Semiconductor Stocks Soar to New Highs: The ETF to Buy Today
In today’s Market Talk, Amber Lancaster, Ian Dyer and I discuss:
- What the latest jobs and manufacturing numbers tell us about the health of the U.S. economy.
- President Donald Trump’s calls for interest-rate cuts.
- The newest initial public offerings (IPOs) in the tech sector.
- Our thoughts on bitcoin’s comeback.
April 8, 2019Amber Lancaster: Welcome to this week’s Market Talk. I’m Amber Lancaster, joined by Paul Mampilly and Ian Dyer. Each week we look forward to sharing our viewpoints with you, our readers, and giving you insight into what’s on our radar.
Today’s outlook is for the week of April 8, 2019. I’ll begin by sharing with you what I’m watching and then we’ll hear from Ian and Paul. Today I’ll cover three topics. The first will be my take on the U.S. economic front. The second will be my story of the week. The third will be the latest performance numbers on the Disruptification Index.
On the economic front, last week two U.S. economic releases proved that our continued bullish stance on the U.S. economy remains true. Those two releases were the change in non-farm payrolls in March and initial jobless claims for the week ending March 30.
Last week’s robust rebound in March payrolls showed that the U.S. economy is on a sound footing and the dip we saw in February’s non-farm payrolls was an outlier. More notably, the March U.S. initial jobless claims released last Thursday dropped to its lowest level since December 1969.
Let’s put that into perspective. Please take a look at this chart. This chart plots the progress of initial jobless claims since 1969. There are a number of rise and falls in the chart, but since its most recent high in March 2009, initial jobless claims have been on a relatively steady decline. Culminating last week in the lowest reading since 1969.
What this means is that the number of Americans newly applying for unemployment benefits dropped to the lowest level in nearly 50 years to a reading of 252,000 claims. The number of individuals collecting unemployment? Those benefits dropped to 1.7 million. In all, the initial jobless claim number coupled with a bounce in March payroll data points to an overall tight labor market, which bodes were for a sustained labor market strength.
With that being said, we have some key economic releases this week. As you can see in this graphic, the March Consumer Price Index month-over-month reading will be released on Wednesday, April 10, at 8:30 a.m. Producer Price Index month-over-month demand for March will be released on Thursday, April 11, at 8:30 a.m. The University of Michigan Sentiment Index preliminary number for April will be released Friday, April 12, at 10 a.m.
My story of the week focuses on a brand new clinical study released by Valeritas Holdings Inc. Valeritas is a medical technology company based in Bridgewater, New Jersey. It’s been around for quite some time. Its emphasis is on improving the health and simplifying the lives and people living with diabetes.
Check out this graphic. Per the CDC and the American Diabetes Association, more than 30 million Americans are now living with diabetes and another 84 million have pre-diabetes which, if not treated, often leads to type 2 diabetes. Overall, diagnosed diabetes cases cost the U.S. about $327 billion per year.
If you or your loved ones are living with diabetes, this story may be of particular interest to you. Valeritas announced today that its flagship product V-Go — a wearable insulin delivery device — lowered users’ average blood sugar levels (A1C) and total daily insulin dosages by 24%. As seen in this image, the delivery device is a simple, affordable insulin patch that adheres to the skin of the abdomen or back of the arm.
Over the course of 24 hours, V-Go’s basal-bolus insulin delivery can eliminate the need for taking multiple daily insulin shots. It provides discreet on-demand bolus dosing at meal times and is the only basal-bolus insulin delivery device on the market today specifically designed keeping in mind the needs of type 2 diabetes patients.
As seen in this image, users fill V-Go with their prescribed insulin using an included, disposable filling accessory called EZ Fill. With the push of a button, a patient can then start the flow of insulin and self-administer their bolus doses at mealtime.
John Timberlake, president and CEO at Veritas, stated that over the past several years, Valeritas has compiled strong, real-world evidence consistently demonstrating the clinical benefits of V-Go for patients with type 2 diabetes. Mr. Timberlake expects that this trend will continue.
Turning to our Disruptification Index, this chart shows that it continues to do well year to date. As of Friday’s April 5 close, the index is up 27% versus 13% on the Dow and 15% on the S&P 500.
That’s it for me. Ian, what are you watching for this week?
Ian Dyer: Thanks, Amber.
Another key piece of economic data came out last week on Monday when the ISM Manufacturing Index number came out. It beat expectations. The reading was 57.5 versus a forecast of 52.4. With that index, anything over 50 means there was an expansion.
Right now we’re seeing an expansion for demand for manufacturing. The report that the number came with also said that we’re seeing an expansion of that demand domestically as well as internationally through exports. Of course manufacturing is a key cyclical part of the economy. When there’s an expanding economy you see a lot of expansion through manufacturing and vice versa.
The fact that we see that well over 50, especially 10% above the estimate, is really encouraging when looking at the overall economy and when looking at what stage we’re at right now. Then there are the jobs numbers you mentioned. The second-lowest jobless claims since 1969 is huge.
There was also the payrolls. For 2019 the forecast has been 521,000 added payrolls for the U.S. economy and now we’re at 540,000. Despite that February number we talked about some time ago, March was great rebound and January was great and now we’re ahead of the forecast overall for 2019.
We’re really seeing no huge trend in any sort of data that would signal a recession this far into 2019. In fact, we’re seeing a lot of the data pointing to the complete opposite. We’re still growing, we’re still seeing improvements in the economy. I’m sure everybody has noticed that you are seeing the people who were saying there was going to be a recession in 2019 start to back those up to 2020 or 2021.
We don’t see a recession coming that’s even worth trying to predict at this point because of all this great data that’s coming in. So, our prediction is that the economy is going to continue to be strong. We’re bullish on the stock market and believe that stocks are a great investment right now.
Going into disruptification, I want to talk a little bit about energy storage. It’s the future of what we’ve seen of the whole revolution of renewable energy we’ve seen over the past five to 10 years. Things like solar and wind are among the cheapest ways of getting energy. We’ve seen solar farms and wind farms put up all over the United States as well as much of the developed world.
Energy storage is really beneficial because it’s not always sunny or windy, you can’t always get that consistent reliable energy to your house or business. This is a way to store that energy away so when it’s nighttime or cloudy or not windy…you’re able to live off of that battery system until things get better or more predictable.
Energy storage has a huge market all over the world. I want to point out a couple things going on in the United States so far, especially in…Los Angeles where we’re seeing a plan to get rid of three of their biggest natural gas facilities by 2029. They want to replace them with renewable energy farms that are backed up by battery storage.
That’s going to expand the market. California in general is a forerunner in the United States in this industry. They want to have all their energy coming from zero-emission sources by 2025 and they want to have enough battery storage to power over 1.3 million homes by 2020. We’re going to see this continue to develop throughout the United States.
Right now there’s legislation going on in New York, New Mexico, Minnesota and Washington state, among others, that are really pushing for the adoption of energy storage plus overall renewable energy. 2018 was a huge year for energy storage in general because there was an 83% increase in finished projects over 2017 all over the world.
These projects can take years to complete. That means for years now there have been developments in this industry that have really carried a wave of momentum all over the world through battery storage. Last year there was a huge group of countries that made up a lot of this market: United States, United Kingdom, Australia, China and South Korea. They made up 76% of the started projects for energy storage.
We’re seeing in those huge developed economies that this is becoming a prominent thing. In China especially, they’ve really begun to transform their whole electric grid into using renewables. Right now, they have about 3 million homes running off solar and wind.
They have a lot of different battery storage projects going on, the biggest two are enormous — two of the biggest in the world. They could have about 300,000 homes running off of these batteries. That’s potentially more than a million people and this is really only the beginning.
In India, there’s a huge mandate to get the electricity through renewables to more than 2 million households by 2022. They just completed their first battery system in February. These are countries with millions of people, there’s a huge addressable market for this, the technology is getting cheaper and we believe this is something that’s really going to take off in the next couple years.
That’s what I’m watching right now. Paul?
Paul Mampilly: Thanks, Ian.
To be sure, we’ve got a lot of things going on with solar power. For example, in our True Momentum service we have what I believe is the premium solar company in the United States and, potentially, the world. You guys right remember — I believe it was a year and a half ago — Tesla installed what it called its big battery.
It essentially solved Western Australia’s power problem where they used to have constant blackouts when it got too warm. With just the installation of one battery they solved it. This was a problem they had been having for a few decades and they got it fixed.
Solar power and renewable energy is something that is absolutely a disruptification sector. It’s an extension of this theme pushing into the utility sector.where these old safe sectors that people rely on for dividends or safety are really a peril sector. You invest in it and you think you’re safe, but really there’s something going on that grabbing business away.
It’s going to be a problem sooner rather than later. Also, in Profits Unlimited, those of you who are members know, we support the Alex Honnold Foundation whose expressed mission is to get solar power all over the world. It’s based on Alex Honnold’s travels and seeing people without power and realizing that solar power is the fastest, cheapest and alsoenvironmentally conscious way to get power to them.
What I’ve got this week on the macro side you have to give credit where credit is due. Even though people dislike giving him credit, it turns out that President Trump was right … The Federal Reserve wanted to increase interest rates at the end of last year. Last week we told you that two of his potential nominees were calling for interest rate cuts. Now President Trump himself is calling for interest rate cuts.
In truth, if it did happen it would move the stock market up in a big way. It would move the stock market up in a big way. It would probably move the economy up in a big way as well. Higher interest rates do act as a barrier to expansion. They act as a barrier from people buying a house or a car because it’s the financing cost.
As I mentioned last week, it looks like for all practical purposes we are done with rising interest rates for the next, I would say, two to three years — potentially five years. That’s incredible for stocks and our stocks. If you look at the stock market you will see we are within 2% of the October highs. Just remember how grim the mood was in October, in December, and what people were saying.
People were calling for a crash, a crisis, a huge meltdown of some sort. At the time, we told you that we believed it was a panic and that it would pass. The evidence, facts and everything we were looking at suggested we would go through this and the stock prices would move higher.
As Amber noted, the Disruptification Index, which has all of the stocks across our services in it equal weighted, you can see it’s completely blowing away the S&P 500. That’s because we’re in the new stocks — the stocks of disruptification. Industrial stocks that are part of the Internet of Things revolution. Semiconductor stocks, which are really the base of all of our big megatrends.
Whether it be Internet of Things, blockchain or robotics, self-driving cars. Pretty much every single mega trend requires lots and lots of chips. These stocks got hit really hard. I saw that one of the ETFs I’ve been telling you to buy — which is the Vaneck Semiconductor ETF (NYSE SMH) — just made a new high last week. I can tell you that last year that was thought to be unthinkable.
Of course, we have many credible semiconductor stocks that are superstar stocks. We think they will have new highs and deliver huge gains for us. If you’ve been interested in Profits Unlimited, now’s your time to check into it. I believe our stocks are setting up to soar.
Just going through the ETFs that I’ve recommended over the last three or four months, as I mentioned, industrials, semiconductors, housing, solar power, Japan, financial technology, these are all ETFs that are up. It shows you it pays to watch Bold Profits Daily and it pays to read our newsletters.
Please read, like, share, subscribe, comment and tell your friends and family to watch Bold Profits Daily.
Moving on to IPOs. Lyft IPO had a pretty rocky second week, however it’s coming back and it still looks pretty good overall. This week we are going to see Pinterest, which is a social media company, come public at about a $12 billion valuation.
Zoom, a company that Amber brought up a week or two ago, which is the way we are recording Bold Profits Daily today. We use their technology and so we can vouch for it — it works and it’s really really good. They are expected to come public this week.
Then another super interesting company called Jumia Technologies, which is the Amazon of Africa. There is a consumer revolution that’s going on in Africa. If you want to play it, this would be the way to play it. Really it shows you that technology today is global. Our mega trends today are global. It argues for and justifies higher valuations and higher stock prices.
This is one more reason we are incredibly bullish. There is more going on than just what is going on in the United States. It’s going on globally.
A quick roundup of big company news. Tesla, which we talk about all the time on Bold Profits Daily, announced their delivery number and it was short of what analysts were expecting. They still delivered about 63,000 cars, which is still pretty incredible when you consider Tesla is new at being a mass-market automobile manufacturer.
They are still figuring out their logistics. People are going crazy about it. I would tell you that Tesla is still setting itself up to be the leading electric vehicle automaker in the world and nothing has changed. The Model 3 is the best-selling premium sedan in the United States. It’s the best-selling car in Norway, period.
When they look at what they have on hand in inventory, they just have two weeks’ worth of supply. This is a car that’s in demand. They are shipping this out and giving this to customers as soon as they can. It’s still a hot-selling car. They are still on target to deliver between 360,000 and 400,000 Model 3s in 2019.
That’s a huge number of cars. As I always say, we’re not even talking about the potential from solar power and batteries and all these other things going on at Tesla. For that matter, autonomous vehicles — self-driving cars — Tesla is so far out in the lead.
In a week or so Tesla is going to have its investor day where they are going to showcase this technology. Elon Musk says that in a few years you will be able to use your Tesla as a robo-taxi. In other words, just like Airbnb allows you to rent out your house, Tesla is going to make it where you can use that Tesla sitting uselessly in your driveway or parking lot and have it go out and operate as a taxi and earn money.
It sounds very sci-fi. It would be incredible to see all these cars driving around without drivers picking up and dropping off people. I can’t wait.
Last thing I am going to focus on is bitcoin. Bitcoin is now over $5,000. If you remember, back on December 20, I made a Bold Profits Daily telling you that the bottom was in in Bitcoin. That was just about six days after the actual bottom which was $3,235.
We also reminded you on March 12, telling you the conditions were ripe for bitcoin to go up because of interest rates, the supply, the demand from people. At that point, bitcoin was about $3,916. The reason I am bringing all the up is that, once again, it pays to watch us, it pays to read us. Please like, share, comment and subscribe.
Back to you, Amber.
Amber: Thank you, Paul. Excellent info as always. Thank you, Ian. As Paul said, like us, subscribe to us, comment. Until next week, we wish you a wonderful week. Until then, take care.
The Bold Profits Disruptification Index is blowing away the S&P 500 Index. It’s up 27% this year compared to the S&P 500’s 15% gain.
That’s because we’re invested in new-world companies like semiconductor stocks, which, really, are the base of all of our mega trends. All of them — the Internet of Things, artificial intelligence and precision medicine, to name a few — need a lot of chips.
After a rocky 2018, the VanEck Vectors Semiconductor ETF (NYSE: SMH) just made a new high last week. And we’re going to continue to see new-world stocks make new highs and deliver huge gains for us in the months and years ahead.
The SMH ETF is up more than 20% since I recommended it to you on January 15. It shows that it pays to read Bold Profits Daily and watch our videos.
Make sure to tell your friends and family about the incredible gains you’re making!
We also talk about:
- A medical company called Valeritas has developed a groundbreaking new product for the more than 30 million Americans suffering from diabetes. It’s a simple, affordable solution that finally eliminates the need to take daily insulin shots.
- Renewable energy sources such as solar and wind are gaining momentum all around the world. Legislators have big plans to making the way you power your home cleaner, less expensive and more reliable.
- Tesla is setting itself up to be the world’s leading electric-vehicle maker. And it has an exciting new feature ready for its investor showcase next week.
Editor, Profits Unlimited