If you follow these two rules, you will never have a losing trade. First? Buy low. Second? Sell high. Sounds easy, right? Well, here we are, hovering at nearly 5 year lows and after a long and bumpy ride, precious metal investors want to know, “Are we there yet?” Continue reading “Freeport McMoRan Is A Buy (FCX)”
Oh boy we need that plunge protection tomorrow… or not. Continue reading “Markets Closed for MLK Holiday, Futures Down Though, or Not.”
The Santa Clause Rally came 2 weeks late (always BTFD!) According to MarketWatch, small-cap stocks, as gauged by the Russell 2000 index RUT, +1.04% , are off to their best start to any year in the past 32 years, boasting a gain of 8.8% (WOW) over the past 12 trading sessions, according to Dow Jones Market Data. That’s outpacing the large-cap S&P 500 SPX, +1.32% the U.S. stock-market benchmark, which is up 5.2% over the same stretch — a performance, however, that likewise is the strongest 12-day start to a calendar year in 32 years. You can think Central Banks and Powell being Trumps right hand man for that.
Is it a reason to cheer? Perhaps it would be if not for the fact that the gains are the strongest since 1987, when the Russell popped 11.87% over the first 12 trading days and the S&P rallied 11.22%. 1987 is a year that lives in infamy on Wall Street.
On Oct. 19, 1987, the Dow sank 22.6% in a single session, marking its steepest percentage drop ever. That is not at all to suggest that similar action will play out this time around but you can never be to sure.
However, a number of strategists have been warning that gains in small caps aren’t likely to be lasting. MarketWatch’s Chris Matthews writes that investors have been drawn to the relative bargains that small-cap stocks are trading at compared with their larger-cap brethren, but noted that analysts are advising caution in investing in the group (don’t listen).
Separately, MarketWatch’s Barbara Kollmeyer, citing Andrew Lapthorne, a quantitative analyst at Société Générale, warns that U.S. small caps will be in the center of the next storm for stocks because those companies tend to carry larger debt loads relative to their heftier peers and are sensitive to rising interest rates.
“U.S. small caps have been taking on a massive amount of leverage over the past few years,” particularly starting in 2013 during the [quantitative easing] years, wrote Lapthorne.
Although the Federal Reserve appears to be in pause mode, the central bank does want to eventually normalize interest-rate policy, which may add more friction for small-cap names.
Back in 2018, shares of those companies enjoyed a bounce because they were perceived as being more resilient than larger multinational companies amid trade disputes between the U.S. and its trade partners, namely China. However, after punching higher, that rally faded hard and fast as a resolution between Beijing and Washington failed to materialize.
Investors should hope that the same narrative, or an uglier one, doesn’t play out this year. If us at BTFDClub had to bet unless there is a recession buy all dips!
According to CNBC, Tesla has a billion dollar debt coming due, and it could wipe out nearly a third of the company’s cash if the stock price doesn’t improve.
About $920 million in convertible senior notes expires on March 1 at a conversion price of $359.87 per share. But Tesla’s stock hasn’t traded above $359 for weeks. If the shares are about $359.87, then Tesla’s debt converts into Tesla shares. If not, Tesla will have to pay the debt in cash. Maybe its time for Elon to do another cash offering and get another podcast going?
Tesla reported cash and cash equivalents of $3.37 billion at the end of its September quarter. The company continues to reveal pressure to maintain profitability, and announced Friday it would cut 7 percent of its full-time workforce.
Shares fell more than 11 percent Friday following the announcement to trade around $305 per share.
Musk said during the company’s third quarter earnings call that Tesla plans to honor the original maturation date.
“The current operating plan is to pay off our debts and not to refinance them but to pay them off and reduce the debt load and overall leverage of the company,” Musk said at the time.
I wonder if these guys are ready to buy some shares?