The Big Picture in 5

Your 5-Minute Weekly Update on the World’s Biggest Trends and Opportunities

  1. “Trade wars are good, and easy to win.”

Former President Donald Trump famously tweeted those words on March 2, 2018.

Those pre-COVID times now seem like a million years ago. But Trump’s trade war with China has been a lasting legacy and a major complication for backed-up global supply chains. Now, in 2022, the Biden administration has announced that Trump’s tariffs will be “discussed” and possibly rolled back.

Despite Trump’s early pledge, there were no real “winners” from this trade war.

Chinese industrial growth was stifled for several years, but the policies stoked some much-needed nationalism that boosted Xi’s Communist Party. Meanwhile, much of the real-world cost of these policies were passed on to American consumers in the form of higher prices.

Repealing these policies might help relieve some of the upward pressure on consumer prices (aka inflation) and drive investors back toward risk-on assets in the near term.

Bear market rally, here we come.

2. Cashing in on the End of a Trade War

We’ve come back to this play more than once over the last few years, but the SonicShares Global Shipping ETF (NYSE: BOAT) is just an outstanding stock that could surge as tariffs come down and global trade goes back up.

Since Ted initially recommended this stock in November of last year, it’s up over 18% while major indices are down by roughly the same amount. And during a substantial portion of those last few months, China has been completely locked down due to harsh COVID-19 restrictions.

If those lockdowns are lifted, BOAT could see smooth sailing this summer.

3. Costco Is Hiding the Dollar’s Dirtiest Secret

Vicious rumors circulated on the internet last week, suggesting a rise in price of the sacred Costco hot dog and soda meal.

Ever since 1985, this delicious lunch has been available in Costco’s food court for just $1.50. Leadership has refused to budge on the price for nearly four decades. One famous exchange between the company’s CEO and its founder even ended in a death threat. “If you raise the price of the … hot dog, I will kill you,” said co-founder Jim Sinegal (he used more colorful language).

This All-American meal is still just $1.50.

It’s a rare story of management sticking up for the consumer.

But have you ever stopped to wonder why these stories are so rare?

It’s not just a matter of greed. Countless different companies and industries use the same “loss leader” strategy to get customers in the door and buying. But Costco is unique. They benefit from titanic economies of scale, from light speed advancements in shipping technology and from a laundry list of other disinflationary trends that make the dollar-fifty dog even possible.

That’s how hard it is to fight dollar inflation over the long term. And even then, it’s still a loss leader for Costco.

4. When Pandemonium Is Already Priced In

First-quarter gross domestic product numbers are due this week with advanced estimates expecting they’ll be down 1.4% (the first negative print since second-quarter 2020).

Numerous other key statistics for the first quarter will also be released with home sales and mortgage applications expected to sink. You might also see some headlines about minutes from the Federal Reserve’s May 4 meeting, or about the Fed’s upcoming meeting next week where they’re expected to raise rates by another 0.75%.

But what if all this bad news is already priced in?

The Fed’s rate hike is already a foregone conclusion for most professionals. And after two straight months of steady declines, most stocks are offering a completely new value proposition for investors.

5. History Repeats Itself in Our Chart of the Week

It was one of the greatest trades of the century.

John Templeton made his name during the Great Depression, when he bought 100 shares of every beaten-down stock trading under $1. He went on to make an absolute fortune, and that’s not even the trade I’m talking about.

This trade happened during the dot-com boom, when John Templeton (then nearly 90 years old) bet against a bunch of hot new tech stocks just after their initial public offering (IPO). He suspected that those dot-com companies were a sham, and that insiders knew it better than anyone.

He was right, of course. Insiders sold their shares as soon as they could, the stocks plunged and Templeton became a legend twice over.

Now, roughly 20 years later, we’re seeing a similar situation play out in the hottest new tech stocks…

Insiders flew the coop after 2021 IPOs.

Don’t say Templeton didn’t warn you.


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