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The Pull Forward

I saw two charts last week that showed the same thing: This chart was in the deck I shared here last week called Consumer Trends 2022. It shows that after a big lift in 2020 and a bit of a lull in 2021, the e-commerce trendline is back to its old baseline

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I saw two charts last week that showed the same thing:

This chart was in the deck I shared here last week called Consumer Trends 2022. It shows that after a big lift in 2020 and a bit of a lull in 2021, the e-commerce trendline is back to its old baseline.

This is our portfolio company DuckDuckGo‘s search traffic curve, available here, on a ten-day moving average. You can see after a huge move up in late 2020, it had a pullback in early 2021 and has now gotten back on its normal growth curve.

Both of these are examples of what is called “the pull forward”, an event or a series of events that draws a large and unsustainable boost of new users. It is often followed by a lull where growth is flat or even down for a while, but then the normal growth pattern resumes.

We have seen curves like this throughout our portfolio this year as the pandemic and other factors (in DuckDuckGo’s case the presidential election also played a big part) have whipsawed growth curves. It feels great when things are growing faster than ever. It feels bad when things are flat or down.

My suspicion is a lot of these odd-looking curves are going to resume their normal shapes in 2022 when things gradually start to normalize.

The last two years have been a challenge to manage through. There have been endless curveballs coming our way. Boom and bust. It is important to see things for what they are and not get too up or down in times like this.



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Government

Six Commodities Investments to Buy as Putin Wages War on Ukraine

Six commodities investments to buy amid the sustained attack of Ukraine by Russia’s President Vladimir Putin and rising inflation provide potential to…

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Six commodities investments to buy amid the sustained attack of Ukraine by Russia’s President Vladimir Putin and rising inflation provide potential to profit even as the market has been pulling back so far in 2022.

The six commodities investments to buy include those involved in oil, gold and grain due to current supply shortages that are showing no signs of abating anytime soon. Putin’s order for Russian troops to invade Ukraine on Feb. 24 has disrupted the neighboring nation’s agricultural production, led to the theft of grain and imposed an ongoing blockade in the Black Sea to stop farmers from exporting their crops.

Crude oil inventories are down to a “dangerously low point” across Europe, North America and Organisation for Economic Co-operation and Development (OECD) Asia, just as spare production capacity from OPEC+ nations slid to the lowest levels since April 2020, according to BofA Global Research. Inventories of petroleum products also have fallen to “precarious levels” for middle distillates and even gasoline as the market heads into the peak of the U.S. summer driving season, the investment firm added.

As a result, refined petroleum cracks — the differences between crude oil and the prices of the wholesale petroleum products such as gasoline — recently have “spiked to record levels,” contributing to volatility, BofA wrote. In addition, strategic oil barrels held by OECD governments already are low and likely to decline steeply going forward, leaving consumers exposed to future negative supply shocks, BofA predicted.

Pension Fund Chairman Recommends Broad Commodity Funds

Bob Carlson, a pension fund chairman who also leads the Retirement Watch investment newsletter, recommended Cohen & Steers MLP & Energy Opportunity Fund (MLOAX) to all the portfolios in his June 2022 issue. 

Oil and natural gas should be good investments as Europe looks to reduce dependence on Russian exports, Carlson told me. Plus, energy producers in the United States are focused on increasing cash flow and earnings, not maximizing drilling expenses in the short run to increase output, he added.

Bob Carlson, who leads Retirement Watch, meets with Paul Dykewicz.

Good investment opportunities can be found with companies that provide the pipelines, storage facilities and other infrastructure needed to supply the world with oil, natural gas and other energy sources, Carlson continued. 

“One of the attractive qualities of these investments is that their revenues are independent of the prices of the commodities,” Carlson counseled. “The firms charge fees for their services, and the fees often are adjusted for inflation. Their revenues and earnings depend on the volume of commodities passing through their facilities, not the price of the commodity.”

Key energy service companies provide total returns, aided by current income and price appreciation, through investments in energy-related master limited partnerships (MLPs) and securities of industry companies, Carlson pointed out. Those businesses are expected to derive at least 50% of their revenues or operating income from exploration, production, gathering, transportation, processing, storage, refining, distribution or marketing of natural gas, crude oil and other energy resources.

Chart courtesy of www.stockcharts.com

Cohen & Steers Fund Leads List of Six Commodities Investments to Buy

Cohen & Steers MLP & Energy Opportunity Fund recently held 53 positions and had 50% of its portfolio in the 10 largest positions. Top holdings of the fund included Enbridge (NYSE: ENB), Cheniere Energy (NYSEAMERICAN: LNG), Williams Companies (NYSE: WMB), TC Energy (NYSE: TRP) and Energy Transfer (NYSE: ET).

The fund has achieved strong returns since April 2020. Indeed, it has been on an upward trajectory since the second half of December 2021.

“Crucially, oil prices have held up well even in the face of a slowing Chinese economy and widespread lockdowns,” according to BofA. “Given that most China indicators point to a major decline in mobility across the country, any improvement in the COVID-19 situation in large Chinese cities could send oil prices much higher.”

Carlson’s Chooses DBA to Join Six Commodities Investments to Buy

Despite the evils of war, investors still can profit from the rise in grain prices and other commodities through the futures markets, even as many other equities slip. Instead of buying futures directly, investors can purchase diversified agriculture commodities through Invesco DB Agriculture Fund (DBA), Carlson said.

That ETF seeks to track changes in the DBIQ Diversified Agriculture Index Excess Return. The ETF also earns interest income from cash it invests primarily in treasury securities, while holding them as collateral for the futures contracts.

The major holdings in the index are soybeans, wheat, corn, coffee and live cattle. The index is reconstituted each November.

Chart courtesy of www.stockcharts.com

Gold Funds Featured Among Six Commodities Investments to Buy

Carlson also is recommending gold through iShares Gold Trust (IAU). He described it as the “cheapest, most liquid way” to invest in the shiny yellow metal.

Gold has had its ups and downs in the face of rising global inflation, Russia’s invasion of Ukraine, China’s increasing military flyovers of nearby Asian nations and other geopolitical conflicts. At the same time, the U.S. dollar has been appreciating amid high inflation after the Fed recently raised interest rates by 0.5% and promised additional increases later in 2022.

However, there are many risks for the U.S. dollar, so continuing to hold gold remains a good hedge, Carlson counseled.

IAU has retreated since early March, so investors seeking to buy it now that it is rebounding still may do so. Those who believe inflation may stay through 2022 can try to capture gains before the trend no longer is a friend.

Chart courtesy of www.stockcharts.com

Skousen Calls GLD One of the Six Commodities Investments to Buy

“Gold has done far better than stocks, which are down 15-25% this year,” said Mark Skousen, who is recommending SPDR Gold Shares (NYSE Arca: GLD) in his Forecasts & Strategies investment newsletter. 

Mark Skousen, head of Forecasts & Strategies, meets with Paul Dykewicz.

GLD has risen nearly 16% since Skousen recommended it about two years ago. Gold climbed 2021 in anticipation of rising inflation, but its performance has been flat so far this year. If gold truly is an indicator of inflation, the previous yellow metal’s stagnant price may be signaling that price inflation will wane heading into 2023.

The investment objective is for the GLD shares to reflect the performance of the price of gold bullion, after subtracting the trust’s expenses. The trust, formed on November 12, 2004, physically holds gold bars.

The trust’s shares are designed for investors who want a cost-effective and convenient way to invest in gold, according to the company’s prospectus. Skousen, who also leads the Five Star Trader, Home Run Trader, TNT Trader and Fast Money Alert services, recently was a featured speaker at the Vancouver Resource Investment Conference and advised attendees that he recommended gold as a minor holding in every portfolio.

Chart courtesy of www.stockcharts.com

EPD Is Another of the Six Commodities Investments to Buy

Oil has done much better as an inflation hedge than gold, Skousen said. One example is his recommendation of Enterprise Products Partners (EPD, $27, 7% yield), up 27% year to date.

EPD has been the “best performer” in the Forecasts & Strategies investment newsletter so far this year, Skousen said. Enterprise Products Partners is one of the largest publicly traded partnerships and a key North American provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals. 

The company’s services include natural gas gathering, treating, processing, transportation and storage. In addition, Enterprise Products Partners provides NGL transportation, fractionation, storage and import and export terminals. It further offers crude oil gathering, transportation, storage and terminals, along with petrochemical and refined products transportation, storage and terminals, as well as a marine transportation business.

I personally have owned Enterprise Products Partners since shortly after the 2020 stock market crash when I bought the stock as it started to recover. The stock has been trending upward since the end of 2021.

Chart courtesy of www.stockcharts.com

Money Manager Picks One of Six Commodities Investments to Buy

A seasoned investment professional told me that she likes farm machinery company Deere (NYSE: DE) to profit from agriculture. Michelle Connell, a former portfolio manager who now serves as president of Dallas-based Portia Capital Management, said she still likes Deere despite its 14% drop after it reported results last week.

Michelle Connell, CEO, Portia Capital Management

Deere’s key issues are supply-related, since demand for agricultural equipment remains strong, especially for the company’s machinery that is more environmentally friendly than its rivals, Connell continued.

Deere is also focused on providing the farming industry with autonomous equipment, Connell counseled. Wall Street analysts expect Deere to have a better story and performance in the second half of 2022 and in full-year 2023.

Connell cited the following to support her recommendation of Deere: 

-More than half its revenues come from large agriculture.

-If the war in Ukraine continues, U.S. farmers will benefit from higher prices for their crops.

-Increased agricultural profits mean that that farmers and farming corporations will be more likely to buy large, expensive farm equipment.  

Deere has fallen back since its recent high on April 20, so investors should be able to purchase shares at reduced prices, Connell continued.

Chart courtesy of www.stockcharts.com

Supply Chains May Improve as China Starts to Lower COVID Curbs

China is easing its COVID-19 restrictions and it could allow goods produced there to start flowing normally again in the coming weeks. China’s lockdowns have affected an estimated 373 million people, including roughly 40% of its gross domestic product (GDP). Disrupted supply chains have affected products such as rice, oil and natural gas.

Shanghai, home to the world’s largest port and 25 million residents, has strained to unload cargo due to strict regulations that have caused shipping containers to stack up. Some Shanghai residents posted videos online to complain about needing food, even though government officials sought to block such public expressions of frustration.

Chinese authorities also drew public criticism for forcibly separating young children with COVID-19 from their parents to prioritize stopping the spread of a new, contagious subvariant of Omicron, BA.2. The variant also has been causing new infections in European nations such as Germany, the Netherlands and Switzerland.

U.S. COVID Deaths Climb Past 1-Million Mark

U.S. COVID-19 deaths crossed the 1-million mark last week and have climbed further to 1,002,726 as of May 24, according to Johns Hopkins University. Cases in the United States, as of that date, hit 83,501,455. America retains the dubious distinction as the country with the highest numbers of COVID-19 deaths and cases.

COVID-19 deaths worldwide totaled 6,280,342 on May 24, according to Johns Hopkins. Cases across the globe have climbed to 526,664,642.

Roughly 77.8% of the U.S. population, or 258,562,059, have obtained at least one dose of a COVID-19 vaccine, as of May 24, the CDC reported. Fully vaccinated people total 221,001,614, or 66.6%, of America’s population, according to the CDC. The United States also has given at least one COVID-19 booster vaccine to 102.9 million people, up about 500,000 in the past week.

New data on so-called “long-haul” COVID patients released on May 24 reported that even though some symptoms improve others may persist, according to the Northwestern Medicine Neuro COVID-19 Clinic. Most of the 52 patients monitored in the Northwestern study reported “brain fog,” numbness or tingling, headache, dizziness, blurred vision and fatigue, even 15 months after initial diagnoses of COVID-19.

The six commodities investments to buy are intended to profit from rising energy, gold and grain prices. Despite the market’s volatility, the highest inflation in 40 years, the Fed’s plan for further interest rate hikes to curb price hikes and increasing federal deficits, investors are finding profitable opportunities in energy, gold and grains.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.

 

The post Six Commodities Investments to Buy as Putin Wages War on Ukraine appeared first on Stock Investor.

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Economics

Another Month Closer To Global Recession

We always have to keep in mind that the major economic accounts perform poorly during inflections. Europe in early 2018, for example, was supposed to have…

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We always have to keep in mind that the major economic accounts perform poorly during inflections. Europe in early 2018, for example, was supposed to have been just booming only to have run right into the brick wall that was Euro$ #4. Statistics like Real GDP picked up the downshift, but didn’t quite nail the degree to which the European economy had stumbled.

Initially, Eurostat calculated the quarterly increase for Q1 2018 real GDP to have been +0.282% (annual rate of 1.13%), substantially less than the 0.779% (3.15% annual rate) previously in Q4 2017. It took a couple years for the European bean counters to eventually realize there was basically no increase in output those crucial three months.

And while Q2 GDP was revised higher than originally, Q3 like Q1 was also reduced down to practically nothing. The new figures didn’t put Europe into a “technical recession” (there really isn’t any such thing), yet for all practical purposes the entire economic year of 2018 came to be figured as it truly had been for everyone living through it: a complete bust.


Eurostat would have as much if not more trouble the following year, eventually downgraded real GDP numbers in Q3 and Q4 2019 to reflect how its full economy had gone into recession (pre-COVID) maybe even as early as August or September (as global bond markets, and currencies, had contemporaneously priced).

The problem is usually the trend-cycle component subjectively added to smooth out higher frequency variations. Other data, such as PMIs like S&P Global’s (formerly IHS Markit), or Germany’s ZEW, had caught on to the economic inflection from its outset in real time. Given the limitations of GDP accounting and survey methodology, it would only be a matter of time before the latter caught up to the former.

In 2022, the European economy is again grappling with the serious prospects for recession. Real GDP is already weak and has been over the prior two quarters before the current one. With PMIs having already turned downward some time ago, what might the next (few) benchmark revisions further reveal about where output (GDP) actually could already be?



It’s not so much the level of these sentiment surveys as it is the plain direction and how that direction is following along the path surmised in advance by the global marketplace – including, for once, stocks. S&P Global reported earlier today that its May 2022 manufacturing PMI for Europe dropped to 54.4 from April’s 55.5.

While that’s sounds relatively decent, a level that is often characterized as “robust”, it’s the lowest since September 2020. Furthermore, both markets and the PMI internals point to more erosion and declines ahead; the forward-looking new orders category just dropped under 50 for the first time since June 2020.

At the same time, S&P Global’s Services PMI for Europe was stuck around the 55 level in May for the fourth consecutive month. So much hype and what should have been a true reopening bounce after the European omicron panic, this limited upside only adds more to further downside potential ahead once the bounce fades.

Quite simply, not looking all the great in Europe. Therefore, euro.


But the dollar being up against the European currency, like the dollar’s value higher against any currency, doesn’t indicate better conditions or prospects here in the US. On the contrary, rising dollar means bad everywhere for everyone; the only variances are degree and timing.

As it pertains to timing, the data suggests there may not be as much difference this time (Euro$ #5) compared to last time (Euro$ #4). Whereas in 2018 Europe fell down immediately and it took America almost a year to blunder, too, there does appear to be more synchroneity in 2022.

According to S&P Global’s just-released PMIs for the United States, manufacturing is somewhat better than Europe but still heading in the wrong direction – the manufacturing index at 57.5 in May, down from 59.2 in April though still higher (but suspiciously not much) than omicron-affected January’s 55.5.

And there’s a growing catalog of data which puts this S&P number as an outlier among the goods economy outlier. The ISM’s manufacturing, for instance, much lower already in April. Then there is the recent rash of Fed regional manufacturing surveys that have, to put it mildly, crashed. The Empire and Philly surveys already this month, and today Richmond.


The last of those was down sharply, its headline now -9 from +14 last month, lowest since May 2020 (a recurring theme here). More important, New Orders in Richmond -16 from +6.

Services here in America aren’t faring nearly as well regardless, no surprise in these sentiment figures with GDP or PCE consistently pointing to lack of recovery and ongoing weakness there. The US service sector was wrecked by the combination of coronavirus overreaction as well as the lingering liquidity leftovers from GFC2.

S&P Global put its services index at just 53.5, a seriously low number, therefore the composite not much more at 53.8.



The whole range of global data indicates exactly what markets have been pricing the entire year, since the beginning of Euro$ #5. The more time passes, the more most everything continues in this – not the inflationary – direction.

That direction is firmly toward recession, the very high probability already priced in (inversions). And if the 2-year UST, of all singular measures, really is breaking down as it sure seems to be (see: today’s trading) the whole world might be a lot closer to one still.



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Economics

Visa holds key support intact and eyes up to a 10% short-term upside move

Visa Inc. (NYSE:V) has not been one of the best stocks this year. However, its minus 6% return year-to-date gives it a hedge compared to the minus 17%…

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Visa Inc. (NYSE:V) has not been one of the best stocks this year. However, its minus 6% return year-to-date gives it a hedge compared to the minus 17% return for S&P 500. Besides, as major tech names plunged due to a tighter economy, Visa has only fallen slightly. 

Fundamentally, Visa has not been spared by the geopolitical environment. In March, the payments giant said it would quit Russia. However, a robust travel recovery from the Covid-19 slowdowns was a plus for the stock. On April 26, CEO Alfred F. Kelly pointed out that Visa projects continued growth. He pointed to travel recoveries and the emergence of newer global payment methods.

In the second quarter, Visa’s revenue rose 25.5%, while the EPS of $1.79 was 26.6% higher. The company expects FY22 EPS to increase 21% to $7.15, higher than estimates. 

On Wall Street, Visa has a B grade rating. The stock is rated with a B on fundamental growth, sentiment, and quality aspects. The rating emphasizes Visa as a strong stock for investors. But besides the fundamentals, what makes Visa a buy at the current level?

Visa is heading higher after forming bullish signals at key support

Source – TradingView

On the weekly chart, Visa has kept intact its key support of $194. A bullish pin bar can be seen towering above the support and pushing prices higher. We expect the current momentum to be sustained due to the strong company fundamentals. Investors should aim at the $227 resistance zone.

Concluding thoughts

Investors should hold or add Visa positions to ride the current bullish move. The stock could rise to $227, representing around a 10% upside potential.

The post Visa holds key support intact and eyes up to a 10% short-term upside move appeared first on Invezz.

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