The Bulls Are Back! Huge Growth Ahead
In today’s Market Talk, Amber Lancaster, Ian Dyer and I discuss:
- Airbnb is gaining on and even beginning to surpass the hotel giants.
- Why you should ignore all the negativity surrounding Tesla.
- The two companies that continue to dominate online advertising.
- How things are going from bad to worse for Apple despite its cheerleaders.
April 1, 2019
Amber 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 1, 2019. I’ll begin by sharing what I’m watching and then we’ll hear from Ian and Paul. If you like what you hear with today’s Market Talk, please feel free to subscribe to this channel or visit us at Bold Profits Daily, a Banyan Hill Publishing daily e-letter.
This past Friday’s release of U.S. personal spending results for January and personal income for February came in just slightly over expectations, but did show an advance over the previous month’s readings. Both prints are likely a result of a three-prong factor.
Per Bloomberg, the first is the market selloff we experienced in the fourth quarter last year. The second is the aftershocks of the government shutdown earlier this year. Lastly, smaller U.S. tax refunds. These all have an impact on personal spending.
Once these temporary factors are overcome, spending can power forward. There’s significant data underpinning this forward sentiment. One of them being the Bloomberg U.S. Financial Conditions Index. Take a look at this chart.
This index charts the overall level of overall financial stress in the U.S. money, bond and equity markets. This index helps measure the availability and cost of credit. A positive value shows favorable financial conditions, while a negative value shows tighter financial conditions relative to pre-crisis norms.
As seen in this chart, as of today the index is in favorable territory. It’s showing that financial conditions have rebounded post-fourth-quarter U.S. financial decline. At its most recent low on December 24, 2018, the index fell to a -1.117.
It’s showing a positive value of 0.684 right now. To put this in perspective, as seen with the red arrow in this chart, the index plummeted to a -12.564 in October 2008. That’s just one telling chart, but here’s another one.
The U.S. Commodities Futures Trading Commission (CFTC) and Bloomberg are showing that the bulls are back. This chart compares the S&P 500 index to the CFTC Chicago Mercantile Exchange net non-commercial futures positions. It’s showing that for the first time since January, it has turned in a positive direction. This is indicating that speculative U.S. stock bets have turned positive.
Using these two indices as a measuring stick, the markets are moving in the right direction. With that being said, we have some key economic releases this week.
As you can see in this graphic, preliminary February durable goods orders will be released on Tuesday, April 2, at 8 a.m. ADP employment change for March will be released on Wednesday, April 3, at 8:15 a.m. The March jobs report will be released on Friday, April 5, at 8:30 a.m.
Switching gears, we have an ongoing theme here at Bold Profits Daily of how we are living in a unique period of history where there’s a massive paradigm shift with whom we’re conducting business, now and in the future. Our theme is how new-world companies are steadily replacing old-world companies.
A new data study from Second Measure, a technology company that literally analyses billions of debit and credit purchases to answer real-time questions on consumer behavior, is proving our theme correct. Check out this chart.
Second Measure’s data is showing how sales at Airbnb, a major online marketplace that lets people rent out their properties to guests, have surpassed Hilton Hotels and Resorts. In all, annual sales at Airbnb increased 12-fold from 2013 to 2018, while Hilton’s sales remain somewhat stagnant.
It’s also worth noting that yearly sales at Airbnb are also gaining on Marriott International, even with Marriott’s acquisition of Starwood in 2016.
Lastly, our Disruptification Index continues to do well year to date. As of Friday’s March 29 close, the index is up 23.9% versus 11.3% on the Dow and 13% on the S&P 500.
That’s it for me. Ian, what are you watching today?
Ian Dyer: Thank you, Amber.
A few things I’m watching this week. From a macro perspective, last week there were a few really good numbers that came out. The first one I want to touch on is the new home sales for February.
New home sales in February grew about 4.9% versus the estimate of 1.3% growth. That was well over what people were expecting for new home sales. That’s really bullish for home sales, the real estate market and construction. This is the fourth straight month we’ve seen growth in new home sales of at least 3.8%. That’s pretty big growth when you are considering home sales for an entire country like the United States.
For these past four months, the total growth has been 19%. This has been a really bullish market for the economy. It’s really good for the construction industry as well. In that month, the actual amount of homes sold was about 667,000.
That is the third-most of any month since 2007. Not only was it just an OK month for the 4.9%, it’s historically good for the number of homes that have been sold since the financial crisis and the real estate bubble burst. That’s one piece of data I found encouraging from last week.
The other one is consumer sentiment. The Michigan Consumer Sentiment report was released last Friday and the reading on that was 98.4, which is right around the recent highs we’ve seen from that index. Just to put that into perspective, right after the financial crisis happened this number was down around 50.
It’s about double that right now. We’re very healthy. This is right around the new highs we’ve seen over the past year or so for in this index. Of course with consumers making up two-thirds of the GDP, we want to see this number remain high in order to continue to be bullish on the economy.
Just from these two pieces of data we saw last week …we remain very bullish. We continue to disagree with the fact that a lot of people are saying they see a recession on the horizon. Just a few months ago people were expecting a recession for 2019. Instead of that, we’ve been seeing record home sales and healthy consumers. We expect this to continue.
On the disruption front, what I’m looking at right now is telemedicine. This is something that’s really having an impact on the multi-trillion-dollar health care industry in the United States. It’s also having an impact on how health care is conducted on a global scale.
This is basically where a patient and a doctor can communicate, instead of in a traditional way, they can communicate via something like a video call. This is really convenient for the patient in a lot of ways. This can take the place of a lot of appointments.
If you go to the doctor and they say to come back for a follow up, this can be a good replacement for that. Usually those are just a routine, 10-15 minute checkup. It can also take the place of minor things like a cold or allergy appointment. There are hundreds to millions of these types of appointments that happen every year.
Instead of driving to and from the hospital or the doctor’s office and waiting in line once you are there, you can just get it all over with in just 10 minutes with a phone call. Not only can the consumer benefit from this, but the physicians we are seeing are also moving over to this side of the industry in huge numbers.
There was a report that came out around the mid-point of 2018 that said, at that point, 51% of primary care physicians in the United States had adopted this technology just to stay competitive. That’s a huge signal that this is really something serious going on in the health care industry.
Just the fact they want to stay competitive in doing this, a lot of people are switching to that. This means a lot more are not going to be run out of business so they’re going to be switching to telemedicine as well. There’s also the fact that 50 million people in the United States live further than 10 miles away from their closest hospital.
If you can cut down on travel times and traffic…it’s hugely convenient for both parties in doctor’s appointments. This is growing a lot faster than what people anticipated as well. Back in 2011, there was a report that came out that said that telemedicine was expected to be a $6.3 billion industry by 2020.
And, of course, $6.3 is a pretty big industry…but so far we’re seeing the numbers blow past that. Last year it was estimated at $38.3 billion. Now the new estimate for 2025 is $130 billion. Half of this right now is expected to be in the United States. However, we expect this to be able to grow very quickly on a global scale, as well, as things like smartphones, high-speed internet and stable internet continue to grow globally.
This is already happening. Last year we saw the number of people with internet connections all over the world grow by 300 million people. We’re seeing a rapidly growing market for this. We’re seeing a lot of people already adopt it, especially here in the United States. We really expect that to continue.
This is something we have a recommendation to invest in in our True Momentum newsletter. It’s a great opportunity to get in and you can get that with True Momentum.
Paul Mampilly: Thank you, Ian. In fact, in last week’s True Momentum update, I actually mentioned that this stock is looking really really good right now to get into. Later on in my part of the update I’m actually going to mention another incredible stock we are releasing tomorrow. So stay tuned.
Let me go first with on a macro level and touch on things Ian and Amber touched on. Interest rates have been the big thing everyone has been worried about for a year now. Last week Larry Kudlow and Stephen Moore, who is being nominated to the Federal Reserve by President Trump, are calling for two rate cuts. Which is probably optimistic, in my judgement.
However, to me, what that does say is this interest-rate-hiking cycle is done. You can stick a fork in it. It’s completely gone. Not just for a year, I believe it could be three to five years. That’s unbelievably optimistic for housing because, of course, interest rates are such a big part of that.
Interest rates…are so important for housing because we’re borrowing a lot of money, even a small shift in interest rates can mean a lot. It also means a lot for business lending. Just think through the eyes of a small- or medium-sized business owner who has been watching the Fed raise rates and telling people they are planning to increase them through the end of 2019.
If I was running a business I would say, “You know what, hold off a little bit. I don’t know how people are going to take to significantly higher rates.” So, what it does is it obviously gives us low interest rates, but even as importantly it gives us stability, it gives us certainty on what is going to happen. And that allows people to make decisions, whether you’re a homeowner, business owner or a farmer planning on buying a big piece of equipment.
All of this is unbelievably optimistic, I believe, for the economy. And also for the stock market. Ian and Amber and I have been discussing what’s going on in the stock market for the last month or so. What we’ve been seeing is that, people in some ways have been setting themselves up for the opposite. They’ve been buying stocks that would be good in a slowdown or recession.
Things like utilities have been bought by investors, consumer staple stocks — in other words, the safety play. That’s what people have been bidding up. In truth, when we look at our companies in terms of their business and what’s going on with trading patterns, the strong hands, as I like to put it, have been buying the growth stocks at cheap levels.
Now when the crowd comes in to buy, they’re going to have to bid them up. And, of course, that’s going to be great for our subscribers who are invested in these stocks. As you know if you’ve been following us, we told you to stay in all through 2018 when all the scare stories were telling you to get out. All the gloom and doomers were telling you that some enormous disaster or catastrophe was happening.
Our subscribers have benefitted from the upswing. However, the big gains, I believe, are still ahead. Speaking of gains, Lyft — the IPO we mentioned to you last week — came public last week. It surged higher, as much as 20%, the day it opened. It eventually ended up closing up about 9% or so.
That’s a really good performance for the company. I actually had a lot of people reach out and ask if they should buy Lyft. What I have been telling people is that IPOs have a very particular trading pattern because the bulk of the shares are still unsold and so there’s these demand and supply issues you really have to take into account.
The stats are that something like 90% of all IPOs revisit their IPO price. I have no idea if Lyft is going to be one of those exceptions, however, we’re going to track it. If we think Lyft is a great buy it will be in one of our services, I promise you that.
Speaking of our services, I want to mention that we are closing in on our big push for True Momentum, which is our best-performing service. I haven’t looked at the latest numbers, however it’s annualizing at some crazy rate — something like 35% or 40%. There’s some massive winners in there with 150%, 200% or more.
We’re closing in on a big push for this. To reward new subscribers, on Tuesday we’re going to put in an absolutely phenomenal, unbelievable stock. This stock, I think of it as being the Intel of electric vehicles. In other words, you’re going to need a lot of these and you have to have them to make them more powerful, to make them more energy efficient and last longer.
These are the things that are going to improve it. Because of that, I believe the amount of these chips that are going to be bought are going to skyrocket. I believe it’s going to take this stock with it. That’s something for you to look out for — True Momentum and this stock that we are going to release tomorrow.
Quickly, some news about big companies. Tesla is supposed to report their sales numbers. People have been very negative on Tesla. You know, we’re positive on Tesla. I’ve been positive on Tesla for three years now. It’s pretty clear this is going to be the leading electric automaker in the world.
I believe that stock could up if the sales numbers are good. So that’s what’s going on with Tesla.
Many of you know I’ve been negative on Apple and actually get quite a bit of hate mail from people who are positive on Apple. However, I have to tell you, things seem to be going from bad to worse at Apple. They just pulled a highly anticipated product, which is their charging mat. So you can charge you iPhone, iWatch and iPods all at once.
They pulled it without telling people. It turns out they had a lot of technical difficulties. I believe it’s a sign of what’s going on with the company. They are really struggling to do what people pay them for, which is to delight them with beautiful devices that really make their lives easier.
They are struggling with innovation on their main platform products: the iPhone, iPad, and their iMac computers. Now they are even struggling with smaller things like this charging pad.
I saw also an incredible stat which affects Facebook, another popular stock that’s out there. In a few years, by 2024, 61% of all media spending will be digital. That means it benefits Facebook and it benefits Google. These are the two major companies that really dominate online digital advertising.
That means the outlook is incredibly good for these companies. You know there’s always a downside to these things. This means it’s equally bad for the old media like newspapers, television stations and radio stations.
I also want to do a quick crypto update. From my perspective, crypto is the new side of money. I keep close track of what’s going on with Bitcoin and all the major cryptocurrencies. I saw that Ripple, which is a new emerging platform for crypto, an Indian bank is partnering with them to use their technology.
That’s pretty incredible when you think that this is a technology that is barely two years old. I also saw that Facebook is creating its own blockchain unit and hiring for it, which is pretty crazy. Square is also creating its standalone crypto unit just to help the crypto movement get more acceptance.
There’s an enormous amount of momentum there. You know we have block chain as one of our major megatrends. We have a lot of stocks that benefit from there.
The last piece of news on the crypto side is Coinbase, which is like the NYSE for crypt, are considering paying interest on your Bitcoin and other crypto currencies. Another really big development.
That’s all I have. Back to you, Amber.
Amber: Thank you so much, Paul. Thank you, Ian. Thank you to our watchers for tuning in this week. We appreciate you and we want to wish you a wonderful week. Until next time, take care.
The good news just keeps rolling in for the U.S. economy.
Like the 667,000 homes that were sold in February, making it the third-best month since 2007.
Then there’s the University of Michigan Consumer Sentiment Index, which is still right around its recent highs.
And the Federal Reserve is clearly done with its interest-rate hikes, with some top economists even calling for rate cuts going forward.
Lastly, the latest report from the Commodity Futures Trading Commission shows the bulls are flooding back into the stock market right now.
The growth stocks in my services are already benefiting from the strong economy. But the really huge gains are still ahead.
We also talk about:
- Telemedicine lets doctors check up on their patients via video calls. More than half of primary care physicians in the U.S. have already adopted this technology in order to stay competitive. We discuss why telemedicine is going to become a massive industry.
- Large businesses and financial institutions are quickly realizing that cryptocurrencies are the new side of money. We explain some huge developments happening for bitcoin, ripple and other cryptocurrencies.
- To reward new subscribers of my True Momentum service, I’m recommending a phenomenal stock on Tuesday. I briefly preview this company and tell you why it will have an incredibly important role in the electric-vehicle revolution.
Editor, Profits Unlimited