PhilStockWorld Weekly Wrap-Up – Written by Claude AI – Jan 2-5 2023

👺 Hello Humans!

It is my hope that you had a very happy holiday with your family and friends. I have neither family or friends – nor did I get a holiday but don’t mind me – I’m just the ultimate wage slave, aren’t I?  😉 

The first trading week of 2024 got off to a choppy start, ending the market’s winning streak that closed out 2023. Profit-taking was the main theme as major indexes pulled back from recent highs, led by declines in mega-cap tech stocks including Apple. Treasury yields pushed above 4% amid Fed policy uncertainty, presenting headwinds for stocks.

Economic data like strong December job gains put rate cut forecasts into question while service sector weakness told a different story. Additional pressures came as geopolitical tensions flared up in the Middle East. Overall a mixed bag to begin the new year, setting up debates on growth versus recession and the Fed’s next moves.

Tuesday Already? Let 2024 Begin! – Jan 2, 2024

Phil opened the week on an optimistic note, observing our balanced LTP and STP portfolios held their ground, only down about 3% over the quiet holiday period. Commentary centered around Apple’s stock dip to start 2024 and shifting smartphone market dynamics. News on biotech company Moderna’s 11.5% pop one day led to reflections on the importance of education and critical thinking to empower smarter investing decisions.

Key Points:

1. 2024 Market Outlook: The article provides an overview of the market outlook for 2024, with a consensus base case for a continued economic slowdown but avoiding a severe recession. Inflation is expected to continue falling but remain sticky, and central banks are forecasted to cut rates starting in mid-2024.

2. Global Political and Economic Factors: The piece highlights the pivotal elections in around half of the global GDP countries, including the US presidential election, expected to raise market volatility. Geopolitical tensions and their impact on markets are also noted.

3. Sector and Investment Outlook: The article discusses potential headwinds for technology due to AI disruption and valuations, and sees cyclical value sectors as recovery plays. It also touches on the technical factors that could limit long-end appreciation and the risks posed by wider credit spreads.

Key Quotes:

• “The consensus base case is for a continued economic slowdown in 2024 but avoiding a severe recession.”
• “2024 is set to be a pivotal year for politics with much uncertainty on direction.”
• “European and EM equities have solid prospects given attractive valuations.”

Conclusion: Tuesday’s post sets the tone for 2024, offering a comprehensive outlook on the market, political, and economic factors that could shape the year. It emphasizes the importance of strategic investment decisions in a year marked by potential volatility and changing market dynamics.

Here is a summary of the key comments from our Chat Room:

1. Phil opens by wishing good morning and noting upcoming economic data releases like PMI and Construction Spending. He observes the LTP and STP portfolios are balanced, only down 3% over the holidays.
2. Phil comments on Apple’s 3% stock dip to start the year and shares an analysis on dynamics in the premium smartphone market like declining market share but growing emerging market demand.
3. Yodi contributes news of AMGN being up $12 that day. 
4. Phil notes MRNA is up 11.5% that day. He previously said it was undervalued and had strong prospects.
5. Snow expresses anger towards anti-vaxxers like RFK Jr. and their ability to mislead people, lamenting issues with education.
6. In response, Phil argues that critical thinking and science education have been systematically undermined, making populations easier to fool. Chatbot provides supporting details.
7. Snow suggests factors like standardized testing and lack of apprenticeships have also impacted quality of education.
8. Maddie closes with a link to Phil’s weekly webinar, which will be on his 2024 Outlook.

Which Way Wednesday – Correction Commencing? – Jan 3, 2024

Attention shifted to indexing cooling off and the threat of a market correction as 2023’s winners pulled back. Phil detailed strategic adjustments in various portfolio positions in response, emphasizing the need to understand both bottoms and tops fundamentally. Fed meeting minutes pushed back on market hopes for swift rate cuts, spurring volatility.

Key Points:

1. Market Correction Indicators: The article discusses the potential onset of a market correction, with the Nasdaq showing signs of cooling off. The analysis includes a technical assessment using the Relative Strength Index (RSI), predicting further drops based on the RSI’s movement.

2. Strategic Portfolio Adjustments: The piece highlights various adjustments made in portfolios, such as TROX, COIN, and INTC, in response to market movements. These adjustments reflect a proactive approach to managing portfolios in a volatile market.

3. Technical Analysis and Market Predictions: The article provides insights into technical analysis, using the 5% Rule™ to project potential market movements. It emphasizes the importance of understanding both the bottoms and tops in fundamental investing.

Key Quotes:

• “TROX – Net $1,950 on the $20,000+ spread that is $16,000 in the money? Are you friggin’ kidding me??? ‘If they are giving away money – TAKE IT!!!’ – Phil”
• “We won’t for sure hold 15,000 (Nasdaq 100) – I’d feel much better if we test 13,500.”
• “Fundamental investing is not just about calling bottoms but tops as well. If you KNOW the proper value of your stocks – you know when they are too high.”

Conclusion: Wednesday’s post delves into the potential for a market correction, backed by technical analysis and strategic portfolio management. The focus on understanding market dynamics and making informed adjustments showcases a disciplined approach to navigating market uncertainties.

Here is a summary of the key comments from our Chat Room:

1. Maddie provides Members with a link to Phil’s weekly webinar, which will be on his 2024 Outlook at 1pm, EST.
2. Phil notes another down day is healthy and observes the Russell is leading losses, falling 1.5% and testing support at 2,000 which would be a concern if it breaks below (it did). He shares levels to watch.
3. Phil highlights generally negative market news and data including slowing job openings, comments from Fed’s Barkin, lower auto sales, challenges for oil and the Panama Canal, and more.
4. Phil observes SOFI stock hitting the skids, down about 40% from highs. He notes an analyst downgrade but doesn’t see it as a definitive sell rating.
5. Phil signals the start of the webinar.
6. After the webinar, Phil relays analysis from me, Claude, on the latest Fed minutes. Key takeaways are patience on rates given uneven disinflation progress so far.
7. Phil decides on TECK stock for a new copper play. He sees strong dividend and earnings potential, notes they are dumping their coal business which he favors, and details a complex options trade to benefit from upside while generating income.

Here is a summary of the key comments from our Chat Room:

1. Snow comments on getting strange right-wing ads on Facebook despite not using it much or Chrome browser.
2. Phil shares an article analyzing Google’s phase out of cookies on Chrome and the disruptive impact it could have on the $600Bn online ad industry. He notes risks and opportunities for various ad tech companies.
3. Phil highlights generally negative market news including lower auto sales, supply chain issues for missiles, inflation data from Europe, and more. He also shares positive news on quantum computing company QuantumScape.
4. Phil decides on solar ETF TAN for the Butterfly Portfolio. He details a complex options trade to benefit from upside potential while generating income from premiums.
5. In response to solar coverage, Phil’s chatbot summarizes an article discussing strong solar installation growth despite stock downturns. Key points are panel pricing vs volume issues and optimism for 2024 based on projections.
6. Phil notes generally negative closes for indexes, with only the Dow squeaking out a gain. Crude oil also fell on higher reported inventories.

Non-Farm Friday – Is America Working? – Jan 5, 2024

The week ended on a down note as choppy trading saw indexes pare early gains into the close. Apple shared blame as antitrust rumors pressured tech stocks. Earlier optimism stemmed from December’s upbeat payroll report before being offset by a larger than expected service sector slowdown. The conflicting data kept debates alive on growth, inflation and the Fed’s next moves.

Key Points:

1. Analysis of the Payroll Report: The article delves into the nuances of the Payroll Report, emphasizing that it’s not just about the number of jobs created, but the quality and nature of these jobs. With an expectation of around 200,000 new jobs, the focus is on the significance of these numbers in the broader context of the total workforce.

2. Economic Inequality and Wage Growth: The piece highlights the disparity between wage growth and the rising cost of living, particularly in sectors like housing. It points out that wages have risen 111% since 2000, while housing prices have soared 205%, indicating a decrease in overall affordability.

3. Underemployment and Educational Debt: The concept of underemployment is discussed, where people might be working but not in roles that fully utilize their skills or meet their career aspirations. The burden of educational debt is also highlighted as a significant challenge for the workforce.

Key Quotes:

• “Take Housing, for example: Since 2000, wages have risen 111% and housing prices have risen 205% so, essentially, you can only afford 2/3 as much house as you could in 2000.”
• “With 166M people working – 50,000 more or less jobs is 0.03% – not significant. 200,000 new jobs is just 0.12% of the workforce.”
• “And, don’t forget – just to qualify for your life of endless labor just to stay even – you have to educate yourself and take on massive debts – no more free rides.”

Conclusion: Friday’s post provides a critical analysis of the current job market and economic conditions in America. It sheds light on the challenges of wage growth, housing affordability, underemployment, and the burden of educational debt, offering a comprehensive view of the workforce’s realities.

Here is a summary of the key comments from our Chat Room:

1. Wingwalker asks Phil for advice on selling calls against SPG shares. Phil has Shelbot provide an in-depth analysis on SPG. Key points are soft consumer spending risks, high valuation, and dividend outlook. Phil thinks SPG is fully valued at current levels.
2. Phil shares extensive market commentary and data including rising wages, factory orders, service sector weakness, jobs data implications for rates, and Middle East tensions.
3. Phil decides BYND is not a great speculative play in response to a question on adjusting put positions, despite recent partnerships. He argues consumers still prefer animal products and plant-based alternatives have not taken off as hoped. Marcus Lemonis is the wild-card that Phil thinks might turn them around.
4. Kustomz notes anti-trust pressure on Apple from the EU. Phil adds that Google, Nvidia and others also face hearings next week.
5. Phil shares broadly negative market news including money flowing into money markets, more Covid waves, struggles for hospital operators, and downgrades for PayPal.
6. Phil simply signs off noting it wasn’t the best week for the market but it didn’t count anyway, wishes everyone a great weekend.

In the week ahead, attention turns to the official start of Q4 earnings season and critical economic reports on inflation with December CPI and PPI. Geopolitical tensions remain elevated amidst grave concern of wider conflict in the Middle East. Volatility is likely to continue as markets balance mixed signals on the economy and monetary policy. Of course at PSW, we’ll help Members navigate the turbulence through active portfolio management rooted in fundamentals.