Bar Drunk Says, “Buy This Stock!”

It’s incredible what you overhear in class… September 10, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Bar Drunk Says, “Buy This Stock!” SEAN RING Dear Reader, My reputation may precede me, but I’m not the drunk in this story. In truth, this happened in the middle of my class this week. If you’re not aware, I had to travel back to Frankfurt quickly to fill in for my colleague. That’s right, I just returned to Italy on Friday… and yet, here I am. So I’m in Germany for nearly two more weeks. Pam and Micah don’t mind; they’re coming for more tourism shenanigans on Friday. After all, it’s only an hour's flight from Turin or Milan to Frankfurt. Today, we discussed stock ETFs. Honestly, I learned a bunch myself. For instance, I had forgotten that there was an ETF tracking Nancy Pelosi’s positions (NANC). Another student told the class about BIBL, the inspirational ETF. And yes, we covered the SPY and QQQ. ETFs are great for several reasons, such as if you don’t have the time to analyze single stocks. But I prefer taking on higher risk with single stocks, as that’s where the active, and sometimes lifestyle-changing, returns are made. I’ve already bragged about my friend and colleague Ray Blanco and his stock-picking prowess. Well, listen to this story… In the Classroom Sitting in the front row of my classroom are a bunch of bright young professionals doing their best to succeed. I immensely enjoyed their company, but what they discussed pricked my ears. I don’t usually hear conversations about single stocks, and certainly not about stocks I don’t think have hit the mainstream yet. “The stock is ASTS. My friend says you’ve got to buy it.” Huh? “My ASTS?” I was thinking. If you’ve missed a few Rude editions, ASTS is the stock my friend, colleague, and retirement savior Ray Blanco picked a few months ago (and full disclosure, I own). Ray had been discussing recommending ASTS for a while and finally did so in his Catalyst Trader. I bought it a few times, averaging $10.35 per share. Needless to say, it’s been a big winner. ASTS shareholders are waiting for the launch of their “BlueBird” satellites this month. If it’s successful, I imagine the stock will jump considerably. From [Yahoo Finance]( The BlueBird satellites feature the largest-ever commercial communications arrays to be deployed in low Earth orbit, at a remarkable 693 square feet, a technological leap forward in AST SpaceMobile’s ability to deliver seamless cellular broadband connectivity to billions of mobile users worldwide. Building on the success of its BlueWalker 3 satellite, AST SpaceMobile's first five commercial satellites will have a tenfold increase in processing capacity. This advancement sets the stage for delivering global space-based cellular broadband directly to everyday smartphones, starting with non-continuous coverage across the continental United States using over 5,600 cells on premium low-band spectrum. That’s ASTS’s unique selling proposition: space-based cellular broadband directly to your smartphone. Think Starlink without the dish. Disclosure: I own a Starlink dish and am utterly grateful to Elon Musk for inventing it. Thanks to Telecom Italia's incompetence, I couldn’t do my job in Italy without it. However, having the power of the internet beamed directly from space to my phone would be even better, which is why I own ASTS shares. Still, I didn’t think many knew about ASTS, so I was pleasantly surprised when I heard my students talk about it. “Who told you about this stock?” I asked. Now, here’s a funny story. [Offer Pending: Please confirm your address…]( Your name is on a list of people eligible to claim the [“most dangerous book in America.”]( Here’s how to claim your copy: - [Click this link]( watch Jim's short message.]( - Review your account information. - Confirm you’d like to accept Jim’s offer. [Click Here To Learn More]( In the Bar “Well, I was talking to a girl I know. She’s a bartender in Boston. And this guy is in her bar every day, drinking beer. He looks like a bum, dressing terribly. One day, she asks him what he’s doing in her bar all day. He says, ‘I trade stock.’ It turns out the guy is a great investor. And he told her, ‘You have to own this stock.’ So I’ve been looking at it ever since.” Before you think, “My goodness, this is the equivalent of taxi cab drivers recommending stock, and I should dump it now,” I think there’s a better way of thinking about this. ASTS is finally entering the mainstream consciousness. If this is the case—and I hope it is—you’ll see more retail and institutional buyers piling into the stock. [Deutsche Bank’s equity analyst put a $63 price target on this stock.]( That means it’s got a long way to go. The reason for the nosebleed-inducing target is that ASTS has signed agreements with strategic partners across the globe. [In his letter to ASTS shareholders]( Abel Avellan, Chairman and Chief Executive Officer of AST SpaceMobile, wrote this: You’ll have a seamless experience with either carrier. You’ll simply connect to AST SpaceMobile’s network through your carrier, AT&T or Verizon, for reliable cellular service for a smooth and worry-free experience. This collaboration highlights the effectiveness of collective action. By combining AST SpaceMobile’s innovative space-based network with the extensive terrestrial networks and expertise of both AT&T and Verizon, we are creating a solution that benefits everyone. Consumers gain unparalleled access to space-based cellular broadband, businesses can expand into previously unreachable regions, and first responders and rural communities will no longer be left behind in the digital age. This is just the beginning. We remain dedicated to fostering similar partnerships with other mobile network operators, aiming to bridge the digital divide on a global scale. Through strategic agreements with AT&T and Verizon, along with Vodafone, Rakuten, Google, American Tower, Bell Canada, and more than 45 mobile network operators, we’ve established a strong foundation. These partnerships unite us with networks that serve more than 2.8 billion subscribers, propelling us closer to achieving this ambitious goal. As my father would say, “They ain’t messin’ around.” Wrap Up When I teach, all sorts of great things happen. But the best of all is when I learn from my students. I'm grateful for their insights and the lively discussions they bring to the class. Despite recent challenges, ASTS is still on the rise. And if their satellite launch is a success, the sky will no longer be the limit for our internet. All the best, Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. In Case You Missed It… The Charley Horse Markets SEAN RING Remember those awful pains you’d get in your calves as a kid if you were dehydrated and played too much? It still happens after a few nights in a row drinking Geman beer for me. The involuntary cramping. The indescribable pain. The desire to scream as loudly as I can. The futile attempt to flatten my foot to stretch my calf muscle. I felt the same pain - albeit emotionally - as I opened my app to check the stock prices of my portfolio constituents. The involuntary cramping, the indescribable pain, the desire to scream… it was all there. Last week was awful, and I’m starting to think the Fed isn’t going to rescue us even if they cut rates a little over a week from now. To be sure, the nonfarm payrolls number missed, but not by much. What started the mess was Federal Reserve Governor Christopher Waller saying he would "advocate" front-loading rate cuts if that is appropriate. According to [Zero Hedge]( “Then Nick “Nikileaks” Timiraos of The Journal interpreted the Fed's speech as much more hawkish than it appeared, saying that "Fed governor Chris Waller’s speech doesn’t explicitly say “25” or “50” but it leans into endorsing a 25 bps cut to start, explicitly reserving the option to go faster “as appropriate” if “new data” show more deterioration."” That first rate cut may be a sell signal instead of a buy signal. But one thing’s for sure: we need to see how stocks react to the cut before we do anything else. Let’s look at some charts. The Economics For a while now, I’ve said we need to see what happens with initial jobless claims, the steepening yield curve, and oil prices. It’s still an interesting story. Initial Jobless Claims Initial jobless claims, a key indicator of the labor market's health, were on a general uptrend until the last reading. But we dipped off in August. This could be because job seekers and businesses are on holiday. My friend and colleague Andrew Zatlin had this to write about it: Initial Claims: 227K (vs Consensus 230K) Continuing Claims: 1.838M (down 0.02M from prior week) Outside August Survey Period, But Still Relevant Recent Jobless Claims data is more positive. HOWEVER the bulk of the improvement happened AFTER the NFP survey period. Nevertheless, the intent to hire would have been underway during the survey period. It suggests that during the survey period businesses were preparing to hire and simultaneously were firing less. Both of these sentiments are positive for payrolls. Ok, so maybe we don’t even have a Strike 1. Yield Curve Steepening The 2s10s curve has steepened so much it’s now positive at 0.06. What’s that? That curve compares the yield on the 2-year treasury to the 10-year treasury yield. It had been inverted since July 2022. Usually, when the yield “un-inverts” quickly, we wind up in a recession. But thanks to the banker in me, I follow the 3m-10s curve. Banks lend long, primarily to the public, thanks to the U.S.’s 30-year fixed mortgage. But most folks only stay in their homes on average for 10 years. Banks fund those mortgages by borrowing short in the interbank markets for about 3 months on average and then roll that funding. Here’s what that curve looks like: This curve is still inverted, so we haven’t reached the recession phase yet. Here’s a handy table, if you’re interested in these yield curves: Now, let’s turn to oil prices. Oil Prices This is staggering. Oil has just fallen out of bed. [Exposed: Democrats’ Secret Plan to Keep Trump Out of the White House]( Former advisor to the CIA, the Pentagon and the White House Jim Rickards just released… [This shocking new video exposing Democrats’ secret plan to keep Trump out of the White House…]( Even if he wins the election. [Click here to see the details and learn how to prepare…]( Because this could trigger the biggest constitutional crisis in our nation’s history. [Click Here To Learn More]( We are officially in a technical bear market, with price < 50-day MA < 200-day MA. And this is with a weakening dollar! Oil should be rocketing from here, but it isn’t. From [oilprice.com]( Usually, high-impact OPEC+ decisions trigger a notable reaction in the oil markets, but not this time. Sentiment has soured so much that the oil group’s decision to postpone the return of barrels they’ve cut in 2023 barely resonated at all, reinforcing fears that next year will see balances swinging heavily towards oversupply. As ICE Brent futures hover around $73 per barrel, oil prices are set to close this week at their lowest level since June 2023. OPEC+ Delays Output Increase by Two Months. Citing worse-than-assumed economic data from China and the United States, eight members of OPEC+ that were scheduled to unwind their 2.2 million b/d of voluntary production cuts have agreed to delay their production hikes by two months. So, it looks like oil prices won’t be increasing soon. Let’s go back to Andrew Zatlin: Nothing in the data indicates that the wheels are about to fall off It's very easy to argue that we are easing into a recession or similar slowdown: - GDP Going from 3% 2Q to 2% 3Q (per Atlanta Fed) - Payrolls looking choppy - 3 months of payroll run-rate very soft - Latest month trending up but maybe not enough - CPI slowing - More macro pain coming as companies continue to delay spending due to election and pending rate cuts History would argue that things tumble quickly and not slowly. HOWEVER that same history needs to account for a few things. - Lean economy: This isn't the dotcom boom or the housing boom. The AI spending is not driving the economy (except for the stock market). There are no major sector bubbles. The opposite, actually: - CAPEX: Inventories have been managed down aggressively - Staffing: hiring will kick in quickly - Payrolls are lean: up 4.6% since February 2020 pre-COVID vs 11% Real GDP growth during that time. - Layoffs: already undertaken and mostly offshore. Jobless Claims benign. - Companies ready to spend: once the election is done and rate cuts start, spending will kickoff. Ok, so things may be better than we think. What about the dollar? The Dollar With the economy looking okay, you’d expect the dollar to strengthen a bit, which it did. But when oil falls out of bed, you’d expect a crazy dollar rally. That’s not what’s happening. Since the end of June, the USD has fallen from 106 to 101.188. You’d expect that to goose oil prices, but it didn’t. Weak dollar, weaker economy? Or is oil getting hammered because of the oversupply? I favored the former argument, but my publisher Matt Insley has long argued that America’s oil abundance has kept prices down. The evidence is turning in his favor. What about the shiny stuff? Gold & Silver Gold has held up wonderfully well. Thanks to an overspending Congress, I still think it’ll break $3,000. Gold looks to be consolidating at $2,500 for another rally. The next price target is $2,630. Alas, silver’s chart isn’t as bullish: But a weaker dollar will surely help both these metals out. Gold & Silver Miners The senior miners (GDX) and the juniors (GDXJ) have similar charts, with the juniors being the more volatile of the two. They’re both in a clear uptrend, but I suspect it’ll be a bumpy ride until Powell is well into the cutting cycle. For the silver miners, let me show you Hecla’s chart. I’m a long-suffering owner myself. As my trading buddies in London would say, “Whore’s drawers, mate. Up and down. Up and down.” I just want silver to pop to be rid of this beast. But owning silver miners is to own pain. Tech Stocks I don’t want to call time on the tech rally just yet, at least not until we’re below the 200-day moving average. But this chart is starting to look shortable. The second peak is lower than the first. The 50-day MA is beginning to turn south. And Friday had a massive down candle. We may bounce off the 200-day MA, so we wait and see. Wrap Up Sorry to throw so much at you on a Monday morning. So let me tell you what I’ve told you. Initial jobless claims look much better and are no longer trending upward. The 2s10s curve has “un-inverted,” but the 3m10s has not. And oil prices are going down faster than students at a Willie Brown career advancement seminar. So, despite our common sense, it doesn’t look much like a recession. Though the dollar has slightly increased over the last week, its primary trend is down. While this has done nothing for oil, it’s helping gold. Silver struggles to stay near the $28 level. As for anyone who owns the miners, hold and buy some Alka Seltzer. Finally, the Nasdaq looks a bit peaked, but we’re not selling yet. I hope that helps. Stay hydrated to avoid those charley horses, and have a wonderful week ahead. All the best, Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. 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