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Cycle? No, Iran; No-Cash Nio Delivers

Cycle? No, Iran; No-Cash Nio Delivers

Is this the start of a new trading cycle on Wall Street? Stay tuned for the Iran War Cycle.

A New Cycle Is Born?

Did you think the Iran-U.S. conflict would fade over the weekend?

We could only be so lucky. But one does not simply rock the casbah and walk away … especially when one continues to rock the casbah throughout the weekend.

After Iran promised to retaliate for the killing of top Iranian general Qassem Soleimani, President Trump doubled down on his “get tough with Iran” rhetoric. Trump threatened “disproportionate” attacks if Iran retaliated against U.S. targets.

Meanwhile, Iraq — the other Middle Eastern “I” country Americans are familiar with — voted for a resolution to expel U.S. troops from the country. In response, Trump promised harsh sanctions on Iraq if it followed through.

“We have a very extraordinarily expensive airbase that’s there. It cost billions of dollars to build. Long before my time. We’re not leaving unless they pay us back for it,” Trump said.

The Takeaway:

Let me give my take on the Iraq situation by paraphrasing George Thorogood & The Destroyers: Trump is a-howlin’ about the front rent. He’ll be lucky to get any back rent.

We could certainly use one bourbon, one scotch and one beer today. It might take the edge off the growing market turmoil. I have a feeling that this will be a major theme throughout 2020, as President Trump tried to balance two major motifs of his presidency: toughness on America’s foes and stock market gains.

We saw the same balancing act throughout the U.S.-China trade war negotiations. That back-and-forth spawned the Great Stuff Trade War Cycle chart. And you guessed it — I’m already prepared for the same back-and-forth with Iran. Behold, the Iran War Cycle chart:

Great Stuff's Iran War Cycle trading chart.

This is all rather tongue-in-cheek right now. We don’t have a cycle yet, only a minor two-day market sell-off related to rising Middle East tensions. But, given Trump’s history and how much importance he places on the stock market’s performance, I think this has a shot.

Let’s just hope this cycle is another upward spiral for the market — not a downward spiral should conflict escalate.

Great Stuff Good Better Best

Good: There Is No Spoon

Nio Inc. (NIO) announced a 25.4% jump in December vehicle deliveries.

Chinese electric vehicle (EV) maker Nio Inc. (NYSE: NIO) continues to dodge bears like Neo dodged bullets in The Matrix.

This morning, the company announced a 25.4% jump in December vehicle deliveries. It’s Nio’s fifth consecutive month of increased deliveries, and it put bullish investors in a very good mood.

How good? Nio shares surged more than 11% in premarket trading, before quickly coming back down to earth during the regular session. Geopolitical concerns appear to be the biggest drag on Nio’s investor sentiment right now.

Well … except for continued softness in Chinese EV demand … and the fact that Nio is burning through cash like an Australian wildfire.

Better: Fake Plastic Teeth

If you shop at Walmart Inc. (WMT), SmileDirectClub Inc. (SDC) has some brand-spanking-new products just for you!

OK, so they aren’t fake … but they are plastic, and they do align your teeth. Sometimes I go a bit too far for pop culture references. But, one of you now has that Radiohead song stuck in your head. Ha!

If you shop at Walmart Inc. (NYSE: WMT), SmileDirectClub Inc. (Nasdaq: SDC) has some brand-spanking-new products just for you!

“What new products?” you ask? Well, how about an electric toothbrush, some whitening toothpaste, a water flosser, a teeth-whitening system with an LED light and an ultrasonic UV cleaner.

SmileDirectClub’s Chief Financial Officer, Kyle Wailes, said the company has worked on these products for more than a year, and now they’re rolling out exclusively to more than 3,800 Walmart stores (and Walmart’s website).

That means a lot of smiles and a lot of potentially cleaner, straighter teeth. It also means happier portfolios for SDC bulls, as the stock rallied nearly 26% on the Walmart deal.

Now, if only management could turn that frown upside down. According to Wailes, SmileDirect hasn’t decided to factor in the Walmart deal with its 2020 outlook just yet.

How’s that for anticlimactic?

Best: Plug It In, Plug It In

Plug Power Inc. (PLUG) signed a two-year, $172 million supply contract.

Forget the Hindenburg — what is this, 1937? — Plug Power Inc. (Nasdaq: PLUG) is the new hotness in hydrogen power.

After it promised back in September to hit $1 billion in revenue by 2024, the ambitious alternative-energy company signed a two-year, $172 million supply contract. Plug didn’t name the company but did note that it was a Fortune 100 member.

For the next two years, Plug Power will supply hydrogen fuel cell units, storage and dispensing infrastructure. Remaining details on the deal are undisclosed.

“Coupling this growth with already unfolding market expansion in stationary power and on-road electric vehicles well positions Plug Power to achieve our $1 [billion] gross billing goal for 2024,” said CEO Andy Marsh.

Plug Power’s main customers currently include Walmart and Amazon.com Inc. (Nasdaq: AMZN), as both utilize hydrogen-powered forklifts in their distribution centers and warehouses. To achieve $1 billion in revenue, Plug plans to add at least one major multisite customer per year. Today’s news is a great start in that direction.

Great Stuff Quote of the Week

I checked under my blanket and looked around but couldn’t find it — then I realized the sound was coming from my stomach.

— Ben Hsu, Apple AirPod connoisseur

We can now add digestive juices to the list of things that Apple’s AirPods can withstand. Hsu called his experience “magical” and said the AirPod still worked after passing it naturally, cleaning it off and letting it dry.

I can’t help but see this as a win for Apple … though I have so many questions.

(Aren’t you proud of me? I didn’t make any crappy jokes — doh!)

Great Stuff: The Story of the Year

We’re what, six days into 2020? And we’ve already seen what could be the biggest market-driving story of the year. The Iran conflict, I mean — not Ben Hsu’s AirPod escapade.

I mean, we’ve already made a trading cycle chart for it and everything!

But while we’re just now realizing the weight of the situation, Banyan Hill expert Matt Badiali warned us way back in May 2019 that the situation could get ugly … and fast.

Back then, saboteurs hit several oil tankers moving through the Strait of Hormuz, a choke point that’s crucial in shipping oil. Matt warned: “This feels like the prelude to war. Be prepared for much higher oil prices…”

Matt knew it was only a matter of time before this situation got even worse … and here we are. With this in mind, I urge you to read Matt’s latest piece: “Biggest Story of 2020: Oil and the Escalating Conflict in the Middle East.”

It could be game changing.

To get Matt’s expert analysis and research on the oil market delivered right to your inbox, click here to sign up for Real Wealth Strategist today!

You won’t regret it.

Until next time, good trading!

Regards,

Joseph Hargett

Great Stuff Managing Editor, Banyan Hill Publishing

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