New GDP Report Points to Economic Boom
In today’s Market Talk, Amber Lancaster and I discuss:
- How the positive trend for the gross domestic product (GDP) spells great news for investors, supporting what I’ve been saying for months.
- What Amazon’s new Prime delivery policy means for other retailers — another new-world nail in old-world coffins.
- The most important earnings releases coming out this week.
April 29, 2019
Amber Lancaster: Welcome to this week’s Market Talk. I’m Amber Lancaster, joined by Paul Mampilly. Ian Dyer is on vacation. Each week we look forward to sharing our viewpoints with you, our readers, and giving insight into what’s on our radar.
Today’s outlook is for the week of April 29, 2019. I’ll begin by sharing with you what I’m watching and then we’ll hear Paul.
Today I’ll cover three topics. The first will be my take on recent U.S. economic data and earnings releases. The second will be my story of the week. The third will be the latest performance numbers on our Disruptification Index.
This past Friday’s first quarter GDP surprised us all. It rocketed higher to 3.2%, surpassing economists’ expectations of 2.3%. This higher-than-expected number was mainly driven by advances in inventories and trade.
As seen in this column chart, Q1’s GDP number received a significant boost from inventories and net exports. When added together, Q1 net exports and private inventories totaled 1.68. This is a one-two punch in the largest combined boost from inventories and trade not seen since 2013 when it clocked in at 1.73.
Looking forward to this week’s economic releases, there are a number in store for us to look forward to. We’ll have to buckle our seatbelts. Here are the most significant releases. As you can see in this graphic, April’s consumer confidence will be released on Tuesday at 10 a.m. On Wednesday, the final print for April’s U.S. manufacturing purchasing managers index (PMI) will be released at 9:45 a.m.
Also on Wednesday, April’s ISM Manufacturing number will be released at 10 a.m. March’s month-over-month construction spending number will be released at 10 a.m., as well. The U.S. Federal Reserve’s rate decision will be announced at 2 p.m. On Thursday, the final print of March’s durable goods orders will be released at 10 a.m. Factory orders for March will be released at 10 a.m.
On Friday, wholesale inventories month-over-month preliminary readings for March will post at 8:30 a.m. The U.S. jobs report for April will also post at 8:30 a.m.
Now, company earnings still continue to dominate U.S. markets. Let’s check out this list of some of the top U.S. securities reporting earnings this week per Bloomberg. There will be a total of 259 releases in this group of securities alone. These companies include: Google, Apple, Prudential, Allstate, Pfizer, CVS, Humana, Cigna and Charter Communications.
As a side note, we received a great question from David, a loyal Total Wealth Fellowship member. He’s wondering if I can share a similar graphic in print form to our paid subscribers featuring our services’ recommended company earnings list. The answer, David, is yes. Please keep an eye on your email inbox for something very soon.
My story of the week focuses on a chart-topping milestone. Renewable Energy Magazine is reporting that electric car registrations have surpassed 100,000 units in Europe for the first time ever. The periodical states that, “The electrification shift in the European car market continues at pace despite the seventh consecutive month of decline in overall demand for cars in March 2019.”
JATO, the source for this compelling data release and overall supplier of automotive business intelligence headquartered in London, produced this telling chart. Please take a look. The green arrow points out that electric vehicle (EV) registrations topped out at 119,000. This chart shows a steady increase in EV registrations since 2010.
The leading EV carmaker in the chart is Tesla. The top three European countries embracing EVs are Norway, Sweden and the Netherlands. If you haven’t driven or test driven an electric vehicle, I suggest it might be worth a try. As a long-time car enthusiast I visited a local Tesla dealer with friends last year to see their cars up close and personal.
Simply put, I was more than impressed. From the summons feature where the car autonomously drives up to meet you. Then engaging the ludicrous mode launch on the Model S P100D where the car accelerates from 0 to 60 in two seconds was definitely a wow moment that I will not soon forget. Google Tesla’s ludicrous mode launch and then select videos to see exactly what I’m talking about.
Finally, let’s move on to our Disruptification Index. This chart shows it continues to outpace major indices year to date. As of Thursday, April 26, the index is up 22.8% versus 13.8% on the Dow and 17% on the S&P 500.
That’s it from me. Paul, what are you watching?
Paul Mampilly: Thanks, Amber.
Since we’re giving Tesla some love, anyone who is following the stock would know it’s been going down a lot. People have been worrying they’ve hit the peak of their demand. It’s a joke when you think about what you just reported on, Amber. The notion that a car that was introduced just last year and has already sold several hundred thousand is at peak demand.
The stock market can believe all kinds of things for a short period of time. From our perspective and the disruptification view of the world, the data supports us. Smaller countries are now majority electric vehicle countries in terms of their sales. We’re now at 100,000 cars and a million will be just a couple years away. A large number of them will be Teslas for sure.
Just to follow on, Tesla had its investor day last week. They focused on their autonomous technology. I was not there for it but I have seen YouTube reports from it. The Tesla was able to be 100% autonomous with no one taking control at any point in time. The person reviewing it said it did look a little wobbly at a couple points.
However, at no point did the person that was at the wheel take over. The computer ….was able to figure out what the problem was, solve it and continue to go. Elon Musk’s notion that he would have hundreds of thousands, maybe millions, of robo taxis on the road in about five to six years seems ridiculous to many people. However, the idea that you would even sell 100,000 electric vehicles seemed ridiculous when he started Tesla.
I would say, don’t sell Tesla short. Don’t sell Elon Musk short. We believe in the electric car revolution and we believe in the autonomous revolution. For sure we are moving in that direction. There will be some stutter steps, but we are going to get there. It will happen way sooner than what anybody is currently expecting.
With that, let me track back to some of the other things going on in the macro world. The GDP report really does make a mockery out of all the folks who were telling you late last year that a disaster was about to ensue, some enormous crisis was coming, sell your stocks, go hide underneath your desk, go buy a cave, prepare for the doom shelters. 3.2%, I mean come on. This is an utter disaster for everybody that was claiming there was going to be some horrible thing that was going to happen.
If there was, you would have seen a 0.5%. 3.2% makes a joke out of all this. When you actually look inside it, it also supports what President Trump was telling the Federal Reserve: there is no inflation. In fact, the inflation number that was in it is actually really weak. It supports a Federal Reserve rate cut if it’s based on inflation.
The Federal Reserve could cut rates. As you know, we were strong through that period. We told you to hold on to your stocks. We told you it was a panic and we told you to stay in and if you had money you should buy in. We told you that big fear about the inverted yield curve, well you don’t hear much about that anymore.
We think what you’re seeing with inflation tells you that the deflationary boom scenario I told you about… is unfolding. I have one more piece of evidence to show you. On Thursday the productivity numbers are going to be released. Private estimates are that we are going to see the highest productivity numbers since 2010. That really supports my deflationary boom scenario argument.
We’re getting more out of less. As companies and organizations are making these investments in our megatrends — Internet of Things, block chain, artificial intelligence, robotics — they are extracting more out of it. For me, the current GDP report makes perfect sense. We are going back to becoming a country of people who make things.
We do it in a technological way. We are now making things which other people buy. Of course our inventories would rise. For me, it’s a very bullish sign. The stock market is also reflecting that. The Nasdaq is at new highs, the Dow Jones is about to break through to another high, the S&P 500 is in the same territory.
I believe these are being supported by the kinds of stocks we’re in across our services. They are Internet of Things stocks, artificial intelligence stocks, stocks that are supported by the dominate generation in our country and in our economy — the millennial generation. It’s their preferences that’s driving our economy today.
We saw some numbers last week we were discussing in our team meeting. The vacancy rates for houses in this country has hit a 15-year low. I was telling our team you would never know that from reading the Wall Street Journal, The New York Times or any economic publication, who are really mired in some sort of 2008 crisis thinking, looking for the next shoe to drop.
Meanwhile, the housing market is in great shape. 1.4% vacancy rate. That’s reflective of the fact we have all these young people who are in their prime of earning and looking for places to live.
You know we’ve been reporting on IPOs and there’s been a lot of reporting on Uber which is supposed to be coming public maybe this week. It’s looking like they’ll become public as an $85 billion or $90 billion dollar company. Underlying Uber’s valuation is the same thing that’s making Tesla a valuable company: it’s really the promise of autonomous vehicles.
At some point in time, Uber will shift into providing robo taxis from human-driven taxis. To all the folks who are negative on Tesla, if you stop and think about this, Uber is coming public at an $85 billion or $90 billion valuation in terms of the stock market. Tesla is valued at under $50. $90 billion, $50 billion — are you seeing it? They’re in the same business.
If Uber is worth $90 billion and Tesla is a carmaker, they’re going to do robo taxis, they’ve got their battery business and their solar business, and maybe it’s a little cheap relative to the future. I’m just saying. I know there’s a lot of people who hate Tesla out there. I’m just saying, there’s another way to look at it.
For my Profits Unlimited subscribers, I will have an update on Tesla. Make sure you tune in to tomorrow’s update.
Moving on to other popular companies — Facebook, which is actually owned in one of our services, had unbelievable results. It’s driven by Instagram, which it seems everyone on Earth uses. Really, it’s driving their results.
Apple, as Amber noted, is set to report this week. I believe it will continue to show they have weakness across all their platforms. Yes, the stock is back up to over 200. However, I’m guessing it’s Warren Buffett or someone like him coming in to bid it up. It’s definitely not driven by the strength of their business.
Amazon announced last week that they are going to shift their Prime membership so you can get delivery in one day. I can hear the sound of other retailers just being squished. The retailers like Walmart and Target have just barely begun to respond to Amazon’s ability to have virtually anything delivered in only two days.
Now they’ve done it by trying picking it up in their parking lot or faster delivery. I’ve done some of that at Target and it’s OK. I do it with my supermarket. However, whatever I can order from Amazon I do because it’s so much more convenient and it’s not more expensive. I’m thinking that you’re going to start to see a number of retailers having no purpose for being around in this new world. Their valuations are going to get crushed pretty hard.
I saw a super interesting article in the Wall Street Journal this weekend. It was talking about Roche, which is one the world’s biggest biopharmaceutical companies. A leader in cancer and so many categories of medication. They are falling behind. Disruptification has finally come to the pharmaceutical industry. That is music to my ears.
If you’ve been following me for a few years I’ve been telling you to buy into biotechnology. In fact, last week my Bold Profits video was on telling you to buy this incredible ETF that gives you exposure to what this article says it’s benefitting. It’s the smaller and medium-sized biotech companies that are really taking share. They are dominating categories that Merck, Pfizer, Roche or Novartis in another time could have dominated.
However, today it’s technology and intellectual property that matters. Also your ability to do things quickly. This is why next month we are going to put in an unbelievable biotech company that I believe has the potential to be the next Pfizer or the next Merck or the next Roche. All of you look out for that, that’s going to be in next month’s Profits Unlimited.
I also want to note, there was a deal this weekend between two companies most people wouldn’t think about: Ingersoll-Rand and Gardner Denver. These are boring companies. They make pumps and stuff nobody cares about. However, the underlying premise behind this is something important.
This new world we keep telling you about, the world of Internet of Things, aritificial intelligence, robotics, it requires you to invest or be left behind. You have to invest now or a few years out you are a target. You are Sears, you are going to go bankrupt. Smaller companies are finding they can’t justify the expenditure, they are going to run themselves to zero.
So they are merging with stronger companies so they can invest in their businesses to catch up or at least compete. We’re going to see more of that across industries. More mergers in industrials and pharmaceuticals. That’s good for us because we own the strong and they are going to benefit. The weak, as we’ve been telling you, are just going to die by going to zero.
Last thing I want to focus on is cryptos. You know after calling the bitcoin bubble in 2017, also telling you when bitcoin bottomed late last year, I’m positive on cryptos. I’ve been tracking it and giving you updates week after week. This week there was a scare story.
The New York Attorney General filed against an exchange called Bitfinex saying they may have swindled $850 million in a cryptocurrency that actually mirrors the dollar. I would tell you that in the grand scheme of things this currency called Heather has very little meaning for what the cryptouniverse is going to develop into.
That’s caused a lot of cryptos to move back down. From our perspective, cryptos are one of the major disruptification factors in the world of finance and money. It’s something that is going to start taking market share and cause more problems for banks and insurance companies — the old world of finance.
I don’t want to forget. If you like what you’re seeing and hearing, make sure to like this video, comment, share it, subscribe. Also, look out for my publisher’s promotion this week for an industrial stock that I think could one of these kinds of stocks we see in the news fairly soon.
Look out for an email telling you how to subscribe to True Momentum which has this incredible industrial stock.
With that, back to you, Amber.
Amber: Thank you, Paul. Thank you to everyone tuning in listening to us or watching us this week. We appreciate you so much and wish you an excellent week ahead. Take care until then.
Monday’s GDP announcement blew away expectations, supporting my prediction of an upcoming “deflationary boom.”
With the GDP increasing 3.2% in 2019’s first quarter, this tells me that those waiting for a bear market to take over couldn’t have been more wrong.
The GDP’s increase actually means a decrease in financial inflation, which could result in the Federal Reserve cutting interest rates.
This is great news for us. And with the country’s productivity numbers set to increase for the first time since 2010, we are about to see a new wave of companies doing more with less.
In today’s Market Talk, we also discuss:
- Manufacturing companies Ingersoll Rand and Gardner Denver just merged. Could this be the start of a new trend, with smaller biotech and industrial tech companies selling to their competition?
- Cryptocurrency is changing how we handle our money. As a major disruptor of the banking industry, crypto will speed up the shift from old banking to new.
- Uber’s initial public offering (IPO) is set for this week, which is great news for those following the electric vehicle (EV) trend. And with a valuation that’s higher than Tesla’s, Uber could take the EV market by storm.
Editor, Profits Unlimited