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May 7 2021 Option Professor Opinions & Observations
The Option Professor is a graduate of Boston College and has Decades of Investment Experience.
The Option Professor has Instructed Thousand of Investors Worldwide on the Uses and Risks of Investing
Good Day!….Another Great Week to be in Stocks as we roared to new highs as the Fed is not only supplying the punch bowl but; after the jobs miss, may are betting they are the bartender:). We provided subscribers for months the Portfolio Roadmap & a Focus List to take advantage of this market……we think you should go to optionprofessor.com/subscribe so not only can you get weekly updates but a link to our recent webinar. Anyone who has read our updates for the last year knows WE TOLD YOU about the S&P crash ending last year at about a 38% drop off the highs and with a close above 2800 SP & the FED…all systems were go. WE TOLD YOU to add Value Banks Energy Industrials Materials 6-9 months ago as a steepening yield curve would hurt tech and support these sectors. WE TOLD YOU to start looking at Europe & EM for re-opening later this year. WE TOLD YOU Copper & Grains & Commodities would ROAR as Covid supply shortages & massive demand would hike prices. WE TOLD you oil would zoom as rig closures & other factors (tight supplies) would be dwarfed by demand & the energy sector would ROAR. WE TOLD YOU Gold at $1675 ($2065 high-$1040 low = $1025 X 38% or $390 so $2065-$390 = $1675….not a bad call huh?…..so we respectfully ask you keep up to date on what we are thinking by getting our newsletter each week for $49 bucks a month or $297 per year ($24.75 per mo). It’s balanced it’s thoughtful it’s independent and we strive 100 % to bring something of value to you each week! We get into specifics and share our Focus List/Portfolio Roadmap—optionprofessor.com/subscribe & tell a friend! You get our views on Stocks-Dividend Income-International-Bonds-Energy-Metals-Crypto-Grains-More!! We have had a big run and the question is we will go to S&P 4350-4500 before summer or will we see that drop toward S&P 3600-3800 as we are hit by REALITY that opening an economy is harder than shutting one down. We will be happy to share with you; our subscribers exactly the way we see it as it unfolds in the weeks ahead.
The Markets rocketed higher this week as the Fed may never tighten if they will wait for unemployment to normalize as the new normal will be far different than before due to technology and operating margins companies now enjoy. Since interest rates are gravity to stocks-no tightening no gravity. Negative real yields are 90 basis points and this week we get CPI & PPI….this is a recipe for asset inflation and soaring metals prices BUT as we saw this week (Goldman & Pimco reiterated)….people are too excited about inflation & reports are ????. We told you that energy could fly (servicers E&P Integrated) and the ones we told subscribers about did just that last week. Banks Materials Industrials Value all did well and the newer member to our family international got some legs too. Big moves in some of the vice stocks (TLRY MJ CZR WYNN MGM) & other reopen stocks (CCL JETS PEJ) got moving too…next week we have earning from two big ones so let’s see the $$$$ (DIS MAR). The yearlings have earning next week (COIN PLTR BMBL RBLX ABNB DASH POSH) so we’ll see if valuations matter! The shake up in drug companies (MRNA MRK PFE ect) short lived but RKT got whacked as loan demand stinks. GDP in Q2 is expected huge…$2 Trill on S&P balance sheets…$4.7 Trill in money markets and $16 Trill in commercial bank deposits PLUS we spent $1 trill more than income lost leaves us in shock how much liquidity is out there BUT there is a 19th Century Ricardian Theory that deficits deter spending as consumers pay back debt. Leon Cooperman said it well with we are borrowing from the future and progressive agendas lead to higher taxes higher inflation higher interest rates. Bear Markets come from a hostile Fed-inflation and a recession and we have lack evidence of that yet (commodity inflation can be transitory as supply and demand dynamics can change). He said he is a mostly invested bear and will hope to adjust before a major change in the up trend. Go to optionprofessor.com/subscribe and keep abreast of our specific views on positioning right now.
Big reversal after the jobs report as the 10yr Treasury yields dropped toward 1.46% only to close 10 basis points higher. The reality is that Q1b saw the worst bond market sell off in decades and positioning AS WE SAID got overdone and a rally ensued. TLT could be vulnerable if it is unable to take out 141 and decides to head south UNDER 135. Junk Bonds are being issued at record pace and the CCC grade is priced to perfection…many are simply sitting in cash unwilling to loan money at joke rates where risk for no return is the menu. Norfolk Southern sold 100 year bonds (first time since 2018) at less than 2% above treasuries. Peru sold $4 Billion of 100 yr bonds back in November….loan money that doesn’t mature until 2121…it’s a sign of a DEBT BUBBLE to us. The Fed is supposed to be dovish…..so who’s right? If they stay the course & inflation up dollar down metals up; we would love top be a fly on the wall at the meeting in Jackson Hole:)..Volatility is coming in all asset classes for the rest of the year…get our views each week.. go to optionprofessor.com/subscribe…..LEARN alternatives now!
US Dollar/International Markets
We said the Dollar Index was on thin ice when we broke UNDER the 50-200 day MA’s at 91.75-91.50 areas. We closed at 90.22 as the BP EURO CAN & AUS (commodity currencies) all take aim as a dovish Fed with no tapering in sight falls prey to countries that reduce stimulus & BENEFIT from inflation (particularly commodity type). The international market we spoke of in Europe & Emerging Markets had a great week with we believe a lot of runway. China PPI comes out Tues our CPI PPI out next week with retail sales too. China’s domestic spending seems a bit timid but the trade deficits with them Europe and Emerging Markets is staggering. Find out about positioning in Asia Europe & Emerging Markets…optionprofessor.com/subscribe….LEARN alternatives now!
Crude Oil Natural Gas
Anyone who had read our reports knows we have been here for a year and continue to benefit. Same story as any price over 50-55 means FREE CASH FLOW to many firms. the E&P Refiners Integrated all had great runs this week and we will update things for subscribers as to which ones we prefer. We told readers and subscriber 2.50 Nat Gas & LNG at 70 was the turning point and one closed at almost 3.00 and 82.65…plus all the oil stocks….not bad info huh?…go to optionprofessor.com/subscribe and start getting our views each week….Get Learning Now!
Gold Silver Platinum Copper Palladium Crypto
All stores of value to some degree…all with exciting supply/demand dynamics. We told you to use March lows as a get out point in Gold Silver & Platinum and be as bullish as you can afford to be….this week we got the break! Now Gold above 1800 Silver 27 and Platinum 1200 all looks good but we may churn around as the larger move expected later this year BUT with negative real yields and inflation picking up & MA”s up—you never know. Copper we have been bullish on for so long we feel like a broken record…FCX at 10 now 40+…SCCO…also CPER & CUPX we have new ones CPER & CUPX as demand is huge from EV’s Air turbines Construction Infrastructure so mines can’t keep up BUT supply will come (Palladium got hit as South African mines increase production and RSI divergence into new highs) so be careful & sober. The crypto we watch are BitCoin and Ethereum with the latter on are to go list in the last 2 months as we see programmable block chain could be enormous. Mining shares and way to hedge your positions are the focus. LEARN MORE NOW optionprofessor.com/subscribe…. the future may be very volatile & bright…stay informed…..get the facts…the Fed wants an inflation pick up.
Soybeans Sugar Coffee
We have been all over these three markets for a long long time. Backwardation is running very high as well as RSI on the Bloomberg Index. Hedge Funds are plowing money into commodities as shortages coming out of supply cuts die to Covid & droughts (South America now Canada) have led to squeezes. The USDA has a report next week and we must remember shortages don’t last forever though some believe they could last into harvest There are ways to play this stuff thru ETF’s LEARN NOW simply subscribe optionprofessor.com/subscribe Thanks!
REMEMBER There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Consult your brokerage firm/broker.advisor to determine your own suitability. Past Performance is not necessarily indicative of future results. Use Risk Capital. Opinions & Observations for INFORMATIONAL PURPOSE