☕ Nvidia on deck, make this decision now

Howdy! 👋  

My grandfather, John Fitz-Gerald, was a super accomplished metal worker who played a key role in developing controllable variable pitch propellers during the 1930s then subsequently manufacturing ‘em through WWII. He used to tell me that he “missed” the metal whenever he had more than a few days out of his shop. 

I feel the same way about the markets. I’ve been involved one way or another for nearly 45 years and I, too, “miss” em whenever I’m away.  

More specifically and not to get all mushy or anything, I’ve missed YOU – the entire Five with Fitz Family. Thank YOU for giving me the opportunity to share what I know while doing what I love. 

Anyhooooo... I continue to recover from Covid, so I’ll keep it short and sweet. 

Here’s my playbook. 

1 – JPow finally sees the light 

Fed Chair Jerome “JPow” Powell has finally seen the light and declared that rate cuts are all but imminent. And that lit a fire under things, at least for a little while last week. 

JPow says he’s data dependent but that’s about as useful as a snooze button on a smoke alarm. 

What you want to focus on now is a) anything in his language that conveys timing and b) the US 10YR yield which is going down as I speak. 

The language is pretty straightforward.  

Powell’s got to jawbone the idea of a rate cut long enough to maintain the illusion while avoiding the notion that he’s playing politics. I’ve said before that I don’t think he’ll actually do anything until after elections and still think that’s the case.  

As for the 10YR, remember that it’s not the yields themselves that matter.  

It’s the perception of risk that the yields reflect. Right now, those are down which means that the short-term money is in search of safety (because big money traders are buying bonds) but longer term they’ll go the other direction (as investors take over).  

2 – Nvidia on deck – make this decision now 

As I noted in last night’s Sunday Evening Thoughts from the Garden, I expect Nvidia’s earnings to be positively stellar. Potentially even epic. You can sign up for or listen to the call here. 

Expectations are super high which means that volatility around earnings will be too. 

The short-term money crew will be looking for any excuse to shake nervous Nellies out of their positions. The longer-term crew – meaning investors like us – should plan on using any weakness that presents itself to our advantage. 

Nvidia has returned an incredible 156.16% YTD versus the SPX which has turned in an impressive 17.79% as I type.  

People worry about whether that can continue but are totally missing the point in doing so. 

My research suggests that every $1 spent on NVDA chips may result in $10-$15 in follow on spending/revenue for the companies that buy ‘em. A year ago, that was $5-$10. A year from now, it could be $15-$20, perhaps more! 

That’s why you want to decide right now if you’re an investor or a speculator when it comes to NVDA. 

The pie is plenty big enough for both. 

If you’re the former, any drop is something you can use to your advantage. Tactics that come to mind include Selling Cash Secured Puts, LowBall Orders, Bearish Spreads. Or simply taking advantage of any dip to add a few extra shares. 

If you’re the latter, I expect volatility to expand markedly into the earnings call which means that simple options plays could be the way to go. Buying calls if you’re thinking it’ll zoom. Buying puts if you think it’s doom. 

I’ll be sharing more specifics with the OBA Family later today so please keep an eye on your email. 

Keith’s Investing Tip: This sounds terribly obvious but it's not. Many investors find out the hard way that they’ve been speculating when earnings show up because they can’t stand the volatility, haven’t properly controlled risk or simply lack the mindset needed to look past any short-term chaos. Knowing who you are ahead of time can help tremendously! 

3 – Telegram CEO arrested but for what... really? 

This is super interesting to me. 

Telegram messaging app CEO Pavel Durov was arrested on his private jet as it sat on the deck at the Paris-Le Bourget Airport. A native Russian, but now a dual citizen of France and United Arab Emirates, I’ve got to wonder who’s pulling the strings here. 

French police reports suggest that the arrest warrant was served in conjunction with a preliminary investigation into criminal activity on Telegram which officials insist does not have enough moderators to keep bad actors in check. (Read) 

I can also easily envision Russia squeezing France, particularly since Durov is a Russian native and Telegram could easily have ties to elements Putin finds threatening, uses, or wants to control. 

And finally, I’ve got to wonder if US regulators are paying attention. US law stipulates free speech but the line is increasingly blurred between what may constitute threatening or criminal action when it comes to intent via social media. At some point, protecting the rights and safety of many will again become more important. 

I don’t expect this to have a meaningful impact on markets or tech stocks yet, but it could. 

4 – Canada digs in on Chinese EVs, too 

Canada has joined the US in imposing 100% tariffs on Chinese-made EVs. (Read) 

I get it. 

The last thing a politician wants to do is have his or her constituents blistered by unfair trade, predatory pricing, and the like. But as we have noted many times over, this is a futile gesture at best. 

1. High tariffs will all but guarantee US, Canadian, and European car makers fail to remain competitive by removing an incentive that would otherwise be there. 
2. Chinese car makers don’t care because they will sell everywhere but the US and Canada and, ultimately, dominate global markets anyway. 
3. American and Canadian consumers will miss out on exciting, incredibly powerful new technology while paying more for the same, tired old stuff. 

Many folks will get hung up on their personal feelings simply “because” it’s China. That's okay if you’re one of ‘em.  

We may agree, we may not – that's moot.  

MyPOV is that there is plenty of profit potential up for grabs. That’s why I recommend a “blend” of top tier players including three potential blue chips in the making I expect to dominate the EV landscape for years to come. (Learn more) 

5 – NASA chooses SpaceX 

Talk about a black eye. 

NASA has asked Unka Elon’s crew at SpaceX to rescue two astronauts stranded aboard the ISS because Boeing’s Starliner spacecraft can’t return safely with ‘em aboard. (Read)  

If I were NASA Administrator Bill Nelson, I would have simply called the Boeing Starliner for what it appears to be, a POS. Then said we’re tapping SpaceX to get the job done. And, not for nothing, ended the conference in minutes. 

Wall Street seems desperate to hold $BA at $170 or so but I still think $150 is in the cards. Perhaps even $140 if there are more problems brought to light as part of ongoing investigations, whistleblowers, and the like. The scuttlebutt I am hearing suggests that the public doesn’t yet know the half of it. 

Newly seated CEO Kelly Ortberg has one heckuva job on his hands. 

Bottom Line 

Wealth doesn't mean sh_t if you're not healthy enough to enjoy it.  

Get off your butt. 

And don’t get the current Covid variant if you can help it - it's a doozy!

As always, let’s MAKE it a great day. 

You got this – I promise. 

Keith 😊