In his Daily Market Notes report to investors, while commenting on domestic and commodity companies, Louis Navellier wrote:
The Federal Open Market Committee (FOMC) minutes on Wednesday openly acknowledged that it was behind the curve (i.e., market rates) and that 0.5% increments in Federal Funds increases may be forthcoming.
Q4 2021 hedge fund letters, conferences and more
Interestingly, former Fed Governor, Laurence Lindsey, told CNBC “I do think we’re going to have a recession, probably in the next quarter.” Lindsey added that “Inflation is eating into consumer spending power, they’re going to have to cut back.” It is imperative that retail sales in the upcoming months exceed inflation, otherwise, stagflation will persist and erode consumer’s purchasing power.
Go Domestic Companies And Commodity Companies
Domestic companies and commodity companies are clearly the place to be. I think there are going to be some problems with the multinationals because some of them do a lot of business in Russia, and they’re going to have to say how that impacted their business. Others are going to be hurting because of the global economic slowdown.
It will be every stock for itself from the third week of April as earnings come in. I’m ecstatic that our sales and earnings momentum has accelerated because we’ve had all these commodity plays. I feel very comfortable with all the stocks we recommend that are profiting from the commodity inflation out there, the energy stocks, the fertilizer stocks, the food stocks, and of course, the semiconductor chip companies.
The shorts do try to shake you out before earnings come out. It’s a little game they play, and I don’t think we should let them win. So let’s just ride through this.
It’s very unfortunate that interest rates are rising like they are. This is going to strengthen the dollar long term. Commodities are priced in dollars so they’ll help shut commodity prices down.
We are probably going to get some inflation relief in the fall. But in the meantime, everybody’s on pins and needles. I’m wondering how much the Fed is going to have to be raising rates. So right now, if the stock market was a dog, the tail is wagging the dog and the tail would be the bond market.
EVs Stalled
U.S. auto manufacturers, with the exception of Tesla Inc (NASDAQ:TSLA), posted a first-quarter sales decline due largely to semiconductor chip shortages and other supply chain glitches. Interestingly, electric vehicle (EV) sales remain strong and there is a waiting list for most EVs. However, General Motors Company (NYSE:GM) only sold only 457 EVs in the first quarter, 99 of which were Hummer EVs. Ford sold 6,734 Mach-e’s in the first quarter, but that is not sufficient production to compete with Tesla. An acute shortage of lithium-ion batteries, plus soaring costs of nickel and cobalt, have stalled the EV revolution.
It will be interesting if more U.S. companies will follow Rivian Automotive Inc (NASDAQ:RIVN) and switch to less efficient and cheaper iron-phosphate batteries like Tesla has at its Shanghai plant to sustain its EV growth. Frankly, since virtually all U.S. made EVs, with the exception of Rivian, are betting on lithium-ion batteries, the production outlook is bleak, unless the raw materials can be obtained, which has become more difficult, since Russia is a major nickel supplier. The bottom line is that the shortage of rare earth metals to build lithium-ion batteries continues to derail the EV revolution.
Coffee Beans
To reach Elon Musk’s levels of wealth, the average U.S. resident would need to work three million years at an average annual wage of $69,392 given by the Organisation for Economic Co-operation and Development (OECD) for the year 2020. According to the St. Louis Federal Reserve, the median personal income stood at $35,805 in the U.S. in 2020, which would ramp up the time needed to match Elon Musk to 6.1 million years. Source: Statista. See the full story here.
