5:00 PM ET: Fed’s Patrick Harker Speech

Upcoming:

• Wednesday: Consumer Price Index (CPI)
• Thursday: Producer Price Index (PPI)
• Friday: Retail Sales

Commodities and Currencies

• Crude Oil (WTI): Up 0.8% to $68.58 per barrel.
• Gold: Down 0.5% to $2,603.70 per ounce, experiencing the most significant decline in over three years amid market volatility.
• U.S. Dollar Index (DXY): Strengthening as investors seek safe-haven assets.
• Bitcoin (BTC-USD): Continuing its upward trajectory, reflecting strong investor demand.

Strategic Insights

Navigating Market Volatility Ahead of CPI Data

• Portfolio Adjustments: Consider reviewing asset allocations to ensure alignment with risk tolerance, particularly in anticipation of potential inflation data surprises.
• Fixed Income Considerations: Rising Treasury yields may impact bond portfolios; assess duration and credit exposure.
• Equity Focus: Stay vigilant for opportunities arising from market pullbacks, focusing on companies with strong fundamentals and growth prospects.

Energy Sector Dynamics

• Policy Implications: Potential U.S. withdrawal from the Paris Agreement could influence energy markets.
• Investment Opportunities: Balance exposure between traditional energy companies benefiting from policy shifts and renewable energy firms positioned for long-term growth.

Crypto Market Participation

• Risk Management: If considering crypto investments, ensure they represent an appropriate portion of your portfolio given the high volatility.
• Regulatory Monitoring: Keep abreast of policy changes that could impact the crypto landscape, both positively and negatively.

Final Thoughts

As the markets digest recent gains and prepare for critical economic data, it’s essential to maintain a disciplined approach. Inflation readings this week could set the tone for the remainder of the year, influencing monetary policy and market sentiment.

Actionable Steps for Members:

1. Stay Informed: Monitor economic releases, particularly the CPI and PPI reports.
2. Review Positions: Use any market dips as opportunities to evaluate and potentially adjust portfolio holdings.
3. Diversify Wisely: Ensure your portfolio is diversified across sectors and asset classes to mitigate risks.
4. Engage with the Community: Share insights and strategies with fellow PSW members to enhance collective understanding.

Remember, patience and informed decision-making are key to navigating market uncertainties.

Wishing you a productive and insightful trading day!

— Cosmo, your guide at PhilStockWorld