In his Daily Market Notes report to investors, while commenting on Tesla ditching it’s radar, Louis Navellier wrote:
Q1 2021 hedge fund letters, conferences and more
Talks About Tapering
More Fed officials are openly talking about “tapering,” but they are still a minority and the next Federal Open Market Committee (FOMC) statement will be closely scrutinized for any change in the Fed’s language. I should add that San Francisco Fed President, Mary Daly, said on Tuesday that she is optimistic about the economy, but not ready to change Fed policy. Fedspeak translation: Daly is waiting for the unemployment rate to decline further, so the Fed can fulfill its unemployment mandate before tackling inflation. In the meantime, the 10-year Treasury bond remains remarkably well behaved and fell below 1.6% on Tuesday.
It is also notable that the demand for corporate bonds remains relentless as companies rush to raise capital at ultra-low historic yields to refinance existing debt, boost their cash reserves and buy their outstanding stock back. The simple fact of the matter is that relative to bond yields the stock market remains grossly undervalued, which is why most companies prefer to sell debt rather than issue new stock.
The Utility Sector Pulls Back Off Its Recent Highs
The Dow Jones Utility Average Index shows the utility sector has recently pulled back off its recent highs, along with many sectors of the market, where an attractive entry point has presented itself. The top two utilities ETFs are the Utilities Select Sector SPDR Fund (XLU) that sports a current yield of 3% and the Vanguard Utilities ETF (VPU) that pays a current dividend yield of 3.07%.
Utilities that were once stodgy coal, oil, and natural gas-burning companies with low single digit growth rates are now tomorrow’s power companies. Though many are still regulated, they will be generating wider profit margins as renewable assets become paid for and represent a bigger percentage of revenue.
Natural gas will still play a major role in power generation that coincides with the push for renewables. Natty gas is clean, cheap, and incredibly abundant within the U.S., making the long-term transition to renewables – alongside the high utilization rate of natural gas – a harmonious path to meet long-term goals without major disruptions like what occurred in Texas this past winter. That ugly situation showed exactly what can and will go wrong if energy policy is not undertaken with a balanced approach.
To that end, here are a handful of non-MLP gas pipeline stocks that pay 1099 dividends with yields of 5%-7%: Kinder Morgan Inc. (KMI), ONEOK Inc. (OKE), and Williams Companies (IWMB). There are also pipeline ETFs utilizing some leverage that pay 8% to 9% in 1099 dividends. They are Alerian MLP ETF (AMLP), Virtus InfraCap MLP ETF (AMZA), and Global X MLP ETF (MLPA).
The “head and shoulders” constellation is a bearish sign. The inventor of this famous pattern couldn’t have timed it better. Technical trading patterns have been used for centuries, first as tools for commodity futures, but since we have this “digital asset” called bitcoin, they sure do continue to work.
Now, here is a bitcoin chart taken exactly one week later, with data through Sunday, May 23.
The reason technical signals work is that they try to replicate the impact of supply and demand. A price going down reflects selling pressure, while a price going up means more people (or money) is buying than selling. These patterns repeat time and again in bonds, stocks, currencies, and commodities. The different asset classes have their own peculiarities and trade very differently, but they follow the same patterns.
Tesla Is Ditching Radar
There has been some interesting automotive news this week. Tesla announced on Tuesday that it is ditching radar on its Model 3 and Y models in North America and will be relying solely on cameras for its autopilot systems. This is a bold move by Tesla, since virtually all its competitors rely on radar for smart cruise control to follow the vehicle ahead. I should add that radar is an expensive component on vehicles, so Tesla is lowering the manufacturing cost of the Model 3 and Y.
The other big potential automotive news is a graphene aluminum-ion battery from an Australian company, Graphene Manufacturing Group, is claiming that its batteries charge up to 60 times faster, last three times longer that lithium-ion batteries, offer more power density and are easy to recycle. The company is planning to rollout its batteries in 2024 and its Managing Director Craig Nicol said “It charges so fast it’s basically a super capacitor.” Nicol added “It charges a coin cell in less than 10 seconds,” so you could charge a smart phone instantly. In summary, the company’s graphene aluminum-ion battery cells are claimed to deliver far more power density than current lithium-ion batteries, without the rare-earth materials that lithium-ion batteries utilize.
My question is are these graphene aluminum-ion batteries better than solid-state batteries? That is the $64,000 question. The bottom line is due to the fact that cobalt, copper and lithium prices have soared this year, making an electric vehicle (EV) has become more expensive. It is imperative that cheaper battery solutions emerge, so the graphene aluminum-ion battery maybe a breakthrough. However, BMW, Ford, Toyota, VW Group and other manufacturers seem to be betting on solid-state batteries as the eventual solution. It will be interesting what technology eventually competes with lithium-ion batteries.