Empty Streets, Fast Cars and the Farcical Solar Ceremony
Friday Four Play: The “Running on Empty” Edition
Looking out at Wall Street rushing under my wheels.
Looking back at the gains gone by like common sense repealed.
In 2020 before Halloween, we’re trading up one on one.
I don’t know where we’re running now. We’re just running on…
Running on (running on empty).
It’s time for your U.S. economy reality check … with a little Jackson Browne thrown in for good measure.
Yesterday, weekly initial jobless claims unexpectedly rose to 870,000. Unexpectedly? Well … unexpectedly for Wall Street economists at least.
While the figure remains well below the March record of 6.87 million, claims remain stubbornly above their Great Recession highs. The data arrived as Federal Reserve Chairman Jerome Powell urged Congress to “stay with it” when it comes to stimulating the U.S. economy.
“The economy is running on empty,” said Mitsubishi UFJ Financial Group Chief Economist Chris Rupkey. “The country isn’t out of the woods yet and it won’t be if the pleading of Fed officials for more stimulus isn’t heard by government officials down in Washington.”
Meanwhile, the Commerce Department reported today that August’s durable goods orders rose a mere 0.4%, whiffing expectations for a 1.8% increase and not even in the same ballpark as July’s 11.7% rise.
Now, you gotta do what you can just to keep your portfolio alive, trying not to confuse it with what you do to survive. It’s 2020 … wish we were trading free, calling the market our own.
I don’t know when the market turned into the road we’re on: running on (running on empty).
Unless Congress finally does something. (Yeah, right!)
And now for something completely different … it’s time for your Friday Four Play.
No. 1: Fast Carr
OK, dear reader, I don’t usually dedicate an entire section to a shameless promotion … but you’ve just gotta see this.
I mean, this is some of the greatest stuff I’ve seen in years, and it isn’t that shameless.
I know that many Great Stuff readers already take advantage of Michael Carr’s One Trade service. But, if you haven’t taken the plunge yet, here’s why you need to get in now!
This week, Mike’s One Trade closed out a near triple-digit gain in less than three hours — during a stock market rout, no less.
Mike’s research hit the airwaves just before 1 p.m. on Wednesday Eastern time — a bearish trade on the Dow. And, just after 3 p.m. that day, the order to close came through, banking the model portfolio an official gain of 90.42%!
One trade. Three hours. Big gains!
I saw both the buy and sell alerts come in and … if you were quick enough on the draw, you could’ve easily banked a triple-digit gain on this trade. Phenomenal!
This is where I say that past performance does not equal future returns. Your results may vary. Near triple-digit gains in three hours are not typical results. See official rules and regulations for details. Do not feed One Trade after midnight. Do not get One Trade wet. Do not taunt One Trade. You know the deal.
Still, I’ve been in the market biz for roughly 15 years, and I’ve rarely seen results like this.
Great Stuff reached out to Mike for comments on the ridiculous intraday One Trade win. His reply was simply a humble: “Thanks, Joe. This was a good day.”
What a stand-up guy.
No. 2: Farcical Solar Ceremonies
If you want to know just how disconnected Wall Street is from reality, look no further than SPI Energy Co. Ltd. (Nasdaq: SPI).
SPI is a Hong Kong-based solar panel installation company — and a small one at that, with just $97 million in revenue last year. As of June, the company owned and operated just 16.8 megawatts in solar installations, which is next to nothing compared to its gigawatt-generating brethren.
Back in March, SPI received a delisting notice from the Nasdaq because its shares traded below $1 for 30 days in a row. The Nasdaq was understanding, though, and gave SPI until December to rectify the problem due to the pandemic.
This week, SPI “fixed” its problems in stellar fashion. The company issued a press release announcing a new electric vehicle (EV) company called EdisonFuture. The press release did not mention a vehicle — not even a prototype to push down a hill. There was no mention of funding. No raised capital. No technology announcement. Nada. Zip. Zilch.
Nothing but a press release from SPI CEO Xiaofeng Peng that said:
As Tesla has demonstrated, an end-to-end business model in the renewable energy space can generate significant value. With the addition of EV and EV charging segments to our diverse solar business, we are positioning SPI Energy for the future of renewable energy.
That’s all it took. SPI shares skyrocketed more than 4,300%, lurching from just $1.04 on Tuesday to more than $46 at their peak on Wednesday.
Listen, strange solar companies lyin’ across the pond distributin’ press releases is no basis for a trading system. Supreme trading power derives from a mandate from revenue, not from some farcical solar ceremony!
Some traders have at least come back to their senses. SPI has since plunged 75% from its peak. And if you think this thing won’t go back to penny stock territory, think again.
This SPI insanity isn’t just an indictment of speculative Robinhoodlums, it’s an indictment of Wall Street’s irrational exuberance as a whole.
To quote Dr. Peter Venkman: “So be good, for goodness’ sake! Whoa, somebody’s coming!”
No. 3: Hyliion’s Shell Game
Today’s penultimate section is brought to you by loyal Great One Linda M., who just barely missed the cutoff for yesterday’s edition of Reader Feedback.
What happened to Hyliion talk w/ hopefully some guidance on if and when to buy?
Thanks for writing in!
Last time we talked up hybrid truck pro Hyliion, we skipped over some of the nitty-gritty of how special purpose acquisition companies (SPACs) work. But if you’re looking to get speculative with it, let us drop some knowledge so you don’t go in unprepared.
The quick and dirty: Hyliion is using a SPAC called Tortoise Shell Acquisition Corp. (NYSE: SHLL) to go public. SPACs act as a blank check — they already trade publicly, usually starting between $10 and $12 per share. The SPAC then goes on the hunt for new companies looking to go public.
It’s a reverse merger: Once the buyout target is found, the companies merge and become one public entity united in spirit (or at least monetarily).
Based on the target’s prospects (Hyliion’s hybrid truck and powertrain market, in this case), the shares will move freely about the trading cabin.
You get the gist. There’s a final vote to approve the merger, the SPAC shares convert to the “new” company’s ticker in your shiny Robinhood account and bingo bongo — there you go. So, Tortoise Shell is Hyliion (for now). Hyliion is Tortoise Shell. Capeesh? Yes, it’s turtles all the way down.
Now, since the SPAC’s shares started trading, SHLL has run up as high as 460% earlier this month, landing at around 323% today. The vote to merge lands next week, and it’s expected to go through.
That said, I’d be very hesitant to get into anything speculative right now. It’s a big reason why we got out of Nikola Corp. (Nasdaq: NKLA), which also went public as a SPAC. The news-driven market is a fickle sea. If she wants to sell, she’s a-sellin’.
And unless you fancy yourself a salmon, there’s no sense fighting the current.
If you’re a gambler — and that’s a big “if” these days — it could be worth it, depending on the price you pay before or after the vote. This is not a formal recommendation, because you could just as easily get burned by a sell-the-news event or a market correction.
The secret’s out on SPACS after DraftKings Inc.’s (Nasdaq: DKNG) similar 448% run-up to SPAC stardom earlier this year. But the secret isn’t out on Paul Mampilly’s Secret Portfolio — the kinds of stocks he personally invests in!
No. 4: 2 Halves Make a Wholesale
No matter how much Costco Wholesale Corp. (Nasdaq: COST) bulked up last quarter, it couldn’t overpower the might of high expectations.
Costco’s earnings were top of the mass supply heap, too:
- Earnings: $3.13 per share versus expectations for $2.85 per share.
- Revenue: $52.28 billion versus $52.1 billion expected.
On top of it all, revenue grew 12.5% year over year. But Costco’s living in a world of fools, breaking the stock down almost 3% today, when they should all just let it be.
So what gives? Someone forget their membership card at home? Turf wars with that ol’ sly Sam’s Club? No, Wall Street’s just doing its overreacting thang again.
Costco spent an extra $281 million last quarter (like everyone does when shopping there). This time, the wads of cash went toward hazard pay, store sanitation and the overall costs of staying safe in those zombie apocalypse-proof warehouses.
Don’t believe the anti-hype — Costco’s earnings show it knows its way through the pandemic market. I’d expect nothing less from everyone’s favorite source of bulk vodka, rare bourbon, mozzarella sticks by the pound, tires, caskets and saunas.
To boot, like the Targets and Walmarts of the pandemic, Costco reported that ecommerce nearly doubled. And I mourn the backs of postal workers hauling five-gallon jugs of barbecue sauce (granted, I only have myself to blame on that one).
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Thanks for joining us through another rip-roaring and empty-running week of Wall Street sleuthing. We’ll be back next week with the meme-wielding fun poking you know and love.
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Until next time, stay Great!
Editor, Great Stuff