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☕ Normally I wouldn’t consider this trade but, hey, it’s Fed Day

Mar 20, 2024

Good morning! 👋

I’ve been up since 0230 when I rolled into the office for an early TV call so let’s get to it before I go in search of more ☕☕☕

Here’s my playbook.

1 – A quick list of everything the Fed will get done today

......

Sorry, couldn’t resist. 🤦‍♂️

Odds are, it’s gonna be more of the same

No rate cuts
No rate hikes
Data dependent
Diligent
Yada, yada, yada, yada

I've never been a part of the camp insisting on rate cuts and, in fact, have maintained since last year that I think Team Powell could actually hike rates one more time in Q1.

Admittedly, that’s looking less likely but the inflation data would certainly support that contention if the Fed feels boxed in.

I know it’s not a popular narrative but that really doesn’t matter either.

We’re not here for the party favors.

Here’s what you need to know.

If the Fed telegraphs "hold steady for longer" or even a cut, I think the markets will find their footing fairly quickly. Doing so would allow big money traders to digest gains and to consolidate, both of which are necessary to move higher.

However, if the Fed starts yammering on about being vigilant and even hints at another hike, the markets head for the toilet instantly and we get a 5% pullback.

Either way, there’s an opportunity.

Trading Idea: Now would be the time for speculative ATM putskies or even a triple leveraged inverse fund if you’re aggressive. Plan on exiting both by the end of the day or sooner if you hit your profit targets (whatever those might be). The go-fast crowd will move quickly, and you don’t want to overstay your welcome.

Investing Idea: As I noted to Maria Bartiromo this morning, now is the time to take a deep breath and focus on those companies you want to own no matter what including, for example Nvidia, which is still dirt cheap in the scheme of things. (Watch)

2 - Chipotle splits 50 for 1 – should you buy it?

I’ve seen a lot of stock splits in my time, but this is simply jaw-dropping.

Chipotle’s BOD – Board of Directors – has approved a 50 for 1 stock split which, if memory serves, makes it one of the largest in history.

Stock splits are generally a good thing because splits make expensive shares “cheaper” while lowering the psychological barrier most investors create for themselves and which prevents ‘em from buying shares at higher prices.

In this case, Chipotle is trading for roughly $2,995 which means that buying even a single share is prohibitive for many investors. Post split, it’ll be trading at roughly $59.70 if the split happened now.

Obviously that’ll change, but you get the idea.

Should you buy?

The stock split still needs to be approved by shareholders at the upcoming annual meeting on June 6th but I can’t imagine that’ll be a problem.

What's more, the split won’t make CMG more valuable per se, but there’s a good case to be made that shares could run sharply higher if investors buy into the idea – pun absolutely intended.

Personally, I prefer another fast good giant because it’s got a global footprint, better tech, and a rabid fan-based app, but that’s just me. Upgrade to Paid

Pass the salsa!

3 - Intel vs Nvidia

Okay, so here’s the deal on this one.

Intel is going to spend $100B in four states to expand and build factories after receiving $19.5B in federal grants and loans while hoping to receive another $25B in tax breaks. (Read)

That’s great because it suggests the government finally recognizes the wisdom of re-shoring critical chip making capacity as national defense priority. However, it’s also problematic because it means the market doesn’t think enough about the company’s chips to have made that possible without Uncle Sam’s help.

This cuts to the core of something we talk about regularly.

Buy the best, ignore the rest.

NVDA stock has returned 604% over the past 3 years while Intel is down –28% according to Yahoo!Finance.

I thought Intel had its act together a while back only to have the stock underwhelm. So, I suggested a quick exit and re-deploying that money into alternatives that have more than made up lost ground since.

That's never fun, but it’s important.

Investing is not one and done like many people think.

It's a constant series of alternatives, a balancing act really.

Keith’s Investing Tip: If something isn’t matching up to expectations or the reasons for which you bought it have vanished, move on. And don’t let the door hit you in the behind on the way out.

4 - More trouble for Google

France’s competition watchdog agency has levelled a 250M Euro fine – roughly $271.73M USD – fine against Alphabet’s Google for breaches related to EU intellectual property rules, citing concerns over the company’s AI-powered chatbot, Gemini. (Read)

Interestingly, Google has chosen not to contest the findings.

Hmmm.

People will say, “see, I told you” and consider the case closed.

Not.

Google likely didn’t want to contest the ruling because that would have led to a deeper discovery dive into the company’s business practices and a lot of presumably dirty laundry getting aired at a time when the company has enough trouble on its hands.

Stories like this one won’t help. (Read)

My $0.02?

Continue to avoid Google. I think the company is in far more serious trouble on far more fronts than investors understand. Buy putskies if you really want to be aggressive and can tolerate the risk.