OUR WEALTH DAILY

political action committees (PACs). There’s one other factor that allows for incumbent re-election victories: political action committees (PACs). PACs are entities that collect corporate and large donor contributions into one spot then decide where that aggregate money goes – meaning… to whom. Their plan is to get the biggest bang for their buck. And they do that by giving the lion’s share of their dollars to incumbents. That's because they get a surefire bet, with congressional re-election rates around 90%. And it’s not just corporations but labor groups that heavily give to incumbents, too, at $41 million. The only group that tends to bet on political newbies is a single-issue one, and even when compared to the money spent to re-elect politicians ($65 million), this still makes up a small fraction ($16 million). As you can see here, a large proportion of PAC money comes from Wall Street (as represented by the finance, insurance and real estate, or FIRE, line), at $69 million. Nex...

While the market can go down and stay down for extended periods, it's up substantially from each of those disasters. Or to put it in perspective... From its lows in 1974, the S&P 500 is up nearly 7,000%.  So much for the death of equities .   BusinessWeek   magazine ran its infamous headline, "The Death of Equities," with the subtitle, "How Inflation is Destroying the Stock Market"... But look at what the S&P 500 did in the next two decades after that  BusinessWeek  issue... I was at TheStreet.com working alongside Jim Cramer in 2000 when the dot-com bubble burst. I remember the panic well – from its peak in March 2000 to the bottom in October 2002, the tech-heavy Nasdaq Composite Index collapsed 78%. But over the next several years leading up to the next crash, take a look at the recovery... The point here isn't calling tops and bottoms... I'm saying that I've been there, I've seen it all, and now that I'm 70, I'm taking everythi...

A voiding stocks entirely can mean missing out on big gains in the future. Just consider the numbers... According to JPMorgan Asset Management, if you had invested $10,000 and missed the 10 best days from 2002 to 2021, your gains would have been cut by more than half. If you had missed 30 days, you would have missed out on more than 80% of potential gains.

 Buybacks are no new ideas This week, energy giant  Chevron  announced plans to buy back  $75bn  of its shares, five times the oil giant's current  buyback plan , along with an increase in dividend payouts. A prevailing theme from our  2022 in 5 charts  was how it was the year for  stuff-that-comes-out-of-the-ground  — with  Chevron's  oil and gas clearly no exception.

 Egyptian pounds is super cheap Burgernomics The Economist   has published its bi-annual update of one of our favorite pieces of data analysis: the  Big Mac Index . Apart from telling you how much a  McDonalds  burger will cost on your winter vacation, it’s also a lighthearted test of the economic theory of  purchasing power parity  (PPP) — the idea that exchange rates should settle at a place where identical goods and services cost the same in every country.

Switzerland-based chipmaker STMicroelectronics Switzerland-based chipmaker STMicroelectronics N.V. (NYSE: STM) gapped 7.75% on January 26 after significantly topping analysts’ views for fourth-quarter earnings.  The company earned $1.32 per share on revenue of $4.42 billion, topping analyst views of $1.13. Wall Street had expected ...

Still room for a week or two of profit Earnings helped boost the market higher as well.  Companies like Tesla (TSLA) surged 10%, which helped lift the other tech stocks.  Chevron (CVX) rose nearly 5% after earnings and the announcement that it would raise the annual dividend and spend $75 million in stock buybacks. Where does that put the broader market? Here’s a chart of the Dow Jones Industrials (via ticker DIA).  I’ve also included the Williams%R indicator.  I’ve written about it before - it’s a momentum indicator that moves between 0 and -100.  A reading above -20 is overbought and we’re sitting at -29 right now, which means we could have more upside room to go.   You can also see on the chart that an overbought reading on Williams%R doesn’t mean the trend is over.  But it gives you a warning of a potential reversal.  The two areas in the middle of the chart had an extended overbought reading as the market continued higher.  That could ha...

  Gold has a massive floor Russia and China Place Floor Under Gold Price Returning briefly to China, China’s announcement comes just weeks after Russia announced it had doubled the ceiling on permitted gold holdings of its sovereign wealth fund, from 20% to 40%. This will create demand for perhaps 100 metric tonnes over the coming year. If China continues to add 30 metric tonnes or so to its reserves at the same time that Russia is out to buy 100 metric tonnes it will put a de facto floor under the gold price, while supporting the 20% rally in gold prices we’ve seen over the past few months. Russia and China could be acting in concert to send a message to the world that dollars are yesterday’s news, and gold is the new foundational reserve asset (as it was for centuries prior to 1971). We could be witnessing a critical turning point in the international monetary system. In short, Russia, China and the other nations I’ve mentioned are “weaponizing” gold as another weapon in the ongo...

Warehouse Renting And that means industrial real estate is typically in high demand. This high demand leads to consistent rental income for owners. And the tenants that pay that rental income typically sign long-term leases (think 25 years instead of 12 months). That means the income stream is very steady. Industrial properties also usually require less maintenance than other types of real estate. And many of the leases are what’s known as “triple net.” That means they include clauses that make the tenant responsible for that maintenance. There are also tax advantages to owning industrial real estate, as it can allow owners the benefit of accelerated depreciation or cost segregation. It’s also been a favored investment because, historically, it’s far less volatile than other real estate like retail or residential properties. So, it creates steady and growing cash flows, it appreciates in price (often far faster than other kinds), it gives tax advantages, and it helps you diversify your...

 Looking at Lower Lows from here The last time it broke this level was in March 2022, but it was a fake out back then. Will this time be the real thing?

  200-day moving average If support hold we could be up an easy 10% Since the beginning of 2022 this market has been steered lower by the widely followed 200-day moving average. When I tell you the 200-day moving average is important, that’s an understatement. I’ve been doing this long enough to know that even the most fundamental money managers on the street pay attention to this line and base a lot of their long-term asset allocation decisions on how the market is positioned relative to this line. I think for 2023’s developing rally to gain some escape velocity, the 200-day moving average has to become support. Such polarity (when resistance becomes support and support becomes resistance), should it occur, will cause the stocks I am eyeing very closely this week to respond very well to this earnings season. I mean, just look at the popular stocks that are on deck this week alone:

Invest in Mexico for the next stock market explosion One of the reasons for lower labor costs in Mexico is that the minimum wage is lower than in China. Additionally, the cost of living in Mexico is also lower than in China, which means that companies can offer lower wages and still attract a skilled workforce. Another factor that contributes to lower labor costs in Mexico is the availability of said large, skilled workforce. Mexico has a large population of skilled workers, particularly in the manufacturing sector. This means that companies can find the workers they need at a lower cost than they would in China. Mexico also has lower production costs than China because of its proximity to the United States and Canada, which can reduce transportation costs. This makes it easier for companies to export goods to these markets, which can be a huge advantage. This means that manufacturing goods in Mexico can save your company a significant amount of money.

money is flowing into companies with market values of $500 million to $50 billion. As part of my proprietary Quantum Score system, I developed a Big Money Index that tracks these stock-rocketing inflows of cash. We saw diminished buying from mid-December through the first 10 days of January. But those big fund managers have started pushing the “buy button” again. This chart shows you what I mean. That’s helpful ... but it’s not enough. What we really want to know is where that money is going. My system is like a radar device that locks onto “incoming” money. So what we can learn from that incoming money? If we look back over the last month, the first thing that jumps out in the chart below is that there are more than twice as many Big Money buy signals (blue bars) as sell signals (red bars). You can see that total in the far-right column. But now comes the “money shot.” Almost all of those blue “buy bars” are situated on the left side – meaning the money is flowing into companies with ...

Copper is in great demand for the future Since recommending the stock, shares are up over 57%, while the S&P 500 is near flat over that same period. The thesis for buying Freeport was straightforward: It successfully survived COVID, which nearly killed the company. In fact, many analysts expected the company to go bankrupt. It didn’t. The supply/demand dynamics for copper are strong. Demand is expected to grow from EVs and power grid upgrades. Supply is flat to declining. Economics 101 says copper prices must go higher. That’s starting to happen, but they still have a long way to go. Its valuation: In July 2022, Freeport traded for just 10 times 2023 earnings estimates. That’s cheap.

Surprisingly, shares of JPMorgan have been lagging behind the  financial sector (NYSEARCA: XLF)   and the broad market since the pandemic rebound began. In this light, the shares may soon become a sector leader, although the sector itself may come under pressure. Regardless, the best-case scenario for all 3 now that the results are in is for downward movement within a trading range and for support to confirm at or above the October 2022 lows.  Financials should do relatively OK as interest rates are near topping out this year.

 NYMO and NAMO Indicators Take a look at the McClellan Oscillators for the NYSE and the Nasdaq (NYMO and NAMO)… (Click here to expand image) (Click here to expand image) These are momentum-based indicators that help determine overbought and oversold conditions.  Readings of more than 60 indicate severely overbought conditions and often precede large declines in the markets. Readings of less than -60 express extremely oversold conditions and usually lead to strong bounces in stock prices. Both indicators closed in the extremely overbought territory last Friday. This is the sixth time in the past year that both the NYMO and the NAMO have been above 60 at the same time. Now, here’s how the S&P 500 performed after the four previous times… The market fell almost immediately following all five of the previous setups. The setup in mid-July led to only a brief, short-term pullback – lasting about one week. The S&P 500 then went on to rally about 10% over the next month into a ...

  Greg shares the following chart with his viewers. It was first created by an Ohio pig farmer back in the late 1800s. This man was doing well, but he lost everything in an 1873 market panic and a hog cholera epidemic. The experience left him struggling to make sense of how it happened. Eventually, the pig farmer settled on the above framework to make sense of the world. As Greg said during his presentation... In doing so, he stumbled onto a secret of the markets that would go on to make him rich... and also make the handful of people who studied his work in the years afterward multimillionaires... through bull and bear markets. In short, he discovered   the power of cycles... and how these cycles affect prices . Ten years after the Civil War, this farmer ended up putting together a timeline that predicts the stock market all the way out to 2059... and when there would be periods to make money and times that panics might occur... Long after he died, this farmer keeps getting i...

Expectation baked in IS expectation baked into the market, the only issue is that consumer spending is dropping.  Is company spending taking up the slack to curb the human costs which mostly can be automated or outsourced? More telling is that in the final month of 2022, headline CPI fell 0.1 points from November. That's the largest month-over-month ("MOM") decline since April 2020, led by a steep drop in gas prices. The markets expected a report like this. So with expectations already baked in, the major U.S. indexes didn't move all that much after the numbers were released. And according to   Stansberry NewsWire   analyst Kevin Sanford, this latest inflation reading "could force the Fed's hand." As he wrote... This marked the sixth consecutive month where the annual CPI number has remained below its June peak. It's also the lowest [year-over-year] reading since October 2021. Take a look... This should give the Federal Reserve room to slow the pace ...

Inflation Reduction Act (IRA) that act is 100% certain to give specific domestic sectors a major boost. In fact, one of my close contacts told me he’s seeing a lot of new manufacturing projects in the Midwest. “They are all centered on provisions set out in the IRA passed back in August,” he said. “Some very interesting dynamics going on here.” Some of the domestic sectors I’m watching are: Rare earths production, Industrial metals production and mining, And investments in battery technology, infrastructure, and energy. To take advantage of this, consider buying the  SPDR S&P Metals & Mining ETF (XME) . It’s an exchange-traded fund focused on U.S. metals and mining stocks. And it holds industry heavy-hitters like Cleveland-Cliffs (CLF) and Freeport-McMoRan (FCX).

  Services Inflation Excluding Housing (Blue Line) Remains Elevated Utilities are stoking inflation and need some action to address them. Source: Federal Reserve Bank of St. Louis  4 Services inflation is driven in large part by a tight labor market’s effect on wages. That means investors’ approach to inflation this year should involve monitoring average hourly wage data, as well as keeping an eye on the Bureau of Labor Statistic’s employment cost index release. These are the inflation metrics the Fed is watching most closely to determine the path of interest rates, so it makes sense that investors should be honing-in on this aspect of inflation, too.

 Buybacks ending which will not hold up markets anymore With interest rates rising and recessionary concerns looming, companies need to protect their dry powder. Two years ago, interest rates were Zero. In a few months, the Fed funds rates will hit 5%. But that’s not all… On January 1, a new law went into effect. The Inflation Reduction Act mandates that companies pay a 1% tax on all buybacks moving forward.  In December, RBC Capital Markets warned that the “potential pillar of support” would disappear. Around the same time, Bensignor Investment Strategies sounded a similar warning…  “Corporate buybacks – a major catalyst for the bull market since the Great Financial Crisis – will likely be dramatically reduced going forward because of a new 1% excise tax on them taking effect on Jan. 1, as well as corporations no longer being able to issue almost cost-free debt (like they had been able to for several years) to finance those buybacks”. Buybacks started to slow in Q2 of la...

 CPI still running HOT This week’s Empire State Manufacturing Index report was the third worst on record, behind only the frigid financial winters of 2008 and 2020.   Prices are cooling rapidly: Bonds rallied this week after Producer Prices were reported down 2% in December from the month before. The tepid year-on-year rate of 6.9% is a long way from the scorching 22% we had last summer.   It’s not just goods prices icing the economy:   The services component of PPI fell to just 4.5% in December. PPI does not include rent, which makes it a better measure of services inflation than CPI, where the last services print was a too-hot 7.5%. The Fed, of course, will pick the hotter number to worry about.   Winter clearance: Retail sales fell 1.2% in December from November, at least in part because retailers are cutting prices. And inventories remain elevated, so you should have plenty of time to take advantage.   Switching cards: On its earnings call this week, Wells F...