Straight to your inbox from Keith himself!

*Trusted by tens of thousands of savvy investors and traders around the world every day

☕ AI Orders, Big Gains… Time to Jump In?

Feb 13, 2025

Howdy! 👋

All three indices are in the green this morning.

The official story, of course, is that investors are shaking off inflation and tariff concerns but that’s not quite right.

Technically speaking, the go-fast crowd has noticed that the US 10YR yield is down, so they’ve borrowed a grundle of money and gotten on the gas – meaning they’re buying.

Why would they do that?

Leverage magnifies returns and lower treasury yields means less “vig".

Here’s my playbook.

1 – PPI rose 0.4% - no surprise there

Reports from the Ministry of Whitewash show that the Producer Price Index (PPI) rose 0.4% which is neither here nor there. It’s the “more than expected” part that is the attention getter. (Read)

My two cents and, evidently, the balance of market participants who are a whole lot smarter than I am is that inflation is more benign than the numbers suggest.

My wallet disagrees but, hey, I’ll take it.

Keith’s Investing Tip: The markets don’t owe you anything any more than a casino owes you a 7 at the craps table. Find great companies making “must have” products and services that will change our world, have super strong growth and protectable margins. Then, get your money there first.

2 – Apple takes a page from Sun Tzu’s playbook

Alibaba Chairman Joe Tsai confirmed that Apple will integrate Alibaba’s AI into iPhones sold in China. (Read)

Right outta legendary strategist Sun Tzu’s playbook.

Sun Tzu famously said that “water shapes its course according to the nature of the ground over which it flows.”

In this case, Apple could have fought Chinese regulators but has chosen a path demonstrating flexibility by adapting its business model to the constraints there to maintain consumer access, ensure compliance and avoid potential retaliation.

Anybody concerned about iPhone sales best pay attention.

这招高明! (Zhè zhāo gāomíng!) – which, if my super rusty Chinese is still up to scratch, means that’s a brilliant [strategic] move.

You know what to do.

And if for some reason you don’t or would simply like some help staying on track, I’ll be here if you need me.

3 – Nissan just signed its own death warrant

Honda and Nissan have officially ended merger discussions. (Read) 🤦‍

Honda wanted Nissan as a subsidiary, not an equal partner. Nissan balked—exactly as I expected for exactly the reasons I thought that would be the case.

Nissan refused to shut factories, and Honda pushed for deeper staff cuts.

Team Nissan just signed its own death warrant.

It’ll take time, but decades of arrogance, rigid seniority, and outdated corporate culture—once Japan’s strengths—are now the very reasons Japan will never likely regain its former global dominance.

Brutal to watch, especially after 35 years of deep ties to Japan as a husband, father, son, consultant, and investor.

Short or avoid. I’d buy putskies, but NSANY’s OTC ADR doesn’t offer that option – pun absolutely intended.

4 – Biopharma just got a whole lot riskier

I suppose this was inevitable and have long suspected it to be the case.

Now we know.

CNBC is reporting that “Almost 30% of Big Pharma deals with at least $50 million up front came from China last year, up from 20% the year before and 0% only five years before, according to data from DealForma.” (Read)

Three thoughts.

First, that’s logical as AI emerges because China’s now got the computational horsepower AND they can test on/in humans far faster and for dramatically less money there than pharma can here.

Second, US buyers will figure out how to license drugs at a fraction of the price they can design ‘em here or in Europe.

Third, the USFDA will have a watershed moment on its hands if it doesn’t get its you know what out of an unmentionable part of its body.

There will be clear winners and clear losers so be sure you know which US companies stand to win and which could lose it all.

Biopharma stocks just got one heckuva lot riskier.

**I’ll have a few additional thoughts in tomorrow’s OBA AMA/Update.

5 – AI Orders, Big Gains… Time to Jump In?

Cisco reported Q4 earnings seeing a double beat. (Read)

Guidance increased.

Should you buy it?

Wouldn’t be my first choice but it’s hard to argue with the potential for $1B in AI related orders in 2025.

The stock has returned 33.67% over the past 12 months versus 20.81% from the SPX over the same time frame so there is that.

What I wonder is whether the company’s stock can accelerate to match up with expectations. 🤔

LEAPs calls could be an interesting way to stick a toe in the water but keep capital and risk low at the same time. Buyers would be fighting time decay but that’s always the case when you’re buying options.

Hmmm.