Debatable Economics; Weak in the Disneys; GM Shocks Nikola
Relief? That’s Debatable
Man, that was embarrassing.
That was just hard to watch. And I can’t believe how lopsided it was. I mean, I thought things would be at least somewhat close. But civility and anything resembling “close” went out the window real quick…
You’d think with Shane Bieber and Gerrit Cole pitching, the score would’ve been much lower. But … 12-3 in favor of the Yankees? Wow.
What did you think I was talking about?
Anyway … you know what else is embarrassing? The lack of additional COVID-19 relief from Capitol Hill.
Now, you’re probably thinking: Do we really need more relief?
After all, the ADP Research Institute payrolls report just revealed that the U.S. economy added 749,000 jobs in September. The Institute also revised August’s jobs numbers higher to 481,000. Both figures are well above economists’ expectations.
Furthermore, today brought a bumper crop of positive news on the pandemic front.
Moderna Inc. (Nasdaq: MRNA) and CureVac N.V. (Nasdaq: CVAC) both reported very positive clinical results from their respective COVID-19 vaccines. Furthermore, Regeneron Pharmaceuticals Inc. (Nasdaq: REGN) also released positive data on its potential virus treatment.
As Harold Zidler would say: “Everything’s going so well!”
Well, yes … but actually no.
The restrictions on business layoffs from the first COVID-19 relief bill have expired. And, with no further relief in sight, struggling businesses are doing what struggling businesses do.
As part of its $25 billion rescue plan, the airline industry was required to preserve jobs through October 1. Tomorrow just happens to be October 1, putting some 30,000 airline jobs at risk.
Elsewhere, Walt Disney Co. (NYSE: DIS) just announced 28,000 layoffs, and Royal Dutch Shell PLC (NYSE: RDS) will cut 9,000 jobs. And you can bet your bottom dollar that more layoffs will come without additional government support.
So, where does Congress stand on a new stimulus bill? Apparently, House Speaker Nancy Pelosi (I know you guys just love her) and Treasury Secretary Steven Mnuchin are both “hopeful” that a deal will come soon.
Well, hope all you want. I’ll continue to batten down the hatches, take profits where available and stock up on gold, Treasurys and currency funds.
As I’ve said before, it’s time to set aside speculative bets and look for safe havens and solidly run companies that will make it through this morass. If you don’t, the market will wreck your portfolio.
I mean, the market is down nearly 10% from its September peak. But that decline has been punctuated with big rallies and big declines. Did you know which you’d face when you got up this morning?
It’s Bizarro land out there right now, and neither you (nor I) are Nostradamus by a long shot. But you can better your odds and make this market work for you.
You need a strategy that shifts gears faster than a ‘69 Olds 442 with a Hurst slam shifter. Great Stuff has just the solution, and it only takes one trade a week.
The Good: Getting Chippy
Remember a couple years ago when Micron Technology Inc. (Nasdaq: MU) was the hottest chip stock on the market? A pesky glut in flash memory stock and falling prices put that rally in check, but the company is beginning to come back around.
Despite the pandemic, Micron reported strong fourth-quarter results — results that actually rose year over year. Here are the deets:
- Earnings: $1.08 per share versus $0.99 per share expected.
- Revenue: $6.06 billion versus $5.90 billion expected.
Net earnings actually soared 76% year over year, while revenue jumped 24.4%. Impressive considering the market conditions right now.
But it wasn’t all wine and roses. Micron warned of rising operating expenses and put fiscal first-quarter guidance below expectations. Hence why the shares dipped nearly 5% today.
However, those operating expenses relate to new product launches. Specifically, Micron’s second-generation flash storage products and its new video memory, which Nvidia Corp. (Nasdaq: NVDA) will use in its new Ampere gaming chips.
In other words, this dip in MU could be an opportunity for investors — that is, if you have room to play with in your portfolio that isn’t dedicated to safe havens.
The Bad: Moldy Cheese?
M I C — See you real soon!
K E Y — Why? Because we can’t pay you.
M O U S E…
The pandemic has finally become too much for the Mouse’s house to bear. Walt Disney announced 28,000 layoffs in its Parks, Experiences and Products division this morning, blaming COVID-19 … and California’s response.
Disney highlighted the pandemic’s uncertainty and the physical distancing requirements for parks, noting that both were “exacerbated in California by the state’s unwillingness to lift restrictions that would allow Disneyland to reopen.”
With more than 800,000 cases (adding more than 3,000 last week) and 15,791 deaths in the state, I’m not sure pointing fingers at California’s “unwillingness to lift restrictions” is the best PR move for Disney.
Especially since it’s Orange County, where Disneyland is located, that continues to see spikes in infections.
Great Stuff Picks readers in DIS still have hope, however. The shares hover above support in the $122 area, which is home to the stock’s 200-day moving average.
If you have the stomach for risk, DIS is certainly a well-run company that will come back big after the pandemic. But it’s possible you could see better entry points for a long position down the road.
The Ugly: Fear In-Nikola
What a tangled web we weave when we invest in EVs!
Electric vehicles (EVs) are somewhat of a reprieve from the rest of the market’s monstrosities, yet that doesn’t make Nikola Corp.’s (Nasdaq: NKLA) news and lack of news any less ugly. Here’s what’s up:
- This year’s in-person Nikola World showcase is a no-go. You know … the pandemic and all.
- Nikola is still ready to rock with its hydrogeny plans even without Founder Trevor Milton.
- The first few prototypes of the Nikola Tre electric truck will be “substantially completed” at the company’s German plant in the next few weeks.
NKLA rallied 12% throughout the day, but what remained unsaid was how much of General Motors Co.’s (NYSE: GM) deal with Nikola is still under negotiation — if it ends up going through at all after today’s decision-less day.
From GM: “Our transaction with Nikola has not closed. We are continuing our discussions with Nikola and will provide further updates when appropriate or required.” Translated, that boils down to: “Well, we’re still here, aren’t we? Don’t @ me.”
Here’s the short and long of it. Short term, if GM walks away from the deal, it’s bye-bye NKLA as the market devours the easy prey. Whomp.
But then, realistically, it’s “buy-buy” NKLA. Over the long-term, the company is still the strongest force in electrifying the trucking industry — and we’re back to that debate between Nikola’s hydrogen fuel cells and bog-standard batteries like, well, everybody else.
With the latter, you’ll never beat filling up the tank at the gas station — even with fast charging. If EVs charged in the two minutes it takes you to fill up a tank, we wouldn’t be having the combustion discussion.
But … with hydrogen fuel cells, you can “fill up” your truck in minutes, just like with gasoline. Efficient hydrogen production is really the only hurdle. And that’s why everyone’s eyes are still on Nikola — the shorts, Robinhoodlums and futurist fanatics alike.
So how about that ADP payrolls report, huh? What, you mean to tell me that wasn’t the first thing you jumped out of bed to check today?!
Pretend you’re Wall Street and disregard all the data you’ve heard recently … forget all the nastiness going on and just think about your situation for a minute.
For this week’s poll, we want to hear from you on a most individual level — your family and closest friends. Tune out the world of social media at large and all the narratives you’ve heard.
Now, here’s this week’s poll: Some error has occured.
Some error has occured.
By the way, if none of these answers quite scratched your poll-respondin’ itch, why not drop us a line? GreatStuffToday@BanyanHill.com.
Now, we here at Great Stuff headquarters understand that “How’s work?” can suddenly feel like a very personal question. So, if you don’t want your comments blasted out to the four winds (read: featured in issues), let us know…
Just like you and your fellow readers let us know about the pot stock resurgence in last week’s poll!
Or not. We’re split down the middle. Just under half of the Great Stuff gang said they’re cashed out on pot stocks, while 23% of you never left the drum circle to begin with.
The other 28% or so are ready and willing to get anything you can out of the pot market … equity or otherwise.
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