Alpha Trader

Latest Episodes:

JPMorgan Asset Management's Gabriela Santos joins Alpha Trader Dec 29, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Gabriela Santos, global market strategist at JPMorgan Asset Management.
Among the topics covered:
There are lots of positives going into 2022, says Santos, expecting the pandemic to fade further, inflation to moderate, and growth to remain strong. For now, at least, inflation should prove to be a boon to corporate profits. The only thing holding the JPMorgan Asset Management team from being uber-bullish is the starting point for stocks - it’s been a big two years for equities, and valuations are perky as we end 2021.
JPMorgan’s just-completed Long-Term Capital Market Assumptions report looks out to the next 10-15 years, and Santos notes it’s somewhat easier to predict returns over this longer period than over the next 12 months. That report sees U.S. equities returning an average of just over 4%. The better opportunities, says Santos, can be found in more reasonably valued Europe and developing markets.
This is Alpha Trader’s final podcast. It’s been a great run over the past two+ years, and we’d like to thank all of our fantastic guests and our sponsor CME Group.
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Playing the Omicron wild card - Scott Bauer joins Alpha Trader Dec 22, 2021

This week’s Alpha Trader features host Stephen Alpher speaking with Scott Bauer, CEO of Prosper Trading Academy (co-host Aaron Task is off this week).
Among the topics discussed:
The recent market stumbles probably have a lot more to do with the Omicron variant, rather than the Fed speeding up its pace of policy tightening, suggests Bauer. For now, Omicron is more about cases, rather than serious illness, but it’s too early to have a handle on how this plays out.
Of that Fed tightening, Bauer isn’t too worked up about the central bank’s “plan” to maybe hike three times in 2022. That would still leave short rates near historic lows, and even a move in long rates to the 2.5% area shouldn’t pose much issue for the economy.
While leaning bullish on stocks right now, Bauer isn’t trying to hit any home runs thanks to the Omicron wild card. He’s been selling volatility on spikes, noting that seemingly every market downdraft of late has been quickly faded (and he’s using the subsequent rallies to buy back that vol).
Looking into 2022, he’s fan of the recently hit big banks, expecting players like Goldman Sachs and JPMorgan to do well alongside the continuing strong economy.
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The bull has room to run - Ryan Detrick joins Alpha Trader Dec 15, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Ryan Detrick, chief market strategist for LPL Financial.
Among the topics covered:
Speaking ahead of the results of this week’s FOMC meeting and after a couple of very speedy inflation prints, Detrick suggests a speedier taper has already been priced in by the markets. Betting on perhaps a more dovish Fed action tomorrow might be something to consider. Looking out to 2022, while markets have priced in three rate hikes, Detrick and team believe there will only be two, with the first move not coming until the second half.
Speaking of inflation, Detrick doesn’t believe we’re in a rerun of the 1970s. Yes, the numbers are ugly at the moment, but market-based signals like nominal bond yields, inflation-protection spreads, and the price of gold suggest there may be a speedy improvement in the inflation outlook.
Turning to the markets in 2022, Detrick continues to favor stocks over bonds. He notes that when the S&P 500 is up 20% for the year (which we’ll likely be in 2021), it’s been up the following year nine consecutive times. And in seven of those instances, the average was up double-digits. Since 1950, the average return following a 20%+ year is 11.5%.
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The technician's take - J.C. Parets joins Alpha Trader (podcast) Dec 08, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with J.C. Parets, founder and chief strategist at All Star Charts.
Among the topics covered:
The technician’s take on last week’s swoon and this week’s major bounce in the stock market. The Cliff’s Notes: The S&P 500 (SP500) held above its September low of 4,500, setting the stage for the rally.
Swooning along with stocks, were cryptocurrencies, including a flash crash as we slept on Saturday morning, which took bitcoin (BTC-USD) down by about 20% in minutes. Not necessarily bearish on bitcoin, Parets prefers those cryptos showing relative strength, among them Terra (LUNA-USD), TerraCoin (TRC-USD), Decentraland (MANA-USD), Axie Infinity (AXS-USD), and Sandbox (SAND). He’s got a sizable portion of his trading assets invested in these, and at the moment is earning some whopping yields.
While crude oil fell from about $85 per barrel to $65 during November, the Energy Select SPDR (XLE) and the Oil & Gas Exploration SPDR (XOP) barely budged off their highs. That’s the sort of bullish divergence Parets loves to see. He prefers the producers (and thus XOP) to the services names, thanks to the producers’ relative strength. Two favorites are Chevron (CVX) - at a 52-week high despite the price retreat - and Cheniere Energy (LNG), which might have the strongest technicals of any oil & gas name.
Among other nuggets: Buying in hopes of mean reversion is like working in a coal mine, while buying strength is like going to a warm beach. Go to the beach.
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Alpha Trader talks EV infrastructure plays with Pieter Taselaar Dec 01, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking EVs with Pieter Taselaar, founding partner and portfolio manager of Lucerne Capital Management. He’s also the CEO of European Sustainable Growth Acquisition Corp. (EUSG), a SPAC which hopes to soon close on its acquisition of ADS-TEC Energy, a German-based company that manufactures EV charging stations that can charge batteries in minutes without putting strain on a city's electrical grids.
Among the topics covered:
Task and Alpher discuss Fed Chair Jay Powell’s surprising hawkishness on Tuesday morning, which helped send stocks sharply lower. They also dig into Jack Dorsey’s exit from Twitter (TWTR), and what it might mean for the future of that platform
Not an investor in the EV auto manufacturers, Taselaar instead looks for opportunities in companies providing the critical charging and battery infrastructure for the industry.
Key to his thesis is the need for fast charging, and - in addition to above-mentioned ADS-TEC Energy - Taselaar is a fan of Wolfspeed (WOLF), and ASML (ASML), who make the semiconductors necessary for the battery chargers. He’s also an owner of EVgo (EVGO), a pure EV play which could benefit from the subsidies in the Biden infrastructure bill.
Nothing goes in a straight line, of course, and WOLF and EVgo have had rough recent runs. The EV revolution, however, is going nowhere, and Taselaar suggests investors consider adding on dips.
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Oil, inflation, and bad government policy - Jim Iurio joins Alpha Trader Nov 24, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Jim Iurio, managing director at TJM Institutional Securities.
Among the topics discussed:
Speaking as crude oil prices (CL1:COM) were jumping despite a coordinated governmental effort to boost supplies, Iurio reminds that it’s another entry in the “buy the rumor, sell the fact” mantra. Oil, he notes, was down about $10 per barrel in the weeks leading up to Tuesday morning’s announcement of the SPR release.
Iurio is short the S&P 500 (SP500) for a trade, noting a recent rise in interest rates and significant deterioration in the average stock even as the market gauge remains close to or at an all-time high. This isn’t the “big one,” though, cautions Iurio. A continuation of easy monetary policy should assure that any correction will be a modest one.
The question going forward is whether the current fast inflation numbers have put us at an inflection point, i.e. is nearly 40 years of progressively easier monetary policy coming to an end? Iurio isn’t so sure we’re there yet, but he’s keeping a close eye on developments.
Iurio remains bullish on not just the price, but the disruptive nature of cryptocurrencies like Bitcoin (BTC-USD) and Ethereum (ETH-USD). Of news that some high-profile professional athletes are taking their salaries in bitcoin, he does get a bit worried, saying it reminds him of a supermodel who in 2007 demanded to be paid in euros shortly before that currency’s long, steep decline.
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Still bullish on the long bond - Lacy Hunt joins Alpha Trader podcast Nov 17, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Dr. Lacy Hunt, executive vice president of Hoisington Capital Management.
Among the topics covered:
Hunt and his partner Van Hoisington have correctly remained steadfastly bullish on long-dated U.S. Treasurys ([[TLT]], [[TBT]]) through multiple inflation scares over the past few decades. They remain bullish today despite some scary recent CPI prints, continuing to point out the clear evidence that over-indebtedness in the U.S. will act as a deflationary force.
This doesn’t mean there won’t be quarters of speedy economic growth and occasional gains in inflation, but once the high of whatever government stimulus du jour wears off, economic sluggishness and a pullback in inflation will reassert. Hunt expects the just-passed $1T fiscal stimulus bill to be yet another example - a short bout of higher growth, but ultimately even worse economic performance down the road thanks to the boosted indebtedness.
Turning to monetary policy, Hunt notes that growth in the money supply has begun to slow even prior to the Fed’s taper, suggesting a coming slowdown in both the economy and inflation. How could this be given that the banks have nearly $1.5 trillion more in reserves than they did a year ago? Banks, Hunt says, are not able to put those reserves to profitable use, so they remain on account at the Fed earning a handful of basis points.
As for yesterday’s hot retail sales report (for October), Hunt believes a lot of folks - reading stories about the possibility of bare shelves come Christmas-time - pulled their buying forward. More interesting to him is last week’s plunge in consumer sentiment, with the sub-index of durable goods purchase expectations falling to one of its lowest reads ever. It suggests to him a serious lack of confidence in the economy. He also takes note of the poor approval numbers for the current administration - prints one would never see were there not major economic concerns.
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Central banks continue to support the market - Brent Schutte joins Alpha Trader Nov 10, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management.
Among the topics discussed:
While the Fed has begun to taper and may push through a couple of rate hikes next year, Schutte expects the central bank to be very patient about tightening policy. He’s in the “transitory” camp on inflation, noting plenty of slack in the labor market as evidenced by a labor force participation rate that remains quite low.
Given the above combined with growing corporate earnings and a 10-year yield in the 1.50% area, Schutte continues to see stocks as the place to invest.
The “market” may be expensive in some areas, says Schutte, but it depends where you look. The S&P Pure Growth Index trades at 35x next year’s earnings, but the S&P Pure Value Index at just 11x. While there’s been good reasons for Growth to outperform to this point, Schutte sees a shift towards areas that are cheaper.
Noting the Bank of England and the Reserve Bank of Australia both reversed themselves on tightening threats in the last couple of weeks, Schutte isn’t seeing any appetite among global central banks to declare war on inflation. Therein lies the risk for the market in future years - that central banks at some point are going to have to really slam on the breaks. That, however, is a question for 2023, or perhaps beyond.
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Energy names with room to run - David Bahnsen joins Alpha Trader Nov 03, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with David Bahnsen, chief investment officer of The Bahnsen Group, and the author of There's No Free Lunch: 250 Economic Truths.
Among the topics discussed:
While the energy sector has been red-hot this year, it’s hard to say things are frothy, says Bahnsen. He notes yield spreads remain high, price-to-earnings and price-to-cash flow multiples remain low, and stock prices for many exploration and production companies are down 30%-50% from the last time oil was in the $80 per barrel area. He notes Chevron (CVX) just had its best cash flow quarter ever, and Exxon’s (XOM) capital discipline during the tough times is paying off in a big way.
As he said during his May appearance on Alpha Trader, Bahnsen believes there’s no more under-appreciated sector in energy than the midstream space, i.e. the players involved in transporting, storing, and pipelines. Yields are strong, valuations are reasonable, and financial metrics continue to improve. He continues to like Kinder Morgan (KMI) and Enterprise Product Partners (EPD), but his major holding is in the USCF Midstream Energy Income Fund ETF (UMI).
A fan of the goal of cleaner energy, Bahnsen is pleased that “grown-ups” like Goldman’s David Solomon and JPMorgan’s Jamie Dimon have pledged to continue facilitating capital towards fossil fuel producers, as it’s just not possible at this time for renewables to fuel the globe’s energy needs.
As for the current inflation scare, Bahnsen expects it is cyclical, not secular. The overwhelming level of government debt has been, and will continue to be a major deflationary force. This will again be apparent once the economy works through this expansion’s supply chain and labor shortage issues.
Moving away from the energy sector, Bahnsen is an owner of Merck (MRK) and JPMorgan (JPM), noting healthy and growing dividends for both. Merck has the soon-to-come Covid treatment pill, and the balance sheet for effective M&A ahead of patent cliffs (see the recent Acceleron purchase). JPMorgan, says Bahnsen, is the best-run big bank in the U.S. He reminds of the big dividends the House of Dimon continues to get from its pennies-on-the-dollar financial crisis purchases of Bear Stearns and WAMU.
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Room to run for stocks, oil, crypto - Ben Laidler joins Alpha Trader Oct 27, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher chatting with Ben Laidler, global market strategist for eToro.
Among the topics discussed:
Q3 earnings season has been a big reminder that growth is not dead, says Laidler. He sees upside to his 2022 year-end S&P 500 forecast of 5,050 as markets continue to dramatically underestimate earnings power, and still-low bond yields support perky equity valuations.
Markets have already priced in three Fed rate hikes next year. Laidler suspects that’s a quicker pace of tightening than what will actually happen, but he reminds that markets often stage a relief rally once the Fed actually commences with rate hikes.
Laidler is also bullish on commodities, and thinks oil could head into the triple digits. But what about inflation in that scenario? He’s not too concerned, noting how “de-commoditized” Western economies have become.
Turning to Bitcoin, Laidler is bullish there as well. The next move higher, he expects, will come from far greater institutional adoption. It’s only a trickle at this point, but wider acceptance is inevitable.
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Capturing the 5G opportunity - Bruce Liu joins Alpha Trader podcast Oct 20, 2021

This episode of Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Brue Liu, CEO at Esoterica Capital, and portfolio manager of the Esoterica Thematic ETF Trust (WUGI).
Among the topics discussed:
5G technology is much more than just an upgrade from 4G, says Liu. If one thinks of 4G as enabling the mobile internet, 5G will allow the digitization of every aspect of our lives - from streaming to smart homes to smart factories to remote healthcare to self-driving cars. Another difference - if 4G was mostly a U.S. phenomenon, 5G is global.
The evolution to 5G technology will first be felt in semiconductors as all devices will require upgrades. Among Esoterica’s top ten holdings are Nvidia (NVDA), Xilinx (XLNX), Marvell (MRVL), Qualcomm (QCOM), Advanced Micro Devices (AMD), and Taiwan Semiconductor (TSM).
Speaking of the recent crackdown by Beijing on China’s large tech companies, Liu says these regulatory developments have been a long time coming. The country’s leadership has long felt the tech giants have been extraordinary beneficiaries of hyper-growth, and now it’s time to share some of the wealth, says Liu. As recently seen with Meituan (MPNGF), the companies will reach a settlement with the government, agree to changes, pay a fine, and move along.
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The value case for Bitcoin and the miners - Mike Alfred joins Alpha Trader Oct 19, 2021

A special bonus edition of the Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Mike Alfred, founding CEO at BrightScope Digital Assets Data, and a board member at Eaglebrook.
Among the topics discussed:
Yes it’s nice that the current price action in bitcoin (BTC-USD) is bullish, but Alfred urges focus on the long-term. The size of the network will continue to grow, more institutions are buying in (but haven’t yet publicly announced), even more institutions are going to have to buy in, and there’s no end in sight to federal deficits and central bank money printing. Bitcoin is likely going to seven figures within the next decade, so it doesn’t matter too much whether one buys at $60K or $30K, or anywhere in between.
Move over FAANG and make room for CHARM. China’s banning of bitcoin mining has led to an even greater opportunity for North America-based miners. This so-called CHARM group: Core Scientific (XPDI), Hut 8 (HUT), Argo Blockchain (ARBK), Riot Blockchain (RIOT), Marathon Digital (MARA) now has a larger opening to scale up and build market share. Alfred notes the miners are the only players who can create their own bitcoin, they’re hodling onto to all the bitcoin they mine, and their cost of capital is rapidly trending towards zero.
Alfred also owns ethereum (ETH-USD), but says it’s a very modest amount vs. his allocation to bitcoin. He considers ethereum as more of a venture capital play on some possibly interesting utility uses. Bitcoin, on the other hand, is a truly decentralized, organically-growing monetary network that is continually becoming more valuable. If Bitcoin is successful with potentially billions holding and using it, it doesn’t require a whole lot of imagination to see what one of 21M coins might be worth at some point. Could Bitcoin fail? There’s a non-zero chance, says Alfred, but as the network grows, the chance of this happening continues to slide.
Turning to brokerages, Coinbase’s (COIN) stock has had a modestly rough run of it since its IPO, but the action reminds Alfred of Facebook’s initial rough post-IPO trade. As Bitcoin grows, and crypto grows, a well-run Coinbase figures to scale right alongside, even if it faces competition on fees from any number of peers. Look at Schwab ... It’s doing better than ever, even with $0 commissions.
After dithering for years, what is the first Bitcoin ETF that the SEC finally approves? It’s a futures-based ETF offered by ProShares which may make for a nice short-term trading vehicle, but is about the last thing any Sats stacker should be interested in. More interesting to Alfred is the Grayscale Bitcoin Trust (GBTC), which has begun the work to convert to an ETF. It’s trading at a 15%-18% discount that will disappear once the ETF conversion takes place - a pretty decent return should that happen in the next 6-12 months.
The train has left the station, says Alfred, speaking of questions about whether the U.S. could somehow ban or halt Bitcoin. There are too many states that have encouraged and are receiving Bitcoin-based investment for any national ban. There is a minor risk, concedes Alfred, that a cabal of powerful governments - think U.S., EU, China, India - get together to severely restrict Bitcoin. Alfred puts the chances at about 1%, but even a move like this would only curtail the size of the network, not kill the crypto.
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The brewing energy crisis - Bob Iaccino joins Alpha Trader Oct 13, 2021

On the two-year anniversary of the Alpha Trader podcast, hosts Aaron Task and Stephen Alpher welcome back to the show, Bob Iaccino, co-founder of The Stock Think Tank.
Among the topics discussed:
While the renewable energy movement is a worthy one, the world isn’t yet ready to run on sun and wind. The lack of investment in fossil fuels has the globe on the verge of, if not already in an energy crisis. Some believe oil would need to be in the triple digits to put a sizable dent in the economy and corporate profits, but Iaccino believes this is already happening at $80.
Iaccino reminds that turning the spigots back on for U.S. shale production isn’t as easy as flipping a switch. Even if there were the regulatory appetite to do so (a big if), getting production up and running again requires capital, equipment, labor … all of which are tough to come by at the moment.
As far as the short term, Iaccino and team believe the price of oil (CL1:COM) is extended. They’ve covered their longs and are waiting for a pullback to reload.
Turning to stocks, Iaccino is bullish in the medium-term, but expects there will be one more washout in the averages prior to a resumption of the uptrend. He’s a bottom-up stock picker and never owns more than a handful of names. Among his holdings right now: Cognizant Technologies (CTSH), Hormel Foods (HRL), Viacom ([[VIAC]], [[VIACA]]), Ford (F), Salesforce (CRM), and Sprott Physical Gold ETF (PHYS).
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Mark Minervini and Dan David join Alpha Trader Oct 06, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking first with Mark Minervini, author of several best-selling books, Trade Like a Stock Market Wizard and Think and Trade Like a Champion, among them, and then with Dan David, the founder of short-focused activist-research outfit, Wolfpack Research.
Minervini is leading the pack this year in the U.S. Investing Championship in the $1+ money manager category with a whopping 262% gain. Though not a short seller by nature, at least some of Minervini’s gains have come from his decision on September 13 to short the SPDR S&P 500 ETF (SPY). What led Minervini to short the market and to remain short was his observation of the weakening technicals beneath the averages - among them, 80% of S&P 500 stocks down 10% or more, and just 38% of Nasdaq names above their 200-day moving averages.
Minervini made news last week saying that the technicals of the market remind him of the situation prior to the 1987 crash. Those who extrapolate that statement to him predicting a crash, however, are missing the point. What he’s trying to say is that conditions continue to favor a correction in stocks, so he’s staying short. When the technicals improve, he’ll cover and go long.
Dan David is perhaps best known as a featured protagonist in 2018’s, The China Hustle, a film that documented his work in uncovering fraud in China-based U.S. stock listings. At the root of The China Hustle is that it was legal in China to defraud foreign investors. That remains so today, says David, so bottom line: The financial statements of Chinese companies - from giants Alibaba (BABA) and Baidu (BIDU) all the way down to the smallest of small caps - cannot be trusted. And though David doesn’t trade the Chinese megacaps, he assures that the regulatory crackdown on these players is for real. “Thou shall not be bigger than the state,” he reminds.
It’s all about control, says David, who isn’t surprised by China’s moves against Bitcoin. A government that doesn’t allow its currency to float or guarantee basic freedoms can hardly be expected to sit aside while citizens keep their money off the books. And on Taiwan, David is certain that China will take over/invade at some point, and that the U.S. will be powerless to stop it. Whatever one thinks of Chairman Xi, says David, he’s a man who does what he says he’ll do … And he’s said as much.
Turning to active trades, David continues to be profitably short what he considers to be frauds like SGOCO Group (SGOC) and Moxian (MOXC), and a SPAC deal - Skillz (SKLZ) - where he believes the sponsors were too aggressive with their projected numbers.
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Walking between the raindrops - Jeff Kilburg joins Alpha Trader Sep 29, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Jeff Kilburg, chief investment officer at Sanctuary Wealth.
Among the topics covered:
What’s behind the current market jitters? Is it the debt ceiling debate, concern about tighter central bank policy, soaring energy prices, supply chain worries, China Evergrande? Whatever the reason and whatever the resolutions to the above concerns, all roads appear to lead to easier than otherwise Fed policy, and Kilburg remains bullish.
Two regional Fed presidents resigned earlier this week thanks to trading scandals, and as the podcast was being recorded, Chairman Jay Powell’s odds of serving another term took a dip when Senator Elizabeth Warren declared him a “dangerous man.”. A lot of this stuff is for show, reminds Kilburg, but it’s yet another reason Jay Powell will more or less continue to stand there with a sign saying “buy risk assets.”
The velocity of the move higher in long-term rates has shaken some, notes Kilburg, but the absolute level of the 10-year yield of about 1.5% remains historically low. As long as the 10-year rate remains range-bound below about 2%, it should be good for tech stocks. Kilburg and team have been buying the dip in areas like cybersecurity and semiconductors. Though a fan of the reflation trade, and an owner of names like 3M (MMM), Boeing (BA), and Masco (MAS), Kilburg did take profits on most energy holdings in mid-September.
Links of interest:
Senator Warren: Fed Chair Jay Powell a 'dangerous man'
Debt ceiling and inflation in focus at Yellen's and Powell's Senate testimony
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Calculating Earnings Distortion - David Trainer joins Alpha Trader Sep 22, 2021

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with David Trainer, CEO of independent research firm New Constructs, and the author of Value Investing 2.0, a newsletter available on Seeking Alpha's Marketplace service.
Among the topics covered:
The Evergrande story out of China is naturally worth paying attention to, but it's particularly important during these times of stretched market valuations. The question at hand is whether the Chinese government will step in to ease liquidity concerns. This is likely to happen, but there's no guarantee.
Trainer explains his proprietary concept of Earnings Distortion, a systematic alpha-generating calculation of a company's true (vs. reported) results.
Among Trainer's favorite picks is Disney (DIS), which is weathering the challenge from Netflix (NFLX) very well. Trainer notes Disney generates massive cash flow from multiple channels, while Netflix is burning through billions.
Another favorite is Walmart (WMT) - like Disney, generating billions in cash flow, and also like Disney, weathering the challenge from a sexier competitor (in this case Amazon).
Links of interest:
David Trainer's Value Investing 2.0
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'Team transitory' gets a win - Alpha Trader looks at the inflation numbers Sep 15, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher discussing the latest macro topics. Technical difficulties kept our guest - RSM Chief Economist Joseph Brusuelas - from the recording, but we were able to speak with him offline and relay some of his thoughts.
Among the topics:
“Team transitory” got a win with Tuesday morning’s softer-than-expected inflation report, says Brusuelas, but - with the CPI continuing to run at north of 5% - it’s still to early to declare victory.
Stocks initially rose on the slow inflation number, but finished the day with losses. Investors may have gotten complacent after what seems like months with no downturn lasting for more than a few hours, but September - so far - has been a return to reality, with the S&P down about 3% in the first couple of weeks of the month.
Meanwhile in China, that country’s leadership reminded everyone that they can send a sector down sharply at any point. This week it was the casino sector that drew some comments from Beijing, sending some of those players down double digit percentages.
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Bullish on 'new tech' - George Ball joins Alpha Trader Sep 08, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with George Ball, chairman of Sanders, Morris, Harris.
Among the topics discussed:
Stocks are expensive and the bull market is long in the tooth, but the Fed (or at least Chairman Jay Powell) is showing little interest in tightening policy. While fast growth and perky inflation would seemingly argue for the Fed to move, don’t discount that Powell would like to keep his job - tapering and/or higher rates wouldn’t be the best career move.
What might upset this equation is the Fed having gotten it wrong on “transitory” inflation. Last week’s “soft” employment report was notable for a 0.6% rise in average hourly earnings - double what was expected. While one could argue that the taper is priced into stock prices, Ball says higher and stickier than expected wage-led inflation certainly isn’t.
Nevertheless remaining bullish, Ball prefers “new tech” names that have far greater upside than the FAANG+ players. Among them are MercadoLibre (MELI) and Chegg (CHGG) - both stocks have had astounding gains over the past few years, but the best way to invest, says Ball, is to have the memory span of a goldfish. The market caps of each remain relatively small compared to the market opportunities they have.
Bullish on cryptocurrencies, Ball recommends splitting an investment up three ways - one-third in bitcoin (BTC-USD), one-third in ether (ETH-USD), and one-third in Coinbase (COIN). If worried about the competitive threat that Coinbase may face as other exchanges raise funds in IPOs, Ball wouldn’t have issue buying a basket of these players instead of just Coinbase.
Ball is also a fan of a recently gone-public small-cap biotech, Sera Prognostics (SERA). The company has a test which can determine if a woman is likely to give birth to a baby prematurely. By being able to identify and treat this condition early, the savings - both from a human and cost standpoint - would be enormous.
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Powell pleases at Jackson Hole - Steve Sosnick joins Alpha Trader Sep 01, 2021

This week’s Alpha Trader podcast features host Stephen Alpher talking with Steve Sosnick, chief strategist at Interactive Brokers (co-host Aaron Task is on vacation this week).
Among the topics discussed:
“Goldilocks is a 68-year-old man in a suit,” or how Jerome Powell’s Jackson Hole keynote address managed to please both equity and fixed-income investors. Ahead of the talk, a number of Fed speakers made clear they were in favor of beginning the taper sooner, rather than later. Powell pushed back against that hawkishness, while still suggesting that tapering isn’t too far off.
With more gains in August, the S&P 500 (SP500) is now on a seven-month winning streak. Past history suggests markets will be nicely higher in six months, but Sosnick reminds that so much depends on the timing of the streak - this time around it’s occurring at what may be near the beginning of a Fed tightening cycle.
Shorting the VIX at this point in the cycle may be like picking up pennies in front of a steamroller, with upside (of the bet) of a couple of points, but the downside far greater - particularly as we head into what’s typically the seasonally volatile period of September/October.
The potential of blockchain technology (decentralized ledger) may be as great as that of the Internet, but that doesn’t mean the price direction of bitcoin (BTC-USD) has to be a one-way street higher. Similar to Cisco - which had a huge run early in the era, but has underperformed for more than two decades despite its importance for Internet usage - bitcoin’s price could languish even as blockchain technology delivers society-changing products.
Links of interest:
Goldilocks is a 68-year-old man in a suit
Blockchain is to the Internet as Bitcoin is to ?
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A bubble in bubble identification - Randy Frederick joins Alpha Trader podcast Aug 25, 2021

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A buying opportunity in China? KraneShares' (KWEB) Brendan Ahern joins Alpha Trader Aug 18, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Brendan Ahern, chief investment officer at KraneShares, whose flagship fund is the $5B AUM KraneShares CSI China Internet ETF (KWEB).
Among the topics covered:
Why the fall of Afghanistan - no doubt a serious issue for the Middle East - doesn’t necessarily translate into China getting more aggressive with Taiwan
There’s plenty being lost in translation with respect to the regulatory news coming out of China, says Ahern. Much of what we’re seeing - while clunkily handled by Beijing - is no different than much of the regulatory issues faced by the likes of Facebook and Amazon on a regular basis in the U.S. or EU.
The result has been a large disconnect between fundamentals (still great) in Chinese Internet players like Alibaba (BABA), Tencent (TCEHY), JD.Com (JD), Meituan (MPNGF), and Pinduoduo (PDD), and the price action (not so great).
Links of interest:
Why Ray Dalio thinks worries about the China regulatory crackdown are overblown
Why George Soros is highly worried about China
KWEB’s top holdings
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Markets to move higher, but don't forget downside protection - Scott Bauer joins Alpha Trader Aug 11, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher chatting with Scott Bauer, CEO of Prosper Trading Academy.
Among the topics covered:
Barring worsening news on the Delta variant or some other unfortunate event, there’s little standing in the way of the market continuing to move higher, says Bauer. That doesn’t mean investors shouldn’t be buying protection, and - thanks to recent low volatility - that protection is relatively cheap at the moment.
Recent strong economic growth and inflation prints suggest we’re maybe nearing the end of the zero rate regime sometime in the next year, but Bauer believes the market has discounted as much. More important is how to play stronger inflation, and Bauer - who has been long semiconductors (SMH) through their big run of the past few months - believes there’s plenty more upside to come.
Markets don’t always have to make sense, reminds Bauer. U.S. bond yields until recently had been headed sharply lower, but at the same time the dollar was showing plenty of strength. Apparel stocks have been taking off of late, even amid stores about companies extending work-from-home, and chatter about at least some schools continuing with remote learning.
And of the dollar (USDOLLAR), Bauer expects it to continue rising - not because its a “bastion of strength” - but because it’s being measured against other currencies like the euro and yen that have even larger flaws.
Links of interest:
Prosper Trading Academy
Micron CFO discusses continuing supply chain shortages as semi stocks pull back
Apparel stocks are taking off - why the sector looks appealing
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Why stocks will continue to outperform - Ryan Detrick joins Alpha Trader Aug 04, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Ryan Detrick, chief market strategist at LPL Financial.
Among the topics covered:
Appearing on Alpha Trader right in the middle of the March 2020 panic, Detrick cooly explained that the market had more than priced in an earnings disaster, making stocks a buy. Fast-forward 17 months, and we’re in the middle of what might be one of the best earnings seasons ever. So yes, things are a bit perky right now, but the major structural bull market remains intact, says Detrick, expecting stocks to continue to outperform bonds over the next 6-12 month timeframe
The bond bears may have thrown in the towel, but Detrick sees yields creeping higher throughout the rest of the year alongside a still-growing economy and rising inflation expectations. He thinks 1.75% on the 10-year Treasury (vs. the current 1.18%) isn’t out of the question
As to whether we’re entering a new 70s-style period of galloping inflation, Detrick isn’t so sure. He notes the continuation of many of the same factors that have held inflation in check - technology and the Amazonization of the economy, to name two - for the last decade. That doesn’t mean we won’t continue with some strong inflation prints for the next year or two as the economy continues to emerge from the 2020 recession
Turning to favored areas, Detrick and team continue to modestly favor value vs. growth for the rest of 2021. And that leads to favoring cyclical sectors like financials, industrials, and materials.
Links of interest:
This earnings season is an upside record-breaker
Detrick’s March 10, 2020 appearance on Alpha Trader
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Understanding the monetary policy transmission mechanism - Mark Dow joins Alpha Trader Jul 28, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Mark Dow, author of the Behavioral Macro Blog, and a former hedge fund manager.
Among the topics covered:
The China regulatory crackdown is clearly not good news for that country’s tech names, and suggests not great relations between Beijing and D.C., but it need not be a headwind for additional records for the S&P 500
While it’s entirely possible that we’ve already passed the peak growth phase of the current economic recovery, that doesn’t mean solid growth won’t continue for several more quarters or years. Along those same lines, Dow believes that inflation may have peaked as well
A lot has been made about what the recent big drop in long-term Treasury yields might be saying, but Dow believes that price signals in the government bond market aren’t what they used to be. Find out why
Dow’s explanation of the monetary policy transmission pipes. The Cliff’s Notes: It’s a closed system, i.e. the Fed’s “printing” of money ends doesn’t go into the economy, it stays in the Federal Reserve deposits of the banks. It’s for this reason that those predicting the next great inflation keep getting it wrong.
Links of interest:
Behavioral Macro blog
The China regulatory crackdown in an fund - The KraneShares CSI China Internet ETF
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The link between money supply and inflation breaks - Blu Putnam joins Alpha Trader Jul 21, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Blu Putnam, chief economist at CME Group.
Among the topics covered:
Making sense of the continued decline in long-term yields even as inflation surges
Why we’ve probably already seen the peak in economic growth for this recovery cycle
A defense of the Fed’s “transitory” inflation argument
Alternative data sources like international travel numbers, sports attendance, and restaurant seating might give the first clue about how the Delta variant affects the growth outlook
Why modern banking means the link between the money supply and inflation has been irrevocably broken, and ...
Why 70s-style wage-push inflation isn’t an issue in today’s digital economy
Links of interest:
What does the bond market know as 10-year yield tumbles
10-year Treasury yield drops below 1.2% for first time since February
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Uncomfortable being short - Fari Hamzei joins Alpha Trader podcast Jul 14, 2021

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Fari Hamzei, the founder of Hamzei Analytics and Timer Digest's Top Timer for the past three, five, eight, and ten year periods.
Among the topics covered:
Any number of indicators clearly point to stocks in need of at least a modest correction (5%-7%), but the market continues to grind to new records
Hamzei is on the lookout for a catalyst that might give the all-clear signal for an aggressive short. What that might be is uncertain, but Hamzei suggests the Robinhood IPO might make a blowoff top event in the same way the Coinbase IPO marked the peak for bitcoin earlier this year.
Hamzei is playing his current bearishness by being long put spreads on the Nasdaq 100 (QQQ) and the SPDR S&P 500 (SPY), but things are uncomfortable. The question he's wrestling with now: Roll the positions forward, or cut bait? Another consideration is the start of earnings season - Hamzei is mulling whether it makes sense to get a little bit long to take advantage of what should be strong results
Task and Alpher mull Tuesday's inflation report which showed a 13-year high for the headline rate (5.4%) and a 30-year high for the core rate (4.5%). The bond market snoozed right through those big prints, with the 10-year Treasury yield remaining near a multi-month low at 1.36%. What gives? Is the bond market discounting an as of yet unforeseen economic slowdown? Or has all price discovery been lost thanks to the Fed's massive monthly asset purchases? Whatever it might be, Alpher reminds that a fast inflation print isn't necessarily a good reason to sell bonds. After all, the previous CPI high came in 2008 amid one of the great deflationary episodes in market history.
Links:
Hamzei Analytics
Bonds snooze, bitcoin slides, gold perky as inflation rises to 30-year high
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Hedging inflation - Quadratic Capital's Nancy Davis joins Alpha Trader Jul 07, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Nancy Davis, founder and CIO of Quadratic Capital, and manager of the Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL).
Among the topics discussed:
No one can be certain of the inflation outlook - be it the Fed’s “transitory,” or somewhat more persistent than that, or of the runaway type
No matter the outlook, we’re all naturally “short” inflation, so should look to have at least some exposure to higher inflation in our portfolios
The IVOL holds about 85% of assets in inflation-protected Treasurys (TIP), and uses the remainder of assets to go long fixed-income volatility
The benchmark Bloomberg Barclays Aggregate Bond Index (ETF version: [[AGG]]) has no inflation protection among its holdings, and - through its high allocation to MBS - is actually short volatility
The recent rally in Treasurys - which has sent the 10-year yield down to 1.36% - doesn’t make a whole lot of sense given strong economic growth and perky inflation. Is a slowdown on the way, or are investors too aggressive in pricing in rate hikes, or have central bank asset purchases erased the idea of price discovery?
Why gold is overrated as an inflation hedge
Links:
The Quadratic Interest Rate Volatility and Inflation Hedge ETF
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Don't get hurt with opinions - Scott Redler joins Alpha Trader Jun 29, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Scott Redler, chief strategist at T3 Live and the T3 Trading Group.
Among the topics discussed:
Don’t get hurt with opinions, says Redler, a pure technical trader. He keeps his eye on the 8- and 21-day moving averages for the S&P 500, Nasdaq 100, and Russell 2000. When above, says Redler, that means “risk on,” and he’ll look to buy individual names with the best technical setups.
Redler is unconcerned that equity markets continue to make new record highs even as falling long-term yields might suggest some trouble ahead. For now, says Redler, stocks are unconcerned about what the bond market might be saying. Again - don’t get hurt with opinions. At some point it might be an issue, but for now the direction for stocks remains higher.
Among recent small- and mid-cap buys thanks to good technical setups are Skillz (SKLZ), Sunpower (SPWR), Churchill Capital (CCIV), and NIO (NIO).
Crypto has charts as well, and Redler sees a battle being waged on bitcoin (BTC-USD) around the $30K level. It’s fallen below that level a couple of times in the past few weeks, but has quickly bounced. That tells him there’s a pretty good chance last week’s $28.8K is the lowest we’ll see for a few months.
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Unpacking the Fed's hawkish turn - Jim Iuorio and Brent Schutte join Alpha Trader Jun 22, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking first with Jim Iuorio, director at TJM Institutional Services, and then with Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management.
Among the topics covered:
Why Iuorio believes China’s crackdown on Bitcoin (and Beijing seems to mean it this time) makes the long-term thesis even more compelling, even as the bulls are likely to experience more pain in the near-term.
Last week’s modest hawkish surprise from the Fed was probably not that big of a deal, says Iuorio, but it caught a lot of inflation trade longs too far out over their skis. Hence, we saw big reversals in bond prices, gold, commodities, and the dollar, not to mention the banks.
It wouldn’t surprise Iuorio if Fed Chair Jay Powell - speaking later this week - pushes back against any ideas that he’ considering tighter policy anytime soon.
“Investment success in this expansion is likely to be the result of ignoring recent history,” says Brent Schutte, as a combination of fiscal and monetary policies will shift concern about deflation and sluggish economic growth to inflation and speedier growth.
Schutte also believes that markets are making a bit too much about the FOMC meeting last week. The “dots” may have been shuffled around a bit, but there’s been no hint of any imminent policy change.
Whether one agrees with it or not, markets are de facto part of the Fed’s mandate these days, says Schutte. Ultimately, that’s going to have the central bank well behind the curve on inflation, and that’s going to be good for stocks - particularly the cyclicals, value names, and small caps.
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Defiance Funds' Sylvia Jablonski joins Alpha Trader (Podcast) Jun 15, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Sylvia Jablonski, co-founder and CIO of Defiance ETFs.
Among the topics covered:
The conundrum of falling long-term Treasury yields as inflation moves higher
Jablonski’s expectation that the inflation scare will be transitory, and won’t derail the continuation of the reopening trade
Why the recent underperformance of FAANG names like Apple and Amazon provides a great buying opportunity for long-term oriented investors
Her take on Paul Tudor Jones calling the current state of fiscal and monetary policy “batsh*t crazy,” and where she thinks the might be the best way to play the inflation trade
Why Jablonski thinks cryptocurrency might be a generational opportunity, and she holds Bitcoin (BTC-USD) and Ethereum (ETH-USD) in her personal portfolio.
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Cryptocurrencies and a return to the decentralized web - Jim Bianco joins Alpha Trader Jun 08, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Jim Bianco, president of Bianco Research.
It doesn’t take too long of a memory to remember the days when then-Fed Chair Janet Yellen was none too pleased about President Trump sticking his nose into monetary policy. Now that Yellen has moved to the Executive Branch (as Treasury Secretary), why does she think it’s okay to continue to opine on Jay Powell’s business, asks Bianco.
Of her latest comments about higher interest rates being a good thing for the economy, Bianco isn’t so sure. It depends why they’re rising, says Bianco. If it’s due to wholesome growth, that’s not so bad for the economy or stocks. But if due to bondholders demanding higher rates to compensate for higher inflation, the stock market might not react so nicely.
Politics aside, current Street thinking says the Fed is going to use the Jackson Hole confab in late August to lay the groundwork for the taper to begin, with rate hikes to maybe start in the second half of 2022. Bianco questions that consensus. He’s keeping his eye on the 10-year Treasury yield. If an inflation scare forces long rates higher, it could force the Fed’s hand a lot sooner than that.
Of his recent great interest in the promise of cryptocurrencies, Bianco takes us back to the days of Web 1.0 - peer-to-peer, decentralized. That was quickly supplanted by Web 2.0 - the rise of the great centralized platforms like Amazon, Facebook, Netflix, and Google. Web 3.0, says Bianco, will be a return to decentralization thanks to the power of blockchain technology.
It’s a fascinating discussion, with plenty more, including why Web 3.0 may not be kind to the above-mentioned (and other) mega-cap tech names, and why central bank digital currencies could be a major threat to the legacy commercial banking system.
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OPEC back in control - Bob Iaccino joins Alpha Trader Jun 02, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Bob Iaccino, co-portfolio manager of The Stock Think Tank, and host of The Market Think Tank.
Talking as oil (CL1:COM) jumps 3% to a new cycle high, a bullish Bob Iaccino says demand for crude is rising a lot faster than OPEC is willing to supply it. With the American shale boom not coming back anytime soon, the cartel knows it’s the marginal supplier, and is only going to drip out as much oil as is necessary.
Speaking of those American supplies, Iaccino takes note of restrictive drilling/exploration policies of the Biden administration, as well as the growing power of the ESG movement, which last week took down a couple of board seats at Exxon Mobil (XOM).
Of possible crude-related investments, Iaccino reminds that when he’s bullish on oil, he buys oil. The correlation between the energy sector and crude isn’t always one-to-one, and it would be highly frustrating to be right on oil and watch energy equites not do a whole lot.
Zooming out to the larger inflation picture, Iaccino suspects the Fed will be proven wrong over its insistence that currently perky price levels are transitory. While commodities may go up and down in price, the cost of labor is far stickier. The wage hikes we’ve been seeing - Bank of America lifting its minimum wage to $25 per hour is but one example - aren’t going to be given back. Ultimately, they’re going to feed through into the price level.
There’s plenty more, including Iaccino’s view on whether the dollar is going to continue its downtrend, and what stocks he’s buying (non-energy-related, of course).
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Henry Blodget talks Bitcoin, bubbles, and Amazon - Alpha Trader podcast May 25, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Henry Blodget, co-founder and CEO of Insider, Inc., and a former top-ranked Internet stock analyst.
Blodget was pitched an investment in Bitcoin (BTC-USD) all the way back in 2011 (price then was about $80 per coin). His conclusion then was that Bitcoin was the perfect asset for a speculative bubble - finite supply, complicated, hard to understand, and with price determined not by any normal valuation metric, but instead completely by supply and demand. Thus, you’ve got downside of “only” 100%, and an upside not limited to any valuation benchmark - $100K per coin, $1M per coin, $10M per coin? Why not?
One thing that’s changed since 2011 … Back then, Bitcoin’s backers talked about it as a new type of money or currency. No one really makes that argument anymore. Instead bulls talk about a store-of-value, or a better gold. So don’t expect Bitcoin to disappear, says Blodget. Like gold, it will have its believers for a very long time. But also like gold for very long periods, an investment in Bitcoin may prove to be a dud.
Blodget came to some level of notoriety during the dot-com bubble, and he’s seeing some similarities now. In particular, the rolling speculative bubbles of the past year are looking very familiar to him. Checking valuations, he suspects equity returns will be pretty lame over the next decade. However, he would advise against trying to time the peak. Harking back to the mid-late 1990s, there were any number of what appeared to be bell-ringing tops, but the bull market kept getting bigger.
There’s plenty more, including Blodget’s view of the outlook on Amazon (AMZN) today, and his thoughts on last week’s mammoth deal for AT&T to sell certain WarnerMedia assets to Discovery.
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Diving into the inflation outlook - JPMorgan's David Lebovitz joins Alpha Trader May 18, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with David Lebovtiz, global market strategist at JPMorgan Asset Management.
With the market coming off its worst week in three months, the inflation question is atop many investors’ minds. Lebovitz is willing to agree at least in part with the Fed that the current inflation scare is transitory - a supply/demand “mismatch” as the economy rapidly emerges from the pandemic - but he believes the wage pressures we’re seeing now may prove stickier than the central bank anticipates.
Bottom line: While the Fed’s forecasts are probably too dovish, the market’s are far too hawkish in an expectation of a rate hike in 2022. The Fed, says, Lebovitz remains laser-focused on jobs, and as long the unemployment rate remains elevated, expect them to stick with the “not even thinking about thinking about raising rates message” language for quite a while longer.
What that means for the markets is anyone’s guess, of course, but Lebovitz reminds that each year brings an average 14% correction at some point, so it wouldn’t be unreasonable to expect the current downturn to run into the double-digits. Still, with earnings growth expected to be about 50% this year and the Fed unlikely to all of a sudden turn hawkish, it’s hard not to see the markets regaining their footing later in 2021.
There’s plenty more, including what sectors are set to benefit most from the current environment, and why Lebovitz is quite a bit more constructive on Bitcoin than some of his JPMorgan colleagues.
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David Bahnsen's favorite pipeline picks - Alpha Trader podcast May 11, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with David Bahnsen, founder, managing partner, and chief investment officer at The Bahnsen Group.
Speaking shortly after the cyberattack on the Colonial Pipeline, Bahnsen says the news speaks to the need for a robust, voluminous, highly effective, and technologized pipeline system to transport oil and gas in the U.S. He notes that the publicly traded pipeline owners are catching a bid on the Monday morning following the weekend attack - and this follows on the best quarters in years for those operators.
Bahnsen says that those interested in clean energy should also be pipeline fans, reminding that most of the product that flows through pipelines is liquified natural gas. To the extent that pipelines allow the use of natural gas instead coal, that lowers carbon emissions.
Getting to investing in pipelines, Bahnsen says many of the weak operators have been weeded out in recent years, leaving a more high-quality field today. His two favorites are Enterprise Product Partners (EPD) and Kinder Morgan (KMI). Both are among the larger pipeline players, offering not just dividend growth, but also excellent dividend coverage, i.e. payouts are easily covered via free cash flow, rather than the balance sheet. For those who prefer ETFs, Bahnsen is a fan of the recently-launched USCF Midstream Energy Income Fund ETF (UMI).
Turning to interest rates, Bahnsen recently warned about the Japanification of America. That means a number of things, but mostly that the government’s policy of loading debt on top of more debt to keep the economy afloat is not a recipe for an overheating economy and inflation, but instead is a recipe for continued sluggish growth, deflationary conditions, and a continuation of the secular bond bull market.
Bahnsen expects the Fed to continue with ZIRP and other extraordinary measures for years to come, but Bahnsen doesn’t anticipate that to be any more effective at breaking the deflationary trap than the BOJ’s efforts of the last three decades.
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The growing risk of a pullback - Schwab's Randy Frederick joins Alpha Trader May 04, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research.
“The risk of a larger pullback is growing even though [sentiment] indicators remain mostly neutral,” says Frederick, who has taken notice of the remarkable similarities between the post-Covid and post-financial crisis bull runs. If form holds, we’re very close to the same point in 2010 at which a 16% correction took place. While Frederick doesn’t expect nearly that large of a downdraft in stocks this time around, today’s markets - with new record highs hit almost every day - are vulnerable to a move lower.
Longer-term, Frederick remains bullish. He reminds of last week’s personal income/savings report showing personal income up 21% thanks to stimulus checks, but spending ahead just 4%. That leaves a lot of money currently sitting idle and waiting to buy any dips.
What might derail the bull market is a rise in inflation forcing the Fed’s hand far quicker than the currently promised 2023. While Frederick acknowledges the current economic boom and price pressures, he’s on board with the Fed’s description of “transitory.” Covid, he says, has caused massive supply disruptions - just look at the large number of ships sitting in the waters outside West Coast ports. This too shall pass, he says, and with it will be the current inflation scare.
There’s plenty more, including a discussion of what current volatility and put/call readings are telling us, crypto, and why the collapse of the a number of mini-bubbles is a healthy thing for the broader market in the long term.
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Stock trader Mark Minervini and market strategist Ben Laidler join Alpha Trader Apr 27, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher chatting first with Ben Laidler, global markets strategist at eToro, and then with stock trader Mark Minervini, author of best-selling books Trade Like a Stock Market Wizard and Think and Trade Like a Champion, among them.
Markets continue to underestimate the growth surprise in the U.S., says Laidler. Continual surprises on the upside for the economy should be good for earnings, and good for stock prices moving forward.
Strong economic growth and rising inflation usually means the Fed coming into play sooner, rather than later, but Laidler suspects not this time, as full employment remains a ways off. There’s also been some large recent inflation prints, but Laidler reminds these are comped to the extraordinary weakness of one year ago, and the Fed has made clear it’s willing to tolerate “transitory” inflation stronger than the 2% target.
“Never buy the numbers, never buy the story,” says Mark Minervini, “unless it’s confirmed by the technicals.” The result of this discipline has Minervini usually buying stocks in uptrends, near 52-week highs, and with at least the appearance of being expensive. As for where’s he’s seeing this sort of setup currently, Minervini mentions Yeti (YETI), PayPal (PYPL), and Duluth Holdings (DLTH).
Maybe most interesting from the talk, Minervini says trading is the same today as when he started in the business several decades ago. Yes, there’s the rise of technology and zero commissions, but chart patterns and setups today look exactly like they did in 1980s, and for that matter look just like they did in the 1920s or the 1880s. The reason: Human nature never changes, no matter the era and no matter the market.
Listen to the full forty minutes for plenty of great insights from these two market veterans.
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The dollar, bitcoin, and interest rates - Jim Iurio joins Alpha Trader Apr 20, 2021

This week’s Alpha Trader features hosts Aaron Task and Stephen Alpher speaking with Jim Iurio - director at TJM Institutional Services and a CNBC contributor - making a return appearance on the podcast.
It’s time to start measuring the dollar (USDOLLAR) differently, says Iurio, noting most forms of the dollar index more or less gauge the greenback vs. other flawed currencies like the yen or euro. Nobody would be talking about dollar strength, he says, if the dollar index had a significant weighting in something like Bitcoin (BTC-USD).
And of bitcoin - which tumbled nearly 20% in minutes over the weekend on some pretty thin news - Iurio is a fan, but suspects we could see a 50% drop at some point when the U.S. government decides it wants to try and squelch the dollar’s competition.
Turning to interest rates, the 10-year Treasury yield is down about 20 basis points in April despite surging equity markets, and way stronger than expected prints for non-farm payrolls, ISM, retail sales, and CPI. What gives? Iurio notes that at 1.75% or so, U.S. long-end yields are a relatively attractive investment given how much negative-yielding developed-world sovereign debt is out there. He also reminds that bond bears - having made a few dollars - were prudently trimming bets just in case the Fed decided to step in and announce yield curve control.
There’s plenty more including a discussion of lumber’s roaring bull market, why identifying a bubble doesn’t make you any money, and why the recent drop in volatility makes it a good time to buy option protection.
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Alpha Trader talks asset allocation with Phil Camporeale Apr 13, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking asset allocation with Phil Camporeale, portfolio manager with JPMorgan Asset Management.
Fed Chair Jay Powell has been “unbelievably consistent” in his dovishness amid the panic, says Camporeale, expecting no imminent policy - or even communication - changes out of the central bank despite what’s been a raft of strong economic prints of late, and what’s likely to be whopping 9% GDP growth in Q2.
Wage pressure will be necessary to make perky inflation numbers anything more than transitory, says Camporeale, but despite some impressive job gains, the unemployment rate remains elevated and labor force participation rate under serious pressure. With all that unused labor sidelined, it’s hard to imagine the sort of wage-push inflation that might put the Fed on alert.
It adds up to Camporeale and team remaining overweight stocks vs. fixed income, overweight cyclicals like financials (XLF), industrials (XLI), and energy (XLE) vs. big-cap tech, overweight cyclical economies like the U.S., Europe, and Japan, vs. tech-dominated emerging markets, and equal-weighted market indexes vs. cap-weighted indexes.
There’s plenty more, including what areas of fixed income Camporeale is allocating money to, why he’s not sold on Bitcoin as an appropriate diversifier for his portfolios, and the lesson Jay Powell learned (and won’t forget) from late 2018.
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Talking industrials, materials, and energy with Peter McNally - Alpha Trader podcast Apr 06, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Peter McNally, Global Sector Lead, Industrials, Materials & Energy at Third Bridge.
Speaking a few hours after the OPEC decision to gradually boost production in coming months, McNally notes oil (CL1:COM) inventories have been falling since early last fall, thus making the OPEC move a logical one. Even with the boosted production, McNally expects inventories to continue to fall through Q2.
As for prices, McNally says since supply is being so well-managed, it’s all about demand. If global economies continue to reopen, crude could be headed to $70, but if the renewed lockdowns currently taking place in parts of Europe become a trend, oil might retreat back to $50.
But what about the potential of more U.S. supply coming online? It’s not as easy as flipping a switch, reminds McNally. He expects it would take three months of oil in the $60s, and then another six months after that to restart much of the domestic drilling that was lost over the past year.
There’s plenty more, including why gasoline prices might rise even if oil prices flatten out, whether Deere (DE) is now a space-exploration company, and an early take on possible winners/losers from the president’s multi-trillion dollar stimulus proposal.
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Talking stocks, rates, volatility, the dollar, and Bitcoin - Jeff Kilburg joins Alpha Trader Mar 30, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking current market events and the outlook going forward with Jeff Kilburg, founder and CEO of KKM Financial.
Topping the news during recording was the blowup in Archegos Capital Management, and the losses possibly to be inflicted upon several of the banks that dealt with that family office. Most notable, says Kilburg, is the broader market’s ability to shrug off these hiccups and continue to move forward. If you’re bullish on banks - and Kilburg is thanks to the steepening in the yield curve - you may be getting an opportunity to buy into some weakness.
Though generally bullish on the economy and stocks, Kilburg believes long-term interest rates (the 10-year Treasury yield was at 1.68% at the time of recording) have gotten ahead of themselves. He reminds of the near-$18T of money still invested globally at negative yields, $5T in money market funds earnings essentially nothing, and a Fed seemingly determined not to let long rates rise too much - it might add up to a sub-1.50% 10-year yield before long.
Turning to Bitcoin (BTC-USD), which can no longer be ignored as an important investment class, Kilburg is a bull, noting growing adoption - whether from institutional investors, listed companies putting it on their balance sheets, merchants accepting it for payments, or workers getting paid in the crypto instead of fiat money.
Of the dollar (USDOLLAR), Kilburg says significant further strength might have him reconsidering his bullish view on stocks. For now, the greenback's relatively modest rise from the 90 level earlier this year doesn't have him too concerned.
There's plenty more, including Kilburg's views on volatility, oil, and gold.
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CFRA's Sam Stovall and Todd Rosenbluth join Alpha Trader (Podcast) Mar 23, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Sam Stovall and Todd Rosenbluth. Sam is chief investment strategist at CFRA, and Todd is CFRA’s head of ETF and mutual fund research.
On the one-year anniversary of the bottom of the market crash, Stovall and Rosenbluth detail the numbers behind how we got to today’s near-euphoric market conditions and where we might go from here.
If you don’t have a perfect market timing tool, you are better buying than you are bailing, says Stovall, summing up the key lesson from the last year.
As for where we might be going, Stovall sees the S&P 500 (SP500) closing 2021 about 9% higher than the current level. As for what might trip that up … On the economic upside front, hotter-than-hoped inflation might force the Fed to tighten sooner than expected. On the economic downside front, keep an eye on the what might be a resurgence of Covid-19. Paris is back in lockdown (though not as severe as the previous ones), and cases are surging in a number of places across Europe.
For those who are worried about the economic downside and that yields indeed might be peaking here, Rosenbluth suggests going back to what worked when yields were falling last year - tech (XLK) and consumer staples (XLP). Stovall seconds this idea, noting the combination of tech and staples is about as close to a free lunch as the financial markets can offer. Going back many years, owning these two sectors has given an investor all of tech’s upside, but with two-thirds of the volatility.
There's plenty more from these two savvy market veterans. Listen to or subscribe to Alpha Trader on these podcast platforms:
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The Fed back in play - JPMorgan's David Kelly joins Alpha Trader Mar 16, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the Fed, interest rates, inflation, Bitcoin, and more with David Kelly, chief global strategist at JPMorgan Asset Management.
The FOMC meets this week, and while Kelly agrees with the consensus that there won’t be any policy moves, he believes the central bank - sooner, rather than later - is going to have to acknowledge that the economy has performed stronger than expected. Look for a few more “dots” to indicate that rate hikes are in play for 2023.
The resultant bond market tantrum might lead to some blow-ups, but Kelly isn’t too concerned, noting similar episodes in 2013 and 1994 didn’t deter (and in fact may have helped lengthen) long-term bull markets for stocks. Bottom line: The vaccine and reopening economy mean strong economic growth, the stimulus bill will provide a further boost, and the unemployment rate could see a 3%-handle before too long. That’s not the sort of environment where the real yield on the 10-year Treasury (TLT) should be negative.
“Cryptocurrencies are nonsense,” says Kelly, not buying the notion that just because there’s a finite amount of bitcoin (BTC-USD) means such a great value should be attributed to it. The real question, says Kelly, is whether there’s a use for it, and whether some aspiring entrepreneur could one day establish a legitimate competitor.
That said, Kelly does have serious issue with the “loss of discipline” among global central bankers, and worries it might end up leading to a great inflation. To hedge, he’d be a buyer of real estate and equities (value names, rather than growth), but not bitcoin.
There’s plenty more, including why the Fed has over-estimated the power of low interest rates, and how intellectual stasis in European central banking has left the Continent in far worse economic shape than the U.S.
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Alpha Trader talks cannabis investing with Todd Harrison (Podcast) Mar 09, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking cannabis investing with Todd Harrison, founding partner and CIO of CB1 Capital.
“2021 will be remembered as the year [cannabis] emerged as a legitimate and powerful asset class,” wrote Harrison recently. The bull case for U.S. cannabis, he says, rests with the legalization wave - not just in the states, but at the federal level where the Blue Wave means a far more favorable regulatory environment.
If Cannabis 1.0 was the Canadian cultivation boom (think [[APHA]], [[CGC]], [[TLRY]]), and Cannabis 2.0 is the jump in U.S. retail operations thanks to state-by-state legalization (think of the multi-state operators), then Cannabis 3.0 - cannabis as medicine - will come thanks to the Blue Wave that just hit D.C.
That friendlier national regulatory environment also likely means U.S. operators as able to list their stocks on the major exchanges, thus opening them up to institutional investment.
Late last summer, Harrison wrote about the FANGificiation of U.S. cannabis - a group of Cannabis 2.0 stocks similar to the four horsemen of the late 90s (Intel, Dell, Microsoft, Cisco) and then the more recent Facebook, Amazon, Netflix, Google. In no particular order: Curaleaf (CURLF), Green Thumb Industries (GTBIF), Trulieve (TCNNF), and Cresco (CRLBF). A big rally since means these are no longer growth names at value multiples, but Harrison remains a fan.
That doesn’t mean there aren’t other quality U.S. operators, and Harrison notes ones like Terrascend (TRSSF), Columbia Care (CCHWF), and 4Front Ventures (FFNTF). An estimated total addressable market of $85B by 2030 means there’s plenty of room for all to succeed. As for the Cannabis 1.0 names, Harrison will trade them, but he prefers to own the 2.0 players.
There’s plenty more, including why Cannabis 3.0 could mean treatment for a wide range or serious diseases and thus a market opportunity far in excess of Cannabis 2.0.
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Talking interest rates and volatility - Steve Sosnick joins Alpha Trader Mar 02, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Steve Sosnick, chief strategist at Interactive Brokers.
The biggest issue on many market-watchers’ attention right now is the rise in long-term interest rates, which last week sped up to a gallop. Keeping it simple, Sosnick says to pay attention to the Fed, which has tied its extraordinary accommodation to the return of a combination of full employment and inflation.
In normal times, the move higher in the 10-year yield - only a large handful of basis points at the moment - might not merit a mention, but the problem now, says Sosnick, is the stretched valuations on everything from stocks to commodities to bitcoin.
As with his previous appearance on Alpha Trader, Sosnick is keeping a close eye on volatility. Headed into last week, he noticed the VIX futures curve as quite steep, wondered what traders were so nervous about, and suggested a sell signal was at hand. While the curve has flattened a bit, it's not to the point where Sosnick believes markets are out of the woods.
One risk not many are focused on: April 15. Sosnick notes there are a lot of new entrants into markets, many of whom made big gains last year, and might find themselves with an unexpectedly large tax bill.
There’s plenty more, including why elevated volatility (and hence higher options prices) isn’t going away, and Sosnick’s view on Bitcoin.
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Digital transformation comes to energy, autos, and currency - Jon Markman and Greg King join Alpha Trader (Podcast) Feb 23, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Jon Markman, president and founder of Markman Capital, and Greg King, CEO and founder of Osprey Funds.
Markman (who previously appeared on Alpha Trader in October) continues to believe the Fed ignited what’s going to be a decade-long bull run in stocks with their actions in response to the Covid crisis last year. With the Fed continuing to provide plenty of liquidity to the system, he’s targeting 92K for the Dow (DJI) in the next decade, and 34K on the Nasdaq (COMP).
Turning to individual names/sectors, Markman is still spying the opportunity in digital transformation, but this time with a twist - it’s old-school energy and auto companies whose business models are changing from nuts and bolts to 0s and 1s. Shareholders of names like Schlumberger (SLB), Baker Hughes (BKR), General Motors (GM), Ford (F), and Volkswagen ([[VLKAF]], [[VWAGY]]) are set to benefit in a big way. And the massive investment the auto players are making into EVs means a re-rating not just for them, but suppliers like Magna International (MGA), NXP Semiconductor (NXPI), and Analog Devices (ADI).
Markman’s got plenty more digital transformation ideas, including a speculative play on cryptocurrencies, and that’s VPC Impact Acquisition (VIH), a SPAC that earlier this year inked a deal to take digital asset marketplace Bakkt Holdings public.
Next up is Greg King, whose Osprey Bitcoin Trust (OBTC) recently launched as a lower-cost competitor to the Grayscale Bitcoin Trust (GBTC). A longtime investor in bitcoin (BTC-USD), King isn’t put off by the wild volatility (including a plunge from $53K to $49K right about the time we were speaking). He notes that whenever bitcoin pierces a previous all-time high (as it did late last year by finally climbing past $20K), the average subsequent return is 900% - this bull move has plenty more to run.
“Not your key, not your coins,” is something the hodlers like to say, but King says we all have limitations - not everyone is in a position to start up an account with an online exchange and possibly even custody their own bitcoin. A trust such as Osprey offers a fee of just 0.49%, is something that can be purchased inside an existing brokerage or retirement account, and safety isn’t an issue as all the Trust’s coins are held in custody by Fidelity.
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Still a bull, but hedging longs - Jack Bouroudjian joins Alpha Trader Feb 16, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Jack Bouroudjian, chief economist and co-founder at UCX, and chairman of the Global Smart Commodity Group.
The Fed is attempting to force-feed at least a modest level of inflation into the economy, says Bouroudjian, and so far it’s clearly been beneficial for stocks, commodities, and other assets like housing prices and cryptocurrencies. Worrying though is what if the Fed;s project doesn’t work as planned - either the next great inflation will be upon us, or we’ll become like Japan, where deflationary conditions have persisted for decades (the Nikkei only on Monday reclaimed 30K for the first time since 1990).
One gets the sense that Bouroudjian is leaning towards the Japan scenario. Be wary he says: The idea that monetary and fiscal stimulus combined with widespread vaccinations will lead to big economic growth and sooner-than-forecast Fed tightening has become a crowded trade. For now, he’s keeping his eye on the dollar (USDOLLAR) - should the greenback’s decline accelerate, it would mean the inflation scenario has taken hold, but dollar strength (and it has risen modestly so far in 2021) might mean the Fed will find itself in a deflationary pickle.
Of the current stock market action, Bouroudjian is getting a vibe similar to the late-1990s, when what started as a wholesome bull market moved into bubble territory. That doesn’t mean he’s short stocks, but he is hedging his longs via the use of inverse ETFs.
There’s plenty more including Brououdjian’s take on the Reddit craze (Preview: “Not everyone can be a zillionaire”), and why’s he long hemp for industrial uses and the cannabis names for medicinal uses.
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Randy Frederick on markets, Chris DeMuth on SPACs - Alpha Trader podcast Feb 09, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking markets in general with Randy Frederick, VP of trading and derivatives at Schwab, and SPACs with Chris DeMuth, founder of Rangeley Capital, and editor of Seeking Alpha Marketplace service, Sifting the World.
While Frederick believes things are looking frothy right now, he reminds that frothiness doesn’t necessarily mean a market downturn is in store, but instead that markets are vulnerable to a sizable dip. His advice for these times - scale into positions, and don’t be too quick to try and buy bottoms.
Frederick made a prescient bullish call on the financial stocks (XLF) when he last appeared on Alpha Trader in October, and he and team continue to have an outperform rating on the sector today. Alpher takes note of the vaccine, another fiscal stimulus bill and super-easy monetary policy as behind what might be a big move higher in economic growth, the yield curve, and the financial names.
DeMuth isn’t ready to call the SPAC boom any sort of bubble, instead noting that SPACs are disrupting what’s been a broken IPO process. The large numbers of companies going public (via SPAC), he says, are simply “clawing back” what’s been decades of more and more companies remaining private and not becoming publicly traded. More of the venture capital world is moving into the more transparent and more accessible world of public companies.
When DeMuth last appeared on Alpha Trader in July, he was bullish on recently gone-public Pershing Square Tontine Holdings (PSTH), and he remains so today, even after more than a 50% rise in shares despite no deal being announced. DeMuth fully expects Bill Ackman and team to announce a merger target before the end of Q1.
As for the criteria DeMuth looks for in a SPAC, they remain the same: Among them, an experienced team (SPACs that have Roman Numerals after their name are always worth a look), and large enough size to purchase well-known brands.
There’s plenty more, including the one other sector Frederick has an outperform rating on, and a few of DeMuth’s other SPAC picks.
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Mike Novogratz and Howard Lindzon talk crypto, GameStop, Robinhood, and more on Alpha Trader (Podcast) Feb 02, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking first with Mike Novogratz, founder and CEO of Galaxy Digital Holdings (BRPHF), and then with Howard Lindzon, co-founder of StockTwits and general partner at Social Leverage.
“This GameStop (GME) squeeze is deeper than a squeeze,” tweeted Novogratz last week. “It is a revolution that started with people not trusting central authority; it is a call for transparency and fairness. It makes my more bullish crypto but more importantly more focused and committed to systems change.”
De-centralization, represented mostly by Bitcoin (BTC-USD), but also by Ethereum (ETH-USD), and other blockchains may help hold the answer to some of these issues, says Novogratz, as crypto goes right after the “rent-takers.” Bitcoin, he says, is this generation’s “digital gold,” i.e. it’s going to be too clunky to be another currency, but will work perfectly as a store of value. Ethereum, he says, is the “fabric” upon which we can rebuild institutions.
He’s bullish on the prices of both since both networks will continue to gain users, and more users means more value. This doesn’t mean there won’t ever be big moves to the downside - rest assured, there will be - but over time the chart direction will be upward and to the right.
Next up is Howard Lindzon, an investor in Robinhood (RBNHD), who freely admits the company likely made some PR mistakes last week, but also had no choice - given the capital needs of any broker/dealer - to halt trading in a number of names.
As to whether this is an existential blow to the Robinhood franchise, Lindzon notes the staggering number of Robinhood app downloads in the past few days suggests otherwise. He also reminds of major stumbles by a wide range of large-cap stalwarts over the years - they ended up being just that … stumbles.
There’s plenty more, including the guests’ takes on whether the silver (XAGUSD:CUR) squeeze can work, why former global macro portfolio manager Novogratz is betting on an upside surprise in interest rates, and Lindzon’s reminder that open price discovery cures many ills.
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Things could get ugly quickly - Bob Iaccino joins Alpha Trader Jan 26, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Bob Iaccino, chief strategist at Path Trading Partners, and co-portfolio manager at Stock Think Tank.
“Be ready for an ugly January,” goes the title of Iaccino’s latest monthly newsletter. By that he means not necessarily a down move in markets, but instead plenty of volatility. While there’s been some volatility, it’s mostly been to the upside this month, with the S&P 500 up about 4%.
Over the past few weeks, Iaccino and team have been unloading long positions in stocks as their upside targets get hit, narrowing holdings to just three names: AbbVie (ABBV), Best Buy (BBY), Big Lots (BIG). Taking one, the bullish position on Best Buy is easily explained - when folks get stimulus checks, they’re likely going to go out and buy a new TV.
Turning to the new presidential administration, Iaccino is somewhat in agreement about the conventional and generally business-friendly nature of its makeup - plenty of recycled D.C. hands who have long histories of being mostly amenable to corporate interests. That said, Iaccino has gone through an early version of some tax proposals, and is seeing some unfriendly things like taxing of overseas profits, and corporate and payroll tax hikes. The likelihood that all these things pass may be rather small, but Chief Financial Officers should nevertheless be prepared to act.
Of the big news of the past few days - and that’s the outsized moves in the likes of GameStop (GME), Bed Bath & Beyond (BBBY), Dillard’s (DDS), Express (EXPR), and BlackBerry (BB), among others - Iaccino suspects it’s an old-fashioned, coordinated (and thus illegal) gamma squeeze, only with online message boards being used today.
There’s plenty more, including a detailed explanation of the gamma squeeze, yet another example of buying the rumor and selling the news, and Iaccino’s outlook for currently rallying crude oil.
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Focusing on prices, not the news - J.C. Parets joins Alpha Trader Jan 19, 2021

If you’re looking for a tonic to the ceaseless flow of (mostly) disturbing news on any number of fronts, than this week’s Alpha Trader podcast is for you. Host Aaron Task is joined by J.C. Parets, market technician nonpareil and chief market strategist at All Star Charts (co-host Stephen Alpher is out this week) .
His eye always on the price charts and never on the news flow, Parets remains bullish on stocks. To those who say the bull market needs a break, Parets would say there’s already been one, noting leading names like Apple, Microsoft, Amazon, Google, Facebook, and Alibaba are flattish-to-down (in some cases significantly down) since early September - that’s more than four months of lame performance.
If you ask him for a price targets, Parets will say 38K, or nearly 25% upside on the Dow (DJI), and 4.5K, or about 20% upside on the S&P 500 (SP500). New information rolls in every day, however, and Parets won’t be afraid to change his opinion if the facts change. For now, he’s keeping his eye on the above-mentioned names, and is looking for those stocks to move to new highs to confirm his bullish case.
And what might turn Parets bearish? Price signals of course … Treasury bonds outperforming stocks, a strong relative bid in consumer staples, widening credit spreads, a rollover in the aussie/yen currency cross, a deterioration in market breadth. At the moment, just the opposite of every single one of these bearish omens is happening, so Parets sees little reason not to stay long equities.
Want another signal? Take a look at Deutsche Bank (DB). It’s been hitting new 52-week highs. If the world (and the S&P 500) is really about to fall apart, would this most risky and sclerotic of banks be breaking out to the upside? Hardly, says Parets.
Turning to bitcoin (BTC-USD), Parets remains bullish, with $46K as his upside target. On the downside, he sees $30K as key support, and a sustained break below that level would be a sign of worse to come. As always, though, Parets is just looking at the charts, and isn’t treating bitcoin analysis any differently from that of stocks. He warns that once one begins buying into the religion status of bitcoin, they can no longer think rationally about the trade.
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The 2021 market outlook and some new stock picks - Ryan Detrick and Eddy Elfenbein join Alpha Trader Jan 12, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with LPL Financial’s Ryan Detrick and Eddy Elfenbein, editor of the Crossing Wall Street blog and portfolio manager of the AdvisorShares Focused Equity ETF (CWS).
Before getting into the outlook, Detrick (who was bullish on stocks at the March bottom) puts last year’s remarkable rally in perspective: The reversal from down more than 30% to up in the teens is unprecedented. While some may be tempted to view things as overdone to the upside, Detrick believes the strength we’ve seen is consistent with the beginnings of a years-long bull market.
In addition to the positive technical signs he’s seeing, Detrick reminds that even more fiscal stimulus is likely on the way, and the Fed looks to be on hold at zero for quite some time. Given all that, Detrick does acknowledge some bubbly signs in things like IPOs, cryptocurrencies, and certain stocks. He reminds that his long-term bullishness doesn’t mean there won’t be sizable setbacks along the way, but investors ought to consider those downdrafts to be buying opportunities.
Elfenbein’s 25-stock Buy List has consistently topped the S&P 500 over the past 15 years (though it did trail by a handful of basis points in 2020). Each year, Elfenbein discharges five names from the list, and adds five others.
Out this year, are Becton, Dickinson (BDX), Eagle Bancorp (EGBN), Globe Life (GL), Hormel Foods (HRL), and RPM International (RPM). Four of the names were notable underperfomers in 2020, so like any good portfolio manager, Elfenbein isn’t shy about cutting losers (and letting his winners run).
Maybe more interesting are the additions: Abbott Labs (ABT), HEICO (HEI), Miller Industries (MLR), Thermo Fisher Scientific (TMO), and Zoetis (ZTS). Peter Lynch said to look for companies that do something dull, says Elfenbein introducing perhaps everyone to Miller Industries. Based in Ooltewah, Tennessee, Miller makes and sells towing and recovery equipment. The company experienced a Covid-related slowdown in business in 2020, and the stock was similarly punished. Its recovery bounce since has been limited. Elfenbein likes management, likes the business’ “moat,” and likes that exactly zero sell-siders cover the name despite the company’s strong long-term success.
There’s plenty more, including a discussion of the 10-year yield rising above 1% for the first time since March, whether the dollar is set up for contrarian bounce higher, and why it’s always a better idea to look for good stocks to own rather than trying to time a bubble.
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A bubble-blowing, bull market, blow-off top phase - Cody Willard joins Alpha Trader Jan 05, 2021

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Cody Willard, hedge fund manager and editor of Trading With Cody.
“Please be selective with your trades,” Willard recently wrote, calling the current action a “bubble-blowing, bull market, blow-off top phase.” He takes note of recent massive moves in what are otherwise penny stocks, as well as the SPAC IPO frenzy. Those words don’t come easy to Willard, who has been mostly bullish for about a decade, but now describes himself as a cautious net seller of equities.
Certainly no penny stock, but surely a sign of the times, Tesla (TSLA) was up big again on Monday even as the major averages sharply sold off. Willard has owned the stock for much of its run higher, and still believes in the transformative nature of the company. Marveling that nothing seems to ever shake the shares, Willard continues to hold the stock, but wonders how much more upside there can be from the current $700B market cap.
Turning to what might be some other bubbly action, Willard’s been an owner of Bitcoin (BTC-USD) for many years, but feels it’s gotten ahead of itself. He thinks the most recent big run higher may have come at the expense of investors selling gold (XAUUSD:CUR) to buy the crypto (which has taken on the nickname of “gold 2.0”). A reversal may be in order, says Willard, adding that the SPDR Gold ETF (GLD) is one of his favorite positions right now.
Appearing on Alpha Trader almost exactly one year ago, Willard was excited about the multi-trillion dollar opportunity in space exploration. He remains so, but the pure-play publicly traded vehicles are slim, with Virgin Galactic (SPCE) and Stable Road Acquisition (SRAC) - which is merging with space travel company Momentus - maybe the two most well known. He’s most bullish and owns a stake in still-private SpaceX (SPACE), believing the company might be worth $1T if public. Alas, Willard doesn’t expect Elon Musk to ever make that move, given some of the regulatory headaches he’s dealt with at Tesla.
There’s plenty more, including a discussion of a still-private 3D printing rocket company, why Apple (AAPL) remains an exciting long, and host Aaron Task making a great elevator pitch for getting long the roughed-up dollar (USDOLLAR).
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Alpha Trader reviews some 2020 picks and looks ahead to 2021 Dec 29, 2020

This week's Alpha Trader podcast features host Aaron Task going it alone as he first reviews the holiday news you may have missed - President Trump signing the latest coronavirus relief bill and Beijing's offensive against Alibaba (BABA) - and then moves on a discussion of what some of our 2020 guests had to say, and how that might help us divine 2021.
Big thanks are in order for all of our guests this year - there's not a single one in the group that we wouldn't love to get their insights from in 2021.
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Talking stocks, the dollar, silver, and Bitcoin - Jim Iurio joins Alpha Trader Dec 22, 2020

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher chatting with Jim Iuorio, director at TJM Institutional Services and a CNBC contributor. Jim was previously on the show five weeks prior to the election suggesting investors get ready to hit the buy button on stocks (and sell button on volatility) the day after November 3. It was a pretty fair call, and after a bodacious November into mid-December rally, Iurio wouldn’t be surprised to see the averages take a breather headed into the end of the year.
The dollar (USDOLLAR) remains key to the outlook, says Iurio, noting its big decline of late, and big rallies dollar hedges like silver (XAGUSD:CUR), Bitcoin (BTC-USD), and the Swiss franc (FXF). Iurio isn’t in any way calling for a dollar collapse, but the chances of something along those lines are at least non-zero.
And speaking of Bitcoin, Iurio is bullish on the idea of owning it as a hedge against the fiscal and monetary sins of D.C., but worries about a big air pocket underneath the price should the politicians feel like taking the crypto down a couple of notches. For that reason, silver is his favorite holding to benefit from the decline in the dollar.
The show then turns to stocks, and Iurio is medium- to long-term bullish thanks to vaccines, the Fed at 0%, and fiscal stimulus. He suspects the conditions for an inflation in 2021 are in place, and will be looking to buy energy names after what may be some year-end tax-loss selling. Iurio is also long and enjoying the ride Tesla (TSLA), calling it the poster-child for the question, “Is there too much money out there.” The answer at the moment is “yes.”
There’s plenty more, including a discussion of the bizarre state of modern-day central banking, the U.S. (of all governments) recently designating the Swiss as a currency manipulator, and why Iurio thinks the financial sector names might be big winners in 2021.
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Unknown Market Wizards - Jack Schwager joins Alpha Trader Dec 15, 2020

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Jack Schwager about the latest book in his Market Wizards series, Unknown Market Wizards - The Best Traders You’ve Never Heard Of.
Prior to the chat with Schwager, the hosts discuss some of the busy news flow as we begin the last full trading week of a long 2020. Among the subjects: The beginning of vaccine distribution in the U.S. as Covid-19 cases (and shutdowns) shoot higher, the continued lack of any stimulus bill out of Washington, the red-hot IPO market, the remarkable comeback in Disney (DIS).
And of that IPO market, Task checked in with occasional Alpha Trader guest Eddy Elfenbein, who says the animal spirits are making him bullish. He notes that a key difference between this year’s IPO gold rush and that of 1999 is that 2020’s batch of newcomers are mature companies with real revenue and even (on occasion) real profits. In 1999, metrics like price-to-sales fell out of flavor to be replaced with things like price-per-click.
Beginning with the publishing of Market Wizards in 1989 and continuing with the new Unknown Market Wizards, Jack Schwager has been taking financial markets junkies inside the minds of some of the most successful traders to ever roam the pits in Chicago, the trading floors in New York and London, the halls of powerful hedge funds, and (today) likely nothing more than a WiFi-connected computer from pretty much anywhere on the planet.
Maybe the most important common trait running through each of Schwager’s books: A deep respect for risk management to the point where most of the traders believe managing the downside is more important than their actual trading methodology. Though markets have changed dramatically over the thirty years, what’s necessary for success in trading really hasn’t, he notes.
Speaking of dramatic change, Schwager spends some time discussing one of the subjects of Unknown Market Wizards. Using “neither fundamental nor technical analysis,” Chris Camillo has turned a modest stake into millions of dollars. How so? By creative use of social media, Camillo has been able to spot “anomalies” in which stock price action isn’t reflective of the trends he’s seeing. By stepping into some of these situations, Camillo has been able to turn great profits.
There’s plenty more, including more common traits across great traders, Schwager’s own evolving trading style, and his involvement with FundSeeder, a platform for finding and providing funding for top trading talent.
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CME Group’s Blu Putnam and Ally Invest’s Lindsey Bell join Alpha Trader Dec 08, 2020

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher first talking with Blu Putnam, chief economist at CME Group, and then with Lindsey Bell, chief investment strategist at Ally Invest.
The strength of this wave of the coronavirus has surprised Putnam, who says the economic recovery will now take longer than he expected when he last appeared on Alpha Trader back in August. He also takes note of the uneven nature of the recovery and says traditional central bank stimulus - lowering rates, buying assets - isn’t necessarily suited to the task. Instead, he says, fiscal stimulus - targeting particularly stressed areas of the economy - is what’s needed.
It’s no secret that markets for the moment are looking past some nasty news on Covid-19, and instead focusing on 6-12 months from now when a vaccine might be begin to take hold around the country (and the globe). Fair enough, says Putnam, but he believes markets are also pricing in as many as two rounds of fiscal stimulus - one this month, and another perhaps larger package after January 20. The combination of government action and a vaccine should be highly favorable in particular for the cyclical sectors like energy (XLE), industrials (XLI), and financials (XLF).
While there will be near-term bumps in the road in terms of bad Covid news and its effect on the economy, Lindsey Bell also believes investors are looking over that valley and seeing vaccine availability and fiscal stimulus as reasons to be bullish about 2021.
Maybe not talked about enough is the enormous amount of “dry powder” being held by the U.S. consumer, even as the economy remains soft and fiscal stimulus benefits run out. Bell notes consumers this year have been building savings to double-digit percentage levels, sending retail deposits across the banking system to a record $15T. While there surely needs to be a near-term fiscal bill targeted at those most hit by the pandemic response, Bell says a viable vaccine is liable to unleash an explosion in spending next year as consumers look to move some of that massive savings stash. The sell-side 2021 consensus S&P 500 EPS forecast of $167 might prove too modest, suggests Bell.
Bell is particularly bullish on the Dividend Aristocrats - names in the S&P 500, but those that have been paying and raising dividends every year for at least 25 years. Over long periods of time the Aristocrats have nicely outperformed the broader index (assuming reinvested payouts), but that hasn’t been the case this year as big cap tech and work-from-home names have done way better. The gap has narrowed a bit since early November (alongside vaccine optimism), and Bell expects that to be just the start of a move for the dividend players. One of the better-known ETFs for playing is the ProShares S&P 500 Dividend Aristocrats ETF (NOBL).
There’s plenty more, including Putnam throwing a little shade at the Black-Scholes options pricing model as he describes the CME’s new Group Volatility Indexes ((CVOL)), and Bell reminding that financials might return to hiking dividends next year as the Federal Reserve lifts pandemic-restrictions on bank payouts.
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Investment choices of the pros - author Brian Portnoy joins Alpha Trader Dec 01, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Brian Portnoy, the founder of Shaping Wealth, and co-editor with Josh Brown of the new book, How I Invest My Money.
Prior to speaking with Portnoy, the hosts discuss an historic month for equity markets - the S&P posting its best November ever, the Dow posting its best month since 1987, and the Russell 2000 outperforming them both. They remind that while the headlines about growing Covid-19 cases, hospitalizations, and related shutdowns look grim, markets look ahead and - thanks to what appears to be outstanding news on vaccines - are pricing in a better world six-twelve months down the road.
And don't forget the election. Markets really appear to be liking the prospects for divided government and - contrary to some pre-election worries - Biden's early cabinet picks show someone who is set on governing roughly from the center.
How I Invest My Money explores the investment choices of 25 prominent finance players. The common theme across this spectrum of experts: There is none, says Portnoy, other than the maxim that personal finance is more personal than finance.
Even in this age of quantification and robo-advisors, says Portnoy, everyone has different goals they're optimizing, meaning investment choices will remain personal. Adding it up, nearly no one's portfolio is necessarily going to fit into the perfect efficient frontier, and there's nothing wrong with that.
So many folks beat themselves up over not being fully invested in the kind of bull market we've seen over the past several months, but Portnoy reminds that we tend to undervalue the optionality and freedom of holding cash. That's not just Portnoy's belief but - in a book of 25 different professionals talking about how they invest their money - the beauty of cash is a common theme.
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Bitcoin wins institutional acceptance, supplants gold - Dan Held joins Alpha Trader Nov 24, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking Bitcoin (BTC-USD) with Dan Held, an old hand in cryptocurrency, who is currently growth head at crypto exchange, Krakenfx.
Held has been in Bitcoin since it was $10, so what does he think about this year's run that has taken its value north of $18K, and how does it differ from the crypto's other major bull markets? Institutional acceptance of Bitcoin is the key, says Held, noting not just hedge fund legends like Paul Tudor Jones and Stanley Druckenmiller as new hodlers (particularly Jones), but Rick Riedler, the CIO of fixed income for the world's largest asset manager, BlackRock.
One hedge funder not yet convinced is Ray Dalio, who is of an open mind on Bitcoin, but wonders if governments could just ban it at some point. "You can't kill an idea," says Held, who addressed that very issue in a tweetstorm late last week. The very nature of Bitcoin and de-centralization, he says, makes it highly difficult for governments to outlaw it, even if they wanted to. Held suspects that if Dalio takes the time to further study Bitcoin, he'll become as big of a fan as some of his institutional brethren.
Held also addresses Bitcoin as "Gold 2.0," i.e. similar but way better than gold (XAUUSD:CUR) in terms of being a hedge against money printing and an overreaching government. He reminds that Bitcoin's supply can never exceed 21M - increasing prices may result in increased attention, but it doesn't result in boosted supplies. The exact opposite is the case with gold - higher prices almost assuredly bring about higher supplies. Also, Bitcoin by its nature can be explicitly verified with very little effort. Gold? Do you fancy carrying a spectrometer around? Never mind the ease with which Bitcoin can be held in our own personal custody and transported.
There's plenty more, including a discussion of Ethereum (ETH-USD), the "religion" of Bitcoin and why it's a good thing, and Held's thoughts on Bitcoin creator Satoshi Nakamoto.
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Value's time arrives - Eddy Elfenbein joins Alpha Trader Nov 17, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Eddy Elfenbein, portfolio manager of the AdvisorShares Focused Equity ETF (CWS), and editor of the must-read Crossing Wall Street blog. His Buy List of 25 stocks - it only gets changed once per year on January 1 - has a 14-year compounded gain of 309.6% vs. the S&P 500's 247.1%.
One of the key questions before the court is whether - after all these years of underperformance - value is finally having its day vs. growth. This time is real, argues Elfenbein, noting value has been outperforming since September. The initial boost for value was thanks to market shudders post-Labor Day that drove high-fliers like Tesla (TSLA) sharply lower. More recently, the positive news about vaccines has investors selling work-from-home plays, and buying re-opening/value sectors like financials, travel, energy, and mall REITs.
Turning to stocks he owns, Elfenbein says Disney's (DIS) investment in streaming has paid off. The company surprised all by turning a profit in Q3, with a whopping 73.5M streaming subscribers. Disney, says Elfenbein, is now a streaming service a la Netflix (NLFX), but with amusement park and film production businesses on the side. The stock's been on a big run of late - rising about 20% just this month - but Elfenbein would be a buyer right now all the way up to $150 (shares closed at $144.67 on Monday).
More generally, Elfenbein loves companies with a strong market niche and strong competitive advantage. Other names on the Buy List are Aflac (AFL), which does about 75% of its business in Japan and has lifted its dividend every year for decades. Another stock is Moody's (MCO), with Elfenbein noting the only thing better than a monopoly is a near-monopoly - and Moody's fits that description.
There's plenty more, including Charlie Munger making the bull case for Disney as only Charlie Munger can, why Elfenbein is a big fan of Ross Stores (ROST) despite its lack of online presence, and just a taste of a preview of what changes he might be making to his Buy List in December.
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Vaccine developments knock election news off front page - Scott Martin joins Alpha Trader Nov 10, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Scott Martin, head of research at Kramer Capital Research.
What might have been an episode focusing on the ramifications of last week's elections instead was dominated by Monday morning's vaccine update - Pfizer and BioNTech announcing positive preliminary data for their Covid-19 candidate. That news sent the Dow higher by more than 5% and the S&P 500 more than 3.5% at the time of recording. The Nasdaq - which housed many of the pandemic-favorite, work-from-home names - was in the red.
Martin reminds that the Pfizer news might not be the golden bullet that ends the pandemic, and suggests the market may be over-reacting (indeed, by the close on Monday, the S&P had more than halved its early gain and the Nasdaq closed down 1.5%). He also notes that e-commerce isn't going away. A stock like Chewy (CHWY) - which fell nearly 12% on Monday - might be thought of as a pandemic stock, but it's really the future of pet supplies. Investors who missed the rip this year might be getting a buying opportunity.
Treasurys are trash, says Martin. Why lock in an (inflation-adjusted) loss, says Martin, when names like Pfizer (PFE), General Mills (GIS), Johnson & Johnson (JNJ) - practically as safe as the government - yield plenty more?
Getting to an election-related idea, the hosts and Martin discuss how to play the potential national de-criminalization of cannabis. Stay away from the growers, says Martin, as that's a commodity business. Instead, look for ways to invest in the consumer angle - gummies, edibles, soaps. Procter & Gamble (PG), Unilver (UL), General Mills may all get involved. As for pot names, Martin has been and continues to be a fan of Aphria (APHA) - medicinal, growing market share, into conventional pharma sales in Europe, and nearing profitability. Under any circumstances, Martin believes marijuana investments should be minor positions around one's major holdings.
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Uncertainty to last long beyond Election Day - Steve Sosnick joins Alpha Trader Nov 03, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking the day before the election with Steve Sosnick, chief strategist at Interactive Brokers.
There's at least a modest amount of conventional wisdom out there that volatility (VIX) - which has been elevated for several weeks and spiked dramatically higher during last week's big market selloff - will return to normal levels after the election. After all, despite a lot of dramatic chatter, there's every reason to believe we'll know the winner of the presidential election, and the majority in Congress soon after. That means markets can start discounting a big fiscal stimulus, and there's still the Fed at ZIRP for as far as the eye can see.
Steve Sosnick would take exception to that thinking. First, he's not positive a stimulus will be agreed upon if the government remains divided. Stimulus is clearly more likely in the event of a "Blue Wave," but the inauguration isn't until Jan. 20 - it could be months before any money flows from this.
And concerning that Blue Wave, stimulus fans may want to be careful what they wish for, says Sosnick. A Biden-led government is likely to raise capital gains taxes, and thus investors' first reaction to the news next week (should that come to pass) might be to sell.
Sosnick's suggestion for those wanting to sell some volatility is to have a look at put options on the VIX in March, for instance. By the middle of 2021's Q1, there will surely be a lot more visibility on stimulus, and a Covid vaccine and/or treatment. Volatility should be down, and those puts will rise in value.
There's plenty more, including why Sosnick thinks the Fed is nervous, but not enough to explore the "nuclear options" like negative rates or outright purchases of common stocks.
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Handicapping election scenarios - Scott Bauer and Chris Zaccarelli join Alpha Trader Oct 27, 2020

This week's Alpha Trader features hosts Aaron Task and Stephen Alpher talking with Scott Bauer, CEO of Prosper Trading Academy, and Chris Zaccarelli, chief investment officer at Independent Investor Alliance.
First up is Bauer, who in two previous appearances on Alpha Trader made prescient bullish calls on gold (last November) and mega-cap tech (last July). He remains bullish on both, though cognizant that Covid and election news could provide some volatility.
Try to look past that, says Bauer, and remember 1) the Fed has assured zero rates for well into the future, and 2) there's going to be a fiscal stimulus deal of some sort, whether it comes in the lame duck session, or early 2021. Also consider the chance that a vaccine and/or effective treatment becomes available, and we have a third prong of the argument for higher share prices.
Bauer's a Chicago guy, so of course the conversation moved towards the subject of volatility. Volatility (VIX) has come down of late, but remains elevated, and probably about where it ought to be given all the news out there (and potential for even more news), says Bauer. Should the election be calmly settled next Tuesday night though, there's potential for a crash in the VIX.
Zaccarelli has similar thoughts to Bauer on volatility, but is a bit more wary that we're going to wake up next Wednesday morning to a nicely settled election result. It's not enough to make him bearish, but he is advising clients to reduce risk by taking some money out of the hot-handed growth names, and putting it into some blander value plays. Think financials (NYSEARCA:XLF), industrials (NYSEARCA:XLI), and materials (NYSEARCA:XLB), instead of tech (NYSEARCA:XLK) and communication services.
Investors should also consider the upside surprise of a "blue wave" in the election. Yes, there may be higher capital gains taxes and corporate taxes, but the extent of how those might hurt stock prices isn't assured. Instead, investors may want to focus on just how big of a fiscal stimulus package might get passed early next year if the Democrats control Congress and the White House (remember 2009).
There's plenty more, including Bauer's super-simple explanation about how to interpret the VIX in terms of stock market movement, and Zaccarelli's argument for why energy (NYSEARCA:XLE) is very much not a buy even at these low levels.
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Massive opportunity in 'digital transformation' - Jon Markman joins Alpha Trader Oct 20, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking (mostly) tech with Jon Markman, founder and president of Markman Capital Insight.
Before getting into individual stock picks, Markman first looks at the big picture: Going back about 80 years, whenever the Fed steps in to put the brakes on a bear market, one should expect the averages to go up five times over the following ten years. The Fed helped end the bear market, says Markman, on March 23 this year. Applying that 5x multiple to what the Dow (DJI) and the Nasdaq (COMP) were that day leads to 91,000 on the Dow and almost 34,000 on the Nasdaq in roughly 10 years.
Before considering that extreme, consider that the S&P 500 (SP500) bottomed in 2009 at 666. Markman's target then for that index was 3,330, which was hit late in 2019.
This, of course, doesn't mean that there will be any number of scares and sizable corrections along the way. These should be thought of as buying opportunities, particularly for those companies leading and benefitting from the "digital transformation," which Markman defines as the use of data and software to build new business models.
A great example of this is Netflix (NFLX), which over two decades went from being a mail-order DVD business to offering bits of data in the cloud. Tap an image on your electronic device of choice, and the show begins. The company has 193M customers, a $234B market cap, and a stock that's up something like 15,000% over 20 years - all from harnessing the digital revolution.
As you might imagine given the major wave he's talking about, Markman doesn't have a ton of interest in Netflix's earnings this week. Over the next 10-20 years, Netflix and others leading the digital revolution - think Amazon (AMZN), Peloton (PTON), and Zoom Video (ZM) to name just three - are all going to be multi-baggers (though Peloton and Zoom might be due for a correction).
Now the above are very well-known (and hot) names. Maybe not as well-known, but with an equally great opportunity, is a player like Schrodinger (SDGR), a company delivering healthcare using digital tools. Another digital healthcare play is
For those wishing to ride the digital revolution, but undecided about which horse to ride, Markman suggests Visa (V) and Mastercard (MA) as - more than any other companies - perfectly levered to e-commerce and the transformation of money to software.
Other digital transformation long ideas discussed in the podcast, include The Trade Desk (TTD), a platform for the buying and selling of digital ad inventory, and enterprise workflow platform operator ServiceNow (NOW). Both have eye-popping charts, but massive opportunity over the next decade still awaits.
We couldn't let Markman go without comment on two tech megacaps - Microsoft (MSFT) and Apple (AAPL). He's a fan of Microsoft, giving its post-Ballmer management kudos for moving the focus of the company away from selling devices and instead selling into the high-margin areas of digital space. He's not bullish on Apple though, worried about waning iPhone sales, and questioning the ability of the company to replace that revenue with other devices and services.
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Rising stock prices and rising volatility - Schwab's Randy Frederick joins Alpha Trader Oct 13, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Randy Frederick, VP of derivatives and trading at Schwab.
Frederick previously saw little-to-no resistance to the S&P 500 (SP500) returning to its previous high of 3,580, but things are moving quickly. Thanks to last week's big rally (which continued on Monday), the index has already moved back to within a stone's throw of that level.
Maybe most interesting about Frederick's expectation of higher share prices is that it comes alongside his anticipation of rising volatility - the two don't typically go hand-in-hand. Why now? The upcoming election is to be thanked for the volatility, and the still-massive monetary and fiscal stimulus is helping the rally in stocks.
Earnings season - which somewhat officially begins this morning - may provide another catalyst for higher stocks. Frederick reminds that earnings were expected to fall 44% Y/Y in Q2, and they ended up sliding only 7%. For Q3, earnings are seen dropping a full 22% from year-ago levels. This suggests there's plenty of room for results to surprise to the upside. One caveat: Earnings expectations actually ratcheted higher into the end of the quarter - an unusual occurrence that's worth paying attention to.
There's plenty more, including why Frederick is a fan of the underperforming financials, why he expects the big tech names to skirt antitrust issues, and why the best time to invest is always "now."
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Stop fretting, it's a secular bull market - Jeff Saut joins Alpha Trader Oct 06, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Jeff Saut, formerly chief investment strategist at Raymond James, the founder of Saut Strategy, and currently chief investment officer at Capital Wealth Planning.
Now on its 52nd episode, Alpha Trader has had a large number of bullish prognosticators on the program, but perhaps none as bullish as Saut. His advice in a nutshell: Stop focusing on the day-to-day news and market gyrations, and instead recognize that we're in a secular bull market that began early in 2009. Secular bull markets, says Saut, tend to last 15-20 years, meaning there's plenty more to go in this one.
Turning to sectors, Saut says it's hard to pick a wrong one in secular bull moves. Energy (XLE) fans for the past few years would beg to differ. Patience, says Saut. He reminds that we're entering tax-loss selling season, and plenty of investors are underwater on their energy holdings. Take advantage, he says, by beginning to accumulate energy shares that investors are unloading for tax purposes.
There's plenty more, including why Saut's not paying attention to election polls, why he's a fan of gold, and one other struggling sector that Saut's a fan of.
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The dollar is the 'dog,' and stocks are the 'tail': Jim Iuorio joins Alpha Trader Sep 30, 2020

This bonus episode of Alpha Trader features hosts Aaron Task and Stephen Alpher talking with Jim Iuorio, director at TJM Institutional Services and a CNBC contributor.
The reversal in the dollar ([[USDOLLAR]], [[UUP]], [[UDN]]) bear market over the last few weeks has been notable. While some believe money has flowed into the greenback because stocks got shaky, Iuorio thinks the opposite. The dollar, he says, is the "dog," and most everything else is the "tail." When the dollar rose past 94.00, says Iuorio, it called into question a lot of the thinking behind the equity rally.
It's since slipped, but Iuorio is keeping his eye on that level, and another solid break above would give him plenty of reasons to worry about another leg down in stocks.
Getting a bit more granular into stocks, Iuorio is sympathetic to the value investor in what's been a period of massive underperformance, and he thinks some sort of comeback might be in order. A warning though: If things get rough for the FAANG names, things are probably going to be rough throughout equities. Value may not lose as much, but you can't eat relative performance.
Looking post-election, Iuorio has cause for a bit more bullishness. Think about the morning of November 4. Despite a lot of chatter about vote counts, there's a high likelihood the uncertainly of the election outcome is going to vanish, and the Fed and its massively easy monetary policy will have gone nowhere. It sounds like the recipe for a rally.
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Bob Iaccino talks stocks, commodities, and the dollar on Alpha Trader Sep 29, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking markets with Bob Iaccino, who is making a return appearance to the show. Bob is co-founder of PureXposure Growth Series, as well as Chief Strategist at Path Trading Partners.
September wasn't the best month for stocks, and last week was a volatile one, but Iaccino notes the market as having shaken off a lot of the negativity by last Friday. It doesn't necessarily make him bullish over the near term, but the price action is worth paying attention to (an idea that might have been borne out by the big rise in stocks on Monday).
The dollar ([[USDOLLAR]], [[UUP]]) has been on a nice run higher of late, and Iaccino has been, and continues to be a bull. While the conventional wisdom says money has flowed into the greenback thanks to shakiness in equity markets, Iaccino over the summer noticed the Fed's balance sheet actually shrunk for several weeks. It was this slowing of dollar creation by the central bank that turned him bullish.
Turning to some stock picks, Iaccino is staying away from the FAANG players, but does want to be long names that might not be too affected no matter the outcome of the election or the virus. Among them is Cheesecake Factory (CAKE), which might seem an unusual pick given its big presence in malls. But Iaccino notes the company's sizable market position gives it pricing power in terms of rent concessions, its large spaces allow for social distancing, and takeout is a big part of the business.
Another long is Dollar General (DG), which Iaccino considers his recession play.
Turning to growth, Iaccino is a fan of PayPal (PYPL), calling it the "anti-XLF stock." Iaccino: You want to be long stocks whose product becomes a verb, and PayPal has that ("Venmo me").
There's plenty more, including why Iaccino is flat gold (XAUUSD:CUR), is intrigued enough by Bitcoin (BTC-USD) to have just a small position, and why he recently got long oil (CL1:COM). As Iacinno advised in his first Alpha Trader appearance, if you're bullish on oil, buy oil (not an ETF, and not the oil producers).
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Navigating the volatility - Jon Najarian talks with Alpha Trader Sep 22, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the markets and more with Market Rebellion co-founder, and longtime CNBC contributor Jon Najarian.
Do you even remember the fight over oil in March between Saudi Arabia and Russia that helped send crude prices into negative territory? In any other year, it may have been the top markets-related and geopolitical news story, but in 2020 it's just another headline.
The point of this, says Najarian, is not to rehash that story, but - on a day when the Dow was down nearly 1K points (at the time of the interview on Monday) - to remember not to get too caught up in the day-to-day action.
Instead, Najarian - expecting the VIX (VXX) to be range-bound between 25 and 35 - is likely to be buying stocks and selling options when the VIX is near the top of that range, and selling stock and buying options when the VIX is near the bottom.
Turning to the election, Najarian has a bit of a contrarian take, and expects volatility to go dramatically lower following November 3. Why? Unlike many, he's not expecting the vote count for the presidency to take very long. We should know relatively quickly who wins the White House.
Moving on to alternative assets, Najarian is not in the camp that believes gold (XAUUSD:CUR) and Bitcoin (BTC-USD) are too "financialized" to be safe havens anymore. Yes, they plunged alongside the market in February and March, but look over a longer time frame. Both have substantially outperformed during 2020 - gold up 30%, Bitcoin up 50%, and the S&P 500 ahead just 4%. Putting his money where his mouth is, Najarian has 7%-8% of his net worth in cryptocurrencies, and about another 5% in gold and silver (XAGUSD:CUR).
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The Psychology of Money - Morgan Housel talks with Alpha Trader Sep 15, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Morgan Housel, partner at Collaborative Capital, and author of recently-published The Psychology of Money.
There's a cost of admission to the stock market, says Housel, and that's putting up with uncertainty and volatility. In order for the market to give an you - an investor - strong returns over time, you need to be able to put up with that cost. It's very common, says Housel, for the market to not "make sense," i.e. its performance seem disconnected from the news or the economy.
Turning to the extraordinary events of 2020, the major takeaway for Housel is the broad belief that monetary and fiscal authorities know just what to do when financial panic hits, i.e. provide massive, nearly open-ended stimulus. As recently as the global financial crisis, notes Housel, there were intense debates about the advisability of swiftly cutting rates, ZIRP, QE, and a major fiscal boost. This time around, the Fed and the government in a matter of weeks took rates to zero, launched a massive QE program, and passed trillions in fiscal measures.
Does this mean the end of financial panics or even bear markets? Of course not, says Housel - the business cycle has not been repealed. What Housel expects going forward, though, are sharper, swifter panics, followed by equally impressive recoveries.
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The 'K-shaped' recovery and the need for more fiscal stimulus - Joe Brusuelas talks with Alpha Trader Sep 08, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the economy with Joe Brusuelas, chief economist at RSM US.
Politicians and market participants can't get complacent about the economy despite a string of positive reports, says Brusuelas. The economy is only operating at 80% capacity. While there have been "V-shaped" recoveries in financial services (markets), manufacturing, and housing, the service sector remains highly impaired. The result is a "K-shaped" economy, with the upward part of the K representing those select industries bouncing nicely, and the lower part of the K representing the devastating damage elsewhere.
As for another major fiscal stimulus package, Brusuelas is certain it's needed. For those who say the economy continues to rebound despite the previous stimulus running out at the end of July, he reminds that much of August's celebrated economic numbers - including last Friday's nonfarm payrolls (1.37M jobs added, unemployment rate tumbling to 8.4%) - takes data from early in the month, i.e. prior to the true effect of the exhaustion of the stimulus benefits. Brusuelas suspects that economic reports in September and October will be a far better measure of how the economy has responded to the money running out.
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The Fed at zero forever - Tony Dwyer joins Alpha Trader Sep 01, 2020

Canaccord Genuity Chief Market Strategist Tony Dwyer for a second time joins hosts Aaron Task and Stephen Alpher on the Alpha Trader podcast.
"There is no precedent to how high valuations can go," said Dwyer, making some news on Monday by pulling his 3,300 target for the S&P 500 (SP500). I have no idea what multiple you pay for an "unlimited" Fed, says Dwyer. 20x? 24x? 30x? 100x?
Dwyer is bullish, but not just because the Fed's new framework and massive U.S. debt loads likely mean 0% policy rates for many more years. There also appears to be a synchronized global recovery at hand. Things won't go up in a straight line - in fact, the current level of frothiness suggests a correction could soon hit - but Dwyer thinks investors ought to be ready to buy any dips.
Dwyer reminds that the "market" of late is essentially a small handful of names that seemingly go higher each day. For much of the rest of the equity universe, it's been a bit of a struggle. He expects leadership might soon change though, with cyclical plays like energy (XLE) and the banks ([[KRE]], [[KBE]]) primed to benefit from the global recovery.
There's plenty more, including why the current period is way more like 2009 (start of major bull market) vs. 1999 (end of major bull market), the outlook for another fiscal stimulus package, and why zero rates forever might not necessarily drive gold higher and the dollar lower.
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Treasury rally set to continue - Gary Shilling talks with Alpha Trader (Podcast) Aug 25, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the markets with Gary Shilling, president of A. Gary Shilling & Co.
A bull on long-dated Treasurys since 1981, Shilling remains so today, not scared away by a 30-year yield at just above 1%. Helped along by very narrow number of names, the S&P 500 is at a record-high, but the economic scene remains quite troubling, says Shilling. What the bond market really cares about, he says, is inflation, and the spread between the 10-year TIPs and 10-year Treasury yields recently narrowed to just 50 basis points, suggesting investors expect nearly no inflation over the next decade. He's telling clients to buy long-dated Treasurys, whether in cash form, ETFs like the iShares 20+ Year Treasury Bond ETF (TLT), or futures contracts at the CME.
As for what bonds might be saying about stocks, Shilling notes that yields this year began falling on January 2, but equities didn't pay attention until mid-late February. He's seeing something similar afoot this summer, with the 10-year yield falling from 0.90% in early June to the current 0.64%. Should equities begin paying attention again, the S&P 500 could be set up to fall 30%-40%.
There's plenty more, including what Fed Chairman Jay Powell might say at Jackson Hole this week and what could get Shilling to change his mind, and instead position himself for sharply higher inflation.
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Navigating the reflationary and deflationary forces - Michael Gayed talks with Alpha Trader Aug 18, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Seeking Alpha contributor and editor of The Lead-Lag Report, Michael Gayed. Gayed is also portfolio manager of the ATAC Rotation Fund, which has managed to walk between the raindrops in 2020, returning about 60% year-to-date.
Prior to the wide-ranging interview with Gayed, Task and Alpher mull Friday afternoon's big news - the disclosure of a $500M stake in Barrick Gold (GOLD) by Berkshire Hathaway ([[BRK.A]], [[BRK.B]]), alongside major cuts in holdings of Wells Fargo (WFC), JPMorgan (JPM), and Goldman Sachs (GS). Warren Buffett, of course, has made no secret over the years of his disdain for investing in the yellow metal, and whether it was The Oracle himself, or Ted Weschler or Todd Combs who made the Barrick purchase remains to be seen. Nevertheless, the news lit a fire under Barrick and the gold miners (GDX) in general on Monday, not to mention maybe playing a role in lifting gold (XAUUSD:CUR) almost back to the $2K level.
The ATAC Rotation Fund is highly tactical and designed for low correlation with broader markets - rotating into Treasurys when indicators point to high volatility, and into equities with leverage when indicators point to low volatility. The fund's signals got it into Treasurys in late January and back into equities in late March - hence, the big gains in 2020. Key to the indicators - the behavior of utilities (XLU) and long-dated Treasurys (TLT).
And what are those indicators saying now? It's a bit cloudy, says Gayed, noting the absolute yields of Treasurys suggests deflationary pressure, but the underperformance of the utility sector suggests reflationary pressure. In the short term, at least, Gayed suspects the reflationary forces will win out.
There's plenty more, including the growing chance of a major selloff in Treasurys, why we should pay attention to the soaring price of lumber, and how Gayed might position his fund for a "two crash" scenario. Finally, we get into Gayed's recent article, "The Greatest Disconnect Between Stocks And The Economy Continues," and how COVID-19 has exposed capitalism's weaknesses.
Listen to or subscribe to Alpha Trader on these podcast platforms:
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The recovery stalls - CMEGroup's Blu Putnam talks with Alpha Trader Aug 11, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with CMEGroup Chief Economist Blu Putnam.
The big news over the weekend was the president signing a number of executive orders to keep stimulus monies flowing, but Putnam is wary of the legality, and notes it's the states that have to pay at least some of the extra unemployment money, and they're currently tapped out. He suggests viewing the president's actions as less the final word on the stimulus, and more as a continuing negotiation with Congress.
Checking "nowcast" indicators like flows through TSA security checkpoints, restaurant seating/reservation numbers, and commuter rail traffic, Putnam believes the fast economic bounce seen in May and June pretty much stalled in July.
Bottom line: People's behavior has changed - if not permanently, then certainly for at least a significant period of time - and that's going to mean a pretty drawn out recovery. What about a vaccine? Even if one does come, says Putnam, it's not going to be like flipping a light switch.
Turning to monetary policy, Putnam notes the enormous amount of government debt the Fed is now monetizing. It's driven down not just interest, but also rate volatility. That in turn has left investors of all types trying to capture some sort of yield by moving out the risk curve. That's helped create not just a bull market in stocks, but a bull market in gold, which - thanks to the expansive monetary policy - now finds itself more and more correlated with moves in stocks.
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The consequences of 'infinite money' - Chris Irons talks with Alpha Trader Aug 04, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the Fed, gold, the dollar, and the big bull move in stocks with Quoth the Raven himself, Chris Irons of QTR Research.
"The Fed is running the biggest long con in human history," Irons has previously said. By that he means the U.S. central bank for years has chosen the path of attempting to paper over any economic difficulties, rather than allowing markets to clear. The Fed's actions in response to the pandemic amount to papering over on massive amounts of steroids. Indeed, says Irons, the Fed's sole mandate these days has devolved into keeping the stock market rising in order to give the impression that all is well.
It takes a lot of money printing to keep this ball rolling, says Irons, noting the Fed's Neel Kashkari recently said, "We have infinite money" to throw at the current crisis. This sort of heresy against the tenets of responsible central banking has to have consequences (timing to be determined). Among the possibilities: Hyperinflation, a sovereign debt crisis, a major bull market in gold (XAUUSD:CUR), the loss of reserve currency status for the dollar ([[UUP]], [[UDN]]).
Don't get the impression Irons is all doom and gloom, though. There's plenty more, including why he thinks the economy will bounce back better than many think, why we're about to get a deluge of great news on Covid-19 treatments and vaccines, and why the S&P 500 should continue to rip higher.
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Alpha Trader podcast: Talking SPACs with Chris DeMuth; talking markets and gold with Lyn Alden Schwartzer Jul 28, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Lyn Alden Schwartzer and Chris DeMuth. Lyn is the founder of Lyn Alden Investment Strategy, and co-author of the Stock Waves service on Seeking Alpha. Chris is the founder of Rangeley Capital and author of the Sifting the World service on Seeking Alpha.
First up is DeMuth to talk about Special Purpose Acquisition Companies, otherwise known as SPACs or blank-check companies. SPACs have been around for some time, but in 2020 appear to be on their way to seriously challenging IPOs as the traditional way for firms to go public. That might be good news, thinks DeMuth, given the shortcomings of the IPO process.
That doesn't mean DeMuth is a fan of all SPACs. In fact, he notes "brutal headwinds" faced by SPACs, and says the odds of a SPAC ultimately succeeding aren't good. Having said that DeMuth says the selective investor can find big winners in the space. Key criteria: Size - they should be larger than the typical SPAC; they have experienced sponsors; they were brought public by a quality underwriter; they ultimately purchase well-known brands familiar to the investing public.
DeMuth then goes on to discuss two SPACs which should fulfill the above criteria: The recently gone-public Bill Ackman vehicle, Pershing Square Tontine Holdings (PSTHU) and Conyers Park II Acquisition Corp. (CPAAU).
Up next is Alden Schwartzer, who currently is expecting a broad, but not particularly deep correction in the equity markets. Her outlook over the next few years, however, gets more interesting.
You might not know it by the performance of the averages lately, but over long periods, an index of equal-weighted large caps tends to outperform an index of market-weighted large caps. That doesn't mean there aren't sizably long periods where market-weighted dominates (such as right now). According to Alden Schwartzer, we're nearing a setup where that action is about to reverse, and equal-weight will again be the place to be. An example of a market-weighted index - the S&P 500 ([[SP500]], [[SPY]]). An example of an equal-weighted ETF - the Invesco S&P 500 Equal Weight ETF (RSP).
Turning to gold (XAUUSD:CUR), Alden Schwartzer has been a bull for awhile, and continues to be so. However, with gold flirting with its all-time high (as of the time of Friday's recording; it pushed through that high on Monday), she wouldn't be surprised by a bit of a pullback here. Longer-term the fundamentals point to gold to move to well over $2,000 per ounce in coming years.
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Big tech in a win-win position - Scott Bauer joins Alpha Trader Jul 21, 2020

This week's Alpha Trader features hosts Aaron Task and Stephen Alpher talking equities and gold with Scott Bauer, CEO of Prosper Trading Academy.
The S&P 500 (SP500) has been attempting and failing to bust through the June 8 post-crash high of about 3,230. Bauer fully expects the S&P to not just break out above that level, but to soon challenge the all-time high just shy of 3,400 (the podcast was recorded on Friday morning - the S&P did make it through 3,230, closing at 3,251 on Monday).
What's holding the market back, says Bauer, are the negative headlines about Covid cases and the related halt or reversal of economic re-openings. Take advantage of the volatility, says Bauer, who offers up an options strategy to do just that.
As to which names will lead the market to new highs, Bauer believes it will be the same mega-cap tech stocks that have already led the surge over the past few months. It's win-win, says Bauer, as these plays are in great position to benefit if the economy shuts down again or if economic growth continues. He's not at all a believer in any sort of significant rotation out of the likes of Amazon (AMZN), Google (GOOG), Apple (AAPL), Microsoft (MSFT) into laggard sectors like energy or financials.
In his previous appearance on Alpha Trader in November, Bauer made what turned out to be a very prescient call spread recommendation on gold (XAUUSD:CUR), so we were interested in hearing what he has to say today.
He's still bullish, noting the presidential election should team with Covid for plenty of headline risk in coming months. Despite gold's troubles during the March market panic, Bauer believes the metal remains a great place to be should markets go into "risk off" mode. As in November, he's continuing to play with upside call spreads.
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Fed liquidity trumps rising Covid worry - Marc Chaikin joins Alpha Trader Jul 14, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Marc Chaikin, founder and CEO of Chaikin Analytics.
Prior to the chat with Chaikin, Task and Alpher discuss the remarkable run in Tesla (TSLA), and the beginning of Q2 earnings season, with many of the country's largest banks set to report results this week.
For Tesla, it appears poised to enter the S&P 500 as soon as this month, and at its current capitalization north of $300B, it would be a top ten market cap stock in that index. As for the banks, Q2 is widely expected to be their worst quarter since the financial crisis. They've been pretty well sold already though. The question before the court: Has what's sure to be an ugly Q2, and what might be a soft outlook been priced in yet?
Market momentum fueled by Fed liquidity and bearish market sentiment is a better guide than trying to parse the Covid-19 statistics, says Chaikin.
At this point, Chaikin - noting daily record highs in the Nasdaq 100 (QQQ) and a lagging S&P 500 (SP500) - isn't too worried about narrowing breadth and the sort of tech outperformance we haven't seen since 1999. This time is different, says Chaikin, fully aware of the meaning of that phrase. So much money today, he says, is pegged to strategies that force money into the mega-cap growth stocks leading the Nasdaq 100. Chaikin's tech favorites - Adobe (ADBE), Amazon (AMZN), Microsoft (MSFT), Nvidia (NVDA), and his stock of the week, Qualcomm (QCOM).
There's plenty more, including why Chaikin likes high-quality biotech like Regeneron (REGN), why he's not bottom-fishing in roughed up sectors like financials (XLF) and energy (XLE), and why it pays to lighten up whenever a stock spikes higher on earnings.
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The second-half outlook - Brad McMillan talks with Alpha Trader Jul 07, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the second-half outlook with Brad McMillan, chief investment officer at Commonwealth Financial Network.
Prior to the chat with McMillan, Task and Alpher talk about recent market action. Among the items - a bull run that appears to be getting its legs again, and a pickup in dealmaking. Of the bull run, Task notes that an equal-weighted S&P 500 is down 9% since June 8. The move higher in the headline indices of late is getting even more focused on big-cap tech.
Of dealmaking, the hosts are interested to see Warren Buffett and Berkshire Hathaway ([[BRK.A]], [[BRK.B]]) finally putting some of their $137B to work with the $9.7B cash purchase of the natural gas transmission assets of Dominion Energy (D). There was also Monday's $2.65B purchase of Postmates by Uber (UBER), with Task pointing out that this is an all-stock deal. At least Uber thinks its currency is of pretty fancy value right here.
It's hardly surprising that the key to McMillan's outlook rests with what happens with the pandemic. For now, his base case is that we get Covid-19 under control and the economic recovery continues (even if at a slower pace than current). In that case, we're pretty much back to normal by early next year.
That doesn't necessarily mean McMillan's a big bull on the stock market at current levels. Instead, he sees stocks as pretty expensive even if earnings come back, and expects the S&P 500 to end the year about where it stands right now.
There's plenty more, including McMillan's take on the wild swings in jobs numbers we've seen, whether or not we get another stimulus package, and what he considers to be the most underrated economic statistic.
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The Fed goes too far - Danielle DiMartino Booth joins Alpha Trader Jun 30, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Danielle DiMartino Booth, CEO & Chief Strategist at Quill Intelligence, and a former advisor to the president of the Dallas Fed.
The Fed is "winning" (for the moment), says Booth, but that doesn't mean she approves of the central bank's massive interventions into the markets. Booth wasn't surprised by Jay Powell's quick action as markets disintegrated earlier this year, but what did take her back was the Fed's move to buy junk bonds, and the fancy accounting and legal footwork needed to do so.
If all one cares about is the S&P 500 or the Nasdaq, it's all looking wonderful. But underneath the surface, says Booth, there are millions of homes and cars that need to be foreclosed upon, millions of rental tenants who can't pay, and tens of thousands of businesses that are bankrupt. The Fed has bought time, but the underlying issues remain.
Booth isn't arguing that the Fed should have done nothing, but instead that they went too far. Businesses are still bankrupt, only now they're going to head into bankruptcy with far more debt than if markets had been allowed to clear a bit more.
The discussion then moves to homebuilding ([[ITB]], [[XHB]]), where the outlook at the moment is rosy thanks to "people of means" leaving the cities for the burbs. For the rest, though, there are nearly 9M mortgages in forbearance and levels of delinquencies way higher than anything during the global financial crisis. Banks can't do a whole lot about it right now, but they know a good percentage of these properties are going to be hitting the market. While home searches, mortgage applications, and pre-qualifications might be going through the roof, deal closings for all but the most pristine of borrowers will be a different story. Prices need to come down.
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A market destined to go higher - Jim Bianco joins Alpha Trader Jun 23, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Jim Bianco, president of Bianco research.
Prior to the chat with Bianco, Task and Alpher note that equities continue to march higher (or at least hold their ground) in the face of a batch of disquieting headlines pointing to a renewed surge in COVID-19 infections. Task wonders if the so-called "second wave" and the upcoming election might keep the market in a trading range for a few months.
Jim Bianco wasn't too surprised by the bounce from the March lows, particularly given the Fed's unprecedented efforts to support markets. The size of the equity bounce and the Fed's doubling down on what was already massive action took him by surprise though. And last week, Bianco made news by fully embracing this bull move.
Not making enough news last week, says Bianco, was the fancy legal footwork the Fed had to go through to enable its program to purchase individual corporate bonds. To Bianco, it shows the central bank will stop at nothing to support markets - including the purchase of stocks should the need arise.
As to where this ends, Bianco wonders if it ever will, noting nothing was ever really wound down from the post-global financial crisis interventions. How far have we come? Quantitative easing (QE) was thought of as completely radical when it was announced nearly a decade ago, but today it's considered par for the course, and in use by major central banks across the globe.
Finally, Bianco suggests the result to all this will be rising inflation in 2021 and beyond. Interestingly, this doesn't make him a gold (or crypto) bug. The hope of bulls in both assets - that they're a hedge against monetary disrupt - hasn't played out. Thanks to ETFs, gold (XAUUSD) has been financialized, he says. And thanks to the need to at some point shift crypto to dollars, Bitcoin (BTC-USD) is financialized as well. The result: The fortunes of both are at least somewhat dependent on the financial markets. He reminds that both gold and Bitcoin crumbled alongside stocks in the March meltdown, and both recovered as equities recovered.
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The pullback and the outlook going forward - Avi Gilburt and Marc Chandler join Alpha Trader Jun 16, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher chatting first with Avi Gilburt, founder of ElliottWaveTrader.net and author of The Market Pinball Wizard serviceon Seeking Alpha. After that, the hosts talk with Marc Chandler, chief market strategist at Banncokburn Global Forex, and a longtime Seeking Alpha contributor.
Gilburt wasn't too surprised by last week's pullback, but the key question is what type of correction are we in. By his calculation, if the S&P 500 (SP500) can hold above the 2,890 region, another higher high may be in store in which the market could challenge its all-time high in the 3,300 area (the S&P closed at 3,066 on Monday). Following that though, Gilburt would expect a much larger pullback. One way or another, says Gilburt, a far more sizable slide in stocks is likely coming this year.
Bulls can take heart though - that's a short-term forecast from Gilburt. Longer-term Gilburt continues to have a minimum 4,000 target for the S&P 500, with a chance of as much as 6,000 before the bull market from 2009 ends.
There's plenty more, including Gilburt's basic explanation of how Elliott Wave analysis works, and how it can apply to any asset class that reflects "mass sentiment," with gold (XAUUSD:CUR) coming up for discussion.
Last week's market correction was long overdue, says Chandler, and he notes the pullback was reflected in the currency markets as well, where bull move favorites like the aussie, the Mexican peso, and the Scandinavian currencies also took big hits.
For those trying to lay Thursday's plunge at the feet of the Fed and its gloomy outlook published the day before, Chandler isn't buying it. He notes that the central bank's forecast - gloomy as it may have been - was actually somewhat stronger than most had been expecting. The Fed Funds futures contracts, says Chandler, didn't really react. The December 2021 contract two weeks ago was implying a negative yield, and today its implying positive, meaning it's seeing a brighter economic outlook.
Going forward, Chandler expects markets (and risk assets in general) to struggle a bit more, but past that the enormous liquidity being made available by both monetary and fiscal authorities should again kick in. He reminds it's not just the U.S. - the ECB this week is about to make available to European banks 3-year loans at negative 100 basis points! And the EU in the next few days might be approving a €750B stimulus package.
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Hedge in May and go away? Jack Bouroudjian talks with Alpha Trader Jun 09, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Jack Bouroudjian, chief economist, co-founder and director of the Universal Compute Exchange, and chairman of the Global Smart Commodity Group.
Prior to chatting with Bouroudjian, Task and Alpher discuss this remarkable rally which has sent the Nasdaq to a new all-time high and brought the S&P 500 back to green for the year. Stan Druckenmiller less than one month ago said the risk-reward was the worst he'd ever seen. Following an 11% rally in the S&P 500 since, he was back on the airwaves yesterday morning pronouncing himself "humbled" by the market.
Druckenmiller's bearishness a few weeks back was shared by other great investors like Sam Zell and David Tepper. If you missed this rally, you're in good company.
Items arguing for a continued rally include a widening yield curve (the 10-year Treasury yield was up 25 basis points last week), and a broadening of stocks participating - financials, industrials, and cyclicals have joined the move in the last few weeks. Items arguing for a reversal include rising speculative fervor - Seeking Alpha colleague Nathanial Baker says FOMO - fear of missing out - has been replaced with POMO - panic of missing out. There's also the issue of the coronavirus, and whether the reopening of the economy might lead to a resurgence.
Asked for his thoughts on this rally, Bouroudjian reminds that the Fed in the space of a couple of weeks put in place more stimulus than it ever did during the many months of the global financial crisis. Similar action is happening in Europe via the ECB. Despite scary headlines in March and April, says Bouroudjian, in his mind there was always an optimism that the lockdowns would be short-lived. For now, that's looking like the case.
As for the economy going forward, Bouroudjian does worry about employment returning to previous levels. Companies have been forced to become more efficient, and that means doing the same amount of work with fewer workers. Without COVID-19, it may have taken 3-5 years for the work-from-home trend to fully take hold. Instead it's taken 3-5 months.
Perusing Friday's surprising jobs report (2.5M jobs added vs. expectations for a loss of 8M jobs), Bouroudjian isn't so shocked. The early months out of a recession, he says, are the easy ones for job gains. Going forward, Bouroudjian expects far softer employment adds thanks to the productivity gains afforded by work-from-home.
Turning back to stocks, Bouroudjian calls himself a reluctant long, noting either the economy needs to get a whole lot better in coming months, or the stock market will take a hit. Not going so far as to sell in May and go away, he suggests hedging in May and going away.
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The coming comeback of active investing - David Trainer talks with Alpha Trader Jun 02, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with David Trainer, CEO of independent research firm New Constructs, and the author of Value Investing 2.0, a newsletter available on Seeking Alpha's Marketplace service.
While Trainer doesn't see a ton of upside to the averages after their big rally from the March bottom, more important to him is what might be a topping out in the passive investing trend.
That doesn't necessarily mean a bear market if he's right. Instead, it could be the averages and passive investing - dominated more and more every day by a very small handful of names - might suffer relative to the rest of the investing universe, i.e. a comeback for active investing and value names.
As the name of his service makes clear, Trainer is a value investor, and all that money flowing into FAANG + Microsoft is leaving a lot of stocks to choose from. Among some recent picks is Southwest Airlines (LUV). It's a best-in-class operator, says Trainer, and those types of companies tend to pick up market share during crises, and we're surely in one now. Another super-important point for Trainer: Never assume executives care about you. As for Southwest, Trainer is pleased that management is explicitly compensated for creating shareholder value.
An industry facing maybe an even larger existential crisis than airlines is shopping malls, and Trainer is a fan of Simon Property Group (SPG). Yes, the retail apocalypse is real, but some malls will survive and thrive, and Simon - like Southwest, best-in-class in its sector - is going to the player owning a high proportion of those survivors.
Finally, there's D.R. Horton (DHI). When Trainer picked the stock at $41 per share (it's at $55 at publication of this podcast), the valuation suggested profits wouldn't get back to 2013 levels for ten years. In Trainer's mind, there's tons of growth opportunity for the company - particularly in DHI's mid-market area of housing - but even without that growth, the stock would be a buy.
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Stimulus vs. the shutdown - Jeff Kilburg and James Altucher join Alpha Trader May 26, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking first with Jeff Kilburg, the founder and CEO of KKM Financial and a CNBC contributor, and then with investor, entrepreneur, and host of his own podcast, James Altucher.
Kilburg sees the risk in the market now being with those overweight cash, and expects the S&P 500 (SPY) to soon test the 3,000 level (it closed at 2,955 on Friday).
What might throw the market off is what we saw a bit of last week, and that's a resurgence in trade tension between the U.S. and China. While acknowledging that possibility, Kilburg sees as far more important the drive towards a COVID-19 vaccine, and acceleration in economic reopening across the nation.
Speaking of reopening, Kilburg takes note of what drove the market higher last week, and that was economically sensitive plays like energy (IYE), financials (XLF), and industrials (XLI). That doesn't necessarily mean this bull move is about to shift from tech leadership - Kilburg expects the Nasdaq (QQQ) to soon return to its February all-time high.
Altucher recently published an article on Seeking Alpha titled "Stocks: The Good, The Bad And The Ugly." In it, and on the podcast, he describes his cautiously optimistic outlook as driven by the end of the lockdowns and the massive government stimulus.
He takes note of comparisons to the Great Depression, but says that makes zero sense. He reminds that the initial response then - hiking tariffs, crimping fiscal policy, and allowing the banks to fail (and the resultant crash in money supply) is the exact opposite of what policymakers did this time around.
Getting to the "Ugly" part, Altucher describes why it kind of makes sense for the stock market to surge as the economy crumbled: The economic shutdown is to the benefit of the large, well-capitalized companies that make up the major indexes. Just think about Starbucks (SBUX) vs. mom-and-pop cafes. Yes, Starbucks was already grabbing market share from them, but the pandemic has sped the process up - those mom-and-pops aren't coming back, and Starbucks will end up with their business.
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Trading range for rest of year? Rick Bensignor joins Alpha Trader May 19, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Rick Bensignor, president of In The Know Trader, and a former chief market strategist at Morgan Stanley.
Bensignor's thesis for now is that the market has seen both its high and low for the year. He's inclined to be a seller of S&P 500 (SPY) rallies above 3,000, and a buyer below about 2,650.
For bulls, the potential for more bad news, i.e. a possible 2nd wave of infections as the economy reopens, likely caps upside. For bears, the bad news (and the market's reaction) won't ever be as bad as it was in late February to mid-March, likely putting a floor on the downside.
Bensignor cut his teeth as a pit trader, and he's got plenty to say on the subject as it pertains to crude oil. First, novices need to avoid trading the U.S. Oil Fund (USO), which is no longer a very good proxy for front-month oil. Second, he sees oil's current rally topping out in the mid-$30s, which would somewhat fill the gap set in early March when the Saudis over a weekend launched a price war and sent crude plunging on the Sunday evening open.
Moving to gold (XAUUSD:CUR), Bensignor is a long-term bull, but currently kicking himself a little bit after cashing in on the current rally about $40 per ounce ago. He's looking for a spot to get back in, believing the global central bank rush to paper over the current crisis means new highs are in store for the metal. The next level of resistance: Roughly $1,780-$1,805.
As opposed to the oil ETF, he's got no issue with the popular SPDR Gold Trust (GLD) or the iShares Gold Trust (IAU) as acceptable vehicles. And don't forget the folks who actually mine the yellow metal - the VanEck Vectors Gold Miners ETF (GDX) two weeks ago broke through long-term resistance.
There's plenty more, including Task and Alpher discussing some of last week's big stories, the dour outlooks by the Jay Powell, Stan Druckenmiller, and David Tepper among them.
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The reasons behind the rally, and the coming inflation - Cullen Roche talks with Alpha Trader May 12, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Cullen Roche, the founder and chief investment officer at Orcam Financial Group, and author of the Pragmatic Capitalism blog.
First up for discussion is Friday's employment report, the massive numbers of jobs lost, and stock investors reacting by continuing to buy low and sell high. Roche isn't expecting another Great Depression for a couple of reasons ... 1) Today's U.S. economy is so much more diverse, and 2) The response this time around - trillions in fiscal and monetary stimulus - is 180 degrees different than that of the 1930s, when policies were tightened in response to the downturn.
So, contends Roche, the stock market - marching higher in the face of bad economic data - is pricing in what just might be super-high, or even record corporate profits in 18-24 months. See also Roche's recent article: "What the hell is the stock market doing"
As for the sectors/names that have led the rally, Roche says there's very good reasons stocks like Amazon (AMZN), Peloton (PTON), and Zoom Video (ZM) have done so well during the pandemic, but he's skeptical such outperformance is sustainable.
Roche, in fact, suspects value stocks - which have suffered relative to growth for many years - may soon have their day. Why? There's a not negligible chance of rising inflation becoming the story within a couple of years. Growth is where you want to be in times of disinflation, says Roche, but it's the staid, Buffett-like plays that do well in the opposite environment.
There's plenty more, including Roche's take on The Oracle's ([[BRK.A]], [[BRK.B]]) reluctance to put any money to work, and his thoughts on Bitcoin (BTC-USD) in the wake of Paul Tudor Jones' recent investment in the most-popular of cryptos.
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What's next after the big bounce - Mark Dow joins Alpha Trader May 05, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the markets with fund manager and Behavioral Macro blog author Mark Dow.
Prior to chatting with Dow, Task and Alpher consider that we might be entering a new phase for markets. Phase one was the panicky crash from late February into mid-to-late March, and phase two was the straight from central casting big bounce.
The "hard" part may be starting now. The idea of a re-opening economy may seemingly have the bears on the defensive, but the bulls need to ponder profits, or lack thereof. Amazon (AMZN) plans on spending its anticipated $4B+ in profits in Q2 on safety measures for workers and customers, and business is booming for the House of Bezos. Pity the retailer or restaurant that - even if allowed to open - will surely be doing so at reduced customer capacity and higher labor costs.
Following the stunning move higher, Mark Dow is now positioned for some momentum to the downside. He turned from being bullish only last week after the market was unable to rally despite a decent amount of good news - Wednesday's Fed meeting and pledge to support markets, positive data on Gilead's (GILD) COVID-19 treatment, and strong results from important players like Apple (AAPL) and Amazon.
But shouldn't the Fed's continued pumping assure that markets march even higher? No, says Dow. Fed liquidity is important to keep the engine of the system running, but the money the central bank "prints" doesn't find its way into equities unless investors place it there. While the Fed might assist through a placebo effect, ultimately it has to be investors taking on more risk appetite.
There's plenty more, including Dow's review of Fed Chair Jay Powell (Cliff's Notes: Thumbs up), why he likes the homebuilders (XHB), and his continuing thesis that a shortage of investable assets ultimately means good things for stocks.
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Adam Feuerstein talks COVID-19 treatments and vaccines on Alpha Trader Apr 28, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking COVID-19 treatments and vaccinations with Adam Feuerstein of Stat News.
Much of the treatment talk has been about Gilead's (GILD) remdesivir, and Feuerstein - who has been at the center of much of the reporting - takes us through those ups and downs. First, there was anecdotal evidence on April 16 out of Chicago which suggested the drug as being almost miraculously effective - the news set off a nice move higher in Gilead (more on that later), and a furious rally in the broader markets.
Next, there was a "leak" one week later out of the WHO that a trial of the drug in China was a flop - the news took the starch out of a sizable rally in stocks that day. Finally, one day after that, there was a report that results from U.S. government's all-important trial of remdesivir were going to hit in mid-May, and chatter that those results might show the drug as being effective.
Feuerstein does find it somewhat curious that Gilead's stock rises and falls with the news about remdesivir given that the company has more or less said it will give the drug away (after recouping costs). The halo effect? Possibly, but Gilead has added nearly $20B in market cap over the past three months.
In any case, Gilead reports Q1 earnings after the close on Thursday - it might make for a good time to report on remdesivir results from one of the company trials (not from the above-mentioned U.S. government trial).
Feuerstein reminds that remdesivir is only a treatment for COVID-19, and even in a best-case scenario will be effective in curing only certain patients. What the world ultimately needs is a vaccine, and there are currently five in clinical development, i.e. being tested on people. There are a number of others in pre-clinical development as well.
One of the more advanced at this time is Moderna (MRNA), and that stock has nearly tripled over the past couple of months. Major pharmaceutical players (and experienced vaccine hands) Johnson & Johnson (JNJ), Pfizer (PFE), GlaxoSmithKline (GSK), and Sanofi (SNY) are also hard at work.
Vaccines, however, take time to develop. If all goes right, says Feuerstein, we're looking at 12-18 months. Any stumbles, and it would take even longer.
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Time to get tactical - Michael Gayed on Alpha Trader Apr 21, 2020

With hosts Aaron Task and Stephen Alpher taking the week off, this week's Alpha Trader features Seeking Alpha Marketplace head Daniel Shvartsman chatting with Michael Gayed of the Lead-Lag Report.
The question at hand, asks Gayed: Is the Fed going to win in its fight against the massive deflationary forces facing the economy? Gayed thinks not. Instead, he believes we're in a perpetual period of lower rates, disinflation, and market volatility. It's time for investors to get "tactical," he says.
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Bottoming is a process - Helene Meisler joins Alpha Trader Apr 14, 2020

This week's Alpha Trader podcast with hosts Aaron Task and Stephen Alpher features a return appearance by Wall Street technician and current Realmoney.com columnist Helene Meisler. Following that, it's Seeking Alpha's Daniel Shvartsmann talking tech with Chaim Siegel of Elazar Advisors and Nail Tech Earnings.
That we might have hit a "V-shaped" bottom a couple of weeks back is generating plenty of chatter, but Meisler has spent her time studying a few other bear markets. What she found is that bottoming is a process that's likely going to take some time - weeks, if not months.
To try and draw a picture, Meisler says the pattern tends not to be a "V," nor will it be a "W," but instead try to imagine the symbol for a square root.
Among the indicators Meisler is looking at are moving averages, and not just for stocks. She takes note of AAII Investor Sentiment data, and the four-week moving average of bears a couple of weeks back got to 50% - the big bull move ensued shortly after. To gauge for when this rally might be petering out, keep an eye for when the average of bears begins to turn noticeably lower.
Next up, Shvartsman and Siegel discuss whether the tech sector can continue to outperform. Siegel's approach is more trader-oriented, so he doesn't look for relative outperformance, but instead talks about why the sector has upside for the long term. He breaks down the various inputs the market will be looking at as earnings season begins, and which quarter will matter most. Lastly, he shares why he likes the video games subsector.
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Bear market bounce - J.C. Parets returns to Alpha Trader Apr 07, 2020

This week's Alpha Trader podcast features a return appearance by J.C. Parets of All Star Charts. Following Parets is a special report on Simon Property Group (SPG), with Seeking Alpha's Daniel Shvartsman talking with Julian Lin of the Best of Breed Marketplace service.
Parets tells hosts Aaron Task and Stephen Alpher that the recent action in stocks is looking like a classic bear market bounce. Why? To name a few reasons: The list of stocks, sectors, and global indices making 52-week lows continues to grow, breadth expansion continues to the downside, and the leading sectors of the bounce were defensive ones like utilities and consumer staples.
In a new bull market, we'd instead be seeing sectors like tech, communications, industrials, consumer discretionary, and financials leading the way. Then there's the bond market, and with it continuing to make all-time highs (yields hitting all-time lows), Parets just isn't buying the bull market argument.
One other indicator: Parets wants to be a buyer when 15% of stocks are trading above their 200-day moving average. Right now, we're at 6% and headed lower (this was recorded prior to Monday's 7% gain for the averages).
Next up, Julian Lin sits down with Daniel Shvartsman to discuss his outlook for the roughed-up mall sector.
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Nationalizing the markets - Jim Bianco talks with Alpha Trader Mar 31, 2020

This week's Alpha Trader features hosts Aaron Task and Stephen Alpher talking with Jim Bianco of Bianco Research about the "nationalization" of large swaths of the financial markets.
Prior to the chat with Bianco, Task and Alpher mull the major bounce in stocks over the past few sessions. They note that the bear markets of 2000-2002 and 2007-2009 had any number of "face-ripping" rallies, only to reverse and make new lows shortly after. The easy call for now is that this too is another face-ripper, but Task reminds that we've seen plenty of historic moves this year. It's probably not likely, but maybe the trillions being thrown around by the Fed and the government did help put the bottom in last Monday.
In case anyone forgot, Bianco reminds that the Fed is only allowed to buy securities directly guaranteed by the federal government. What's unique about the current rescue plan is the central bank's move to buy investment-grade corporate bonds and ETFs that mostly hold such bonds. How? By creation of a special purpose vehicle which the Treasury has capitalized, and the Fed has made financing available to.
So here we are. What started in 1987 - when Alan Greenspan ended the crash by stating the Fed's willingness to support markets - has progressed over the years to the point where now the central bank (in conjunction with the Treasury) has had to more or less nationalize financial markets in order to stop the bleeding.
Any number of market watchers over the past thirty years have looked at exploding government deficits, and come away bearish on bonds. Jim Bianco isn't one of them. The massive stimulus program this time around, however, might have Bianco changing his tune. The new spending alone is going to make the current $1T deficit seem puny, and if it happens to work - if the economy gets moving again - we're bound to see some move higher in inflation.
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'No way to value equities' - Jeff Macke talks with Alpha Trader Mar 24, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Jeff Macke about retail amid the pandemic panic.
Prior to the chat with Macke, Task and Alpher mull the speed with which markets have plunged through any number of bazookas fired by the Fed (Editor's note: Roughly 48 hours after the recording of this podcast, the Fed announced an even larger bazooka - unlimited QE, the purchase of corporate paper, and a dusting off of the financial crisis' TALF facility - markets continue lower).
Goldman Sachs on Friday predicted a 24% annualized contraction in Q2 GDP, and then St. Louis Fed President Jim Bullard over the weekend said he thought GDP might contact 50%, with the unemployment rate rising to 30%.
The best advice might be to try and not pick a bottom, with Task and Alpher noting the financial crisis low didn't come for several months after the Lehman collapse, any number of Fed interventions, and the passage of TARP. Very slowly putting money to work might be the way to go.
"There is no way to value equities on future cash flows in this situation," says Jeff Macke. "It's not even possible to pretend. We don't have enough information." Run away from anyone telling you they can figure things out, says Macke, and run doubly fast from any company management saying they can offer reasonable guidance.
If you want to see who is on top of things right now, check and see who has updated their app, suggests Macke. Business isn't usual for anyone, but it'll give you an idea of which players are still fulfilling orders, still getting at least some facsimile of their business done. He notes a place like The Gap (GPS), which already had plenty of work to do in its online business - that's going to be really hard to do when there's a "goose egg" on the top line.
As for possible changed consumer behavior, Macke reminds that more than half the stuff sold on Amazon (AMZN) doesn't come from Amazon. Should the current situation continue a lot longer, the product you order off of Amazon may or may not show up, and you may not know anything about whoever sold it. This could be an advantage for Target (TGT) and Walmart (WMT) with their well-developed supply chains, and ability to stand behind what they sell.
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Navigating the panic with Alpha Trader Mar 17, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the market panic from COVID-19, and chatting with The Schork Report's Stephen Schork about the crash in crude oil.
Editor's note: This podcast was recorded late last week - prior to the market's 10% gain on Friday, 12% loss on Monday, and 100 basis point Fed rate cut in-between.
The speed of the market decline has shaken everybody up, but Task and Alpher figure there are a couple of things we can count on. One is that the Fed will somehow stumble its way into making sure that the liquidity is there for the financial system to continue operating. The other is that instead of trading or rushing to pick a bottom, those who spend their time researching and putting together a solid buy list of names will be rewarded.
Be greedy when others are fearful is the Warren Buffett maxim, and while The Oracle may not yet have hit the "buy" button, it's a near-certainty his next move(s) will be the purchase of sizable chunks of good businesses selling at discount prices.
Spying a drop in demand prior to the coronavirus, and then the growing pandemic compounding those issues, Stephen Schork had already been bearish on oil prices, and fully expected OPEC to reach an agreement on a production cut at that fateful meeting about 10 days ago. That didn't happen thanks to Russian intransigence, and the Saudis responded hours later by launching an all-out price war, sending crude crashing well below where Schork's bearish models had forecast.
So why would Russia not go along with production cuts? The answer may lie in Russia's (not to mention Saudi Arabia's) desire to take American shale producers down a notch or three. Schork notes U.S. oil production is up 10% Y/Y, making the U.S. the globe's largest producer, not to mention a sizable net exporter of black gold. The battle for market share is on.
As for American shale producers, many of them are over-leveraged, and won't survive this shake-out. Some will go bankrupt, some will get taken over, but major consolidation is on the way. That's good news for big players like BP (BP), Shell ([[RDS.A]], [[RDS.B]]), and Exxon (XOM) who are going to be able to pick up great acreage at fire-sale prices.
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Alpha Trader talks virus fallout with Ryan Detrick and Joe Brusuelas Mar 10, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the market fallout from the coronavirus with LPL Financial's Ryan Detrick and the economic fallout with RSM's Joe Brusuelas.
Editor's note: This podcast was recorded on Friday March 6th - prior to the weekend collapse in the oil price adding to the coronavirus panic.
Detrick has been prepping clients for a pullback for some time, and he notes the correction at the time of recording (just over 12%) was roughly inline with other annual peak-to-trough measures in recent years. What's unusual this time is the massive flight to safety as seen in the huge declines in Treasury yields.
Yes, says Detrick, there will be an economic slowdown coming up, but stocks and yields at the moment are pricing in something way more than that. What may put a stop to the selloff might not even have to be good economic news, but instead just less-weak-than-feared data.
Were you aware that stocks in China - ground-zero for the coronavirus - are at two-year highs? Whether or not one believes the government figures that the damage from the coronavirus has been contained, says Detrick, the financial flows don't lie - money is moving into Chinese shares.
Bottom line, says Detrick, the earnings yield on the S&P 500 is in the neighborhood of 5%, while the 10-year Treasury yield is below 1%. That's a spread of more than 400 basis points - one of the cheapest reads on that measure going back 70 years. Cheap can absolutely become cheaper, but Detrick and team are telling clients stocks will outperform bonds over the next 12 months.
It's a highly unusual three-way shock facing the U.S. economy, says Joe Brusuelas - that's a supply shock, a demand shock, and a market shock. Even with all that, he's not expecting a recession, but instead an H1 slowdown to less than 1% growth (mostly to be seen in Q2 data).
The Fed cut was necessary, says Brusuelas, even if it might be ineffective at addressing the causes of the recent troubles. The issue, he argues, is that nothing - for now - is moving on the fiscal side, and that's what's really going to be needed to combat this slowdown.
Going forward, these shocks are going to manifest themselves in bankruptcies and unemployment, particularly as it relates to small- and medium-sized enterprises. The president and Congress are going to need to work together and be creative. This president and this Congress? Yes, says Brusuelas, and if things get bad enough, the two branches will find common ground to get things through. Even something like the payroll tax break that's been bandied about is a great idea. Brusuelas reminds that this was a feature of the crisis response in the Obama administration, so there is some precedent.
Brusuelas looks at plenty of indicators, but if he had to pick just one it would be the 13-week moving average of initial jobless claims. When it moves above 242K, it's time to get worried. While only about 212K now, the layoffs at the West Coast ports have begun, says Brusuelas. He figures it'll take about 2-3 weeks before those begin to translate into the jobless claims numbers.
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Alpha Trader discusses the selloff with Dan Alpert Mar 03, 2020

This week's Alpha Trader podcast features Westwood Capital Managing Partner Dan Alpert, who has a bit of a variant perception of last week's coronavirus-related market panic.
The selloff, Alpert suggests, has more to do with where markets stood prior to the coronavirus making such loud headlines. He reminds that the SARS and Ebola scares didn't affect risk assets all that much. Markets prior to last week were too perky and ready for a correction - the coronavirus provided the excuse to sell.
Also at work, says Alpert, is a "recognition of pre-existing weakness." Economic growth in China was already slowing thanks to massive overcapacity, massive infrastructure build, and massive real estate build. The virus will be contained at some point, but that's not going to cure the necessary China slowdown.
Mulling a possible policy response in the U.S., Alpert doesn't expect a fiscal boost to be able to get through in a presidential election year. The Fed could cut rates, but Alpert reminds we've already been at zero-to-negative real rates for many months (Editor's note: Podcast was recorded on Friday 2/28. The Fed announced an emergency 50-basis point rate cut on 3/3). A move might inspire some confidence and a market bounce, but will do nothing to boost investment or economic activity.
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Alpha Trader talks 'new paradigm' tech with Mark Hibben Feb 25, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking tech - particularly "new paradigm" tech - with Mark Hibben of Rethink Technology.
Before that, the hosts chat about the rapidly developing coronavirus situation. What's sure to be a very sizable economic slowdown - in China, of course, but clearly also spreading elsewhere - can no longer be denied. That's bringing Fed rate cuts in 2020 back into play, and while Fed speakers are playing it cool for now, it seems just a matter of time before they signal their readiness to move.
While market averages (at least until Monday) have mostly brushed off these concerns, Task takes a look at the stocks other than mega-caps Microsoft, Apple, Google, and Amazon, and popular high-flyers like Tesla and Virgin Galactic. What he finds is that the bear market is well underway for more than half of the Nasdaq.
Hibben is keeping his eye on the coronavirus as well. His base case, for now, is that this is a one quarter event. Even if stretches to two quarters - i.e., a real recession - Hibben would welcome the opportunity to buy the dip in favored names like Apple (AAPL), Nvidia (NVDA), TSCM (TSM), and Microsoft (MSFT).
What Hibben calls new paradigm semiconductor companies (mostly Apple, but others as well) are those that design most of the processors put into their products. At first derided as a Steve Jobs folly, Hibben argues that the move to make custom chips has been perhaps the major reason for the massive profits at Apple over the last decade. Apple's chief competitors, Samsung [[(SSNLF), (SSNNF)]] and Huawei have now followed suit.
Is Amazon (AMZN) new paradigm? Yes, says Hibben, who argues that the most important server processor introduced last year did not come from either AMD (AMD) or Intel (INTC), but from Amazon (AMZN), which in December announced the Graviton 2 based on ARM architecture. It's claiming 40% higher price performance than options from either AMD- or Intel-based options.
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Alpha Trader #18 - Alpha Trader Asks If Things Are Getting Too Perky Feb 18, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher chatting with Kevin Simpson of Capital Wealth Planning.
For a few months now, Task and Alpher have held that the Fed successfully engineered a soft landing in 2019, leading to a healthy bull market, a la 1995. The action of late though has them questioning whether we're now closer to a bubbly late-1999 scenario. They remind that Cody Willard was on the podcast just weeks ago making the bull case for names like Tesla (TSLA), Virgin Galactic (SPCE). They've both gone parabolic since, making even Willard wonder whether things have gotten too perky.
With plenty of other news surrounding markets, many didn't pay attention to Fed Chair Jay Powell's congressional testimony, but - in a time of record-low unemployment, minuscule interest rates, record-high equities, and a $1T government deficit - he called on Congress to do more to support the economy. It indicates that another recent Alpha Trader guest, Tony Dwyer had it right when he argued about a sea change in thinking at the Fed - the central bank has given up the inflation battle and is instead laser-focused on not allowing a Japan- or Europe-like deflationary environment take hold. Invest accordingly.
Acknowledging the hit to earnings from the coronavirus for plenty of the large-cap dividend growers he likes to hold, Kevin Simpson reminds it's not likely to affect the long-term profit power of players like Disney (DIS), Home Depot (HD), and Walmart (WMT). A writer of calls on the names he holds, Simpson recently had his Apple (AAPL) called away. A longtime owner of Apple, Simpson says it's not the first time he's been out of the stock during its run higher. It remains one of his favorite names, and he expects to be able to buy it back cheaper than it is today.
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Alpha Trader #17 - Fear turns into fear of missing out - Alpha Trader talks with Helene Meisler Feb 11, 2020

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with veteran Wall Street technician and current Realmoney.com columnist Helene Meisler.
Was that it? The great correction of early 2020 was a relatively brief and shallow one. Just days after a bit of fear entered the markets, the major U.S. averages are marking (or close to) new all-time highs. Meisler expects another modest move down is necessary to wring out a few more of the excesses that were evident a few weeks ago.
The moonshot in Tesla (TSLA) is the very definition of parabolic, says Meisler, and while the move down has been panicky (as one would expect), she's looking at the $650 area for support. That discussion leads to a bullish idea: The anti-Tesla, i.e. energy.
The sector has underperformed for some time, and January's plunge might have been the washout necessary for a bottom to form, says Meisler. The ESG fad (or not a fad), the rise of Tesla, fracking ... At some point the bad news has been priced in. Meisler is keeping her eye on the Energy SPDR (XLE), noting it's managing to hold above support even as oil is making new lows.
Another underperformer has been the banking sector, and Meisler thinks the chart of the KBE Bank Index (KBE) vs. the S&P 500 (SPY) has already put in a bottom.
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Alpha Trader #16 - The correction begins: Alpha Trader talks with John Roque and Sri Thiruvadanthai Feb 04, 2020

This week's Alpha Trader podcast features Wolfe Research Managing Director John Roque, and Jerome Levy Forecasting Center Director of Research Sri Thiruvadanthai.
Roque's technical indicators prior to last week were clearly pointing to a coming correction, and the coronavirus scare was the excuse needed for markets to begin heading down. Folks are already wondering when to buy the dip, but Roque notes the move lower has been very modest both in terms of points and time. With the S&P 500 (SPY) at around 3,250, Roque's got his eye on 3,100 before he might consider turning bullish again.
The action has been particularly ugly in energy (XLE), with one midcap index Roque follows down a full 23% just in January! On this, the charts are pretty clear to Roque - crude oil (USO) looks set to test its 2016 lows in the low-$30s (vs. the current $51). Gold (GLD), on the other hand, is looking very good on the charts, plus - as is typical - sentiment is lame, and the yellow metal remains "underowned" by most. Roque's looking for a new all-time high this cycle, surpassing $1,921 seen in 2011.
Before we get too bearish on equities, Roque reminds that the Federal Reserve bank is always at the ready to support markets with whatever tools it has.
The U.S. budget deficit is now forecast to top $1T this year, or 4.3% of GDP, and stay at or above those levels for the foreseeable future. Sri Thiruvadanthai isn't a full-on believer in Modern Monetary Theory (which is wholly unconcerned with deficits for a government that prints its own money), but those folks do have some valid points, he says - most importantly, that default can't happen unless a political decision is made to do so.
The flip side of the choice not to default, however, is inflation, and that is certainly a valid concern at times, says Thiruvadanthai. This, however, isn't one of those times. The Fed has missed its inflation target (from the downside) for eight years running, he says, and the streak looks to be going to nine in 2020.
More concerning to Thiruvadanthai is that the deficits are so high given 50-year lows in unemployment. It suggests to him that "beneath the hood" the economy isn't as strong as it seems, and is being propped up by the deficit.
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Alpha Trader #15 - Fear of missing out turns into fear Jan 28, 2020

The one-way stock market has gotten its excuse to reverse course a bit with the coronavirus panic. Even with the skittishness, hosts Aaron Task and Stephen Alpher note it's only been the most modest of pullbacks so far. Even if inclined to buy-the-dip (and the hosts lean that way), there's no need to rush to do so.
The question at hand: Is the market in a 1999 topping-out scenario or a mid-90s correction within a major bull market? Paul Tudor Jones, Seth Klarman, and even corporate gadfly turned stock-picker Ralph Nader are in the 1999 camp. Bridgewater honchos Ray Dalio and Bob Prince, and Appaloosa's David Tepper, on the other hand, remain bullish. Dalio - holding court at Davos last week - declared "cash is trash."
Dalio's partner Prince even suggested the boom/bust cycle is kaput. The globe's major central banks are in a box, he says, not wanting to hike because of secular deflationary forces, and not wanting to ease in order to have some bullets in the chamber should a downturn hit.
The focus at the moment is on the coronavirus, but this week will see some major Q4 earnings reports, Tesla (TSLA), Apple (AAPL), and Caterpillar (CAT) among them. Tesla's surge is arguably the largest single story in stocks over the past months, and Task wonders exactly how big a number will the company have to report to keep the momentum going. Instead of guessing, the hosts decide to see how the market reacts to either the good or bad news. They point to the recent case of Five Below (FIVE), which tumbled about 20% in response to disappointing holiday sales. Several sessions later, most of that drop had been recouped. A bull on the name might be inclined to stay so.
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Alpha Trader #14 - The next really big thing - Cody Willard talks with Alpha Trader Jan 21, 2020

Hedge fund manager and editor of Trading With Cody, Cody Willard joins Alpha Trader hosts Aaron Task and Stephen Alpher for this week's podcast.
The episode begins with a discussion of Tesla (TSLA), and Willard - who was a longtime bear on the company (but never short) - began buying close to last year's lows alongside the introduction of the Model 3. Making him even more bullish was the unveiling of the cybertruck. Willard believes every car on the planet over the next five-to-ten years is going to be using some version of the cybertruck's exoskeleton.
It's hard to find hated names in today's one-way stock market, so Willard - strongly bullish long-term - has been doing some trimming around a few long-held positions. "Feet to fire" though, Willard's favorite five stocks are Disney (DIS), Virgin Galactic (SPCE), Spotify (SPOT), Qualcomm (QCOM), and Cisco (CSCO), and Willard spends some time explaining why he's a fan of the companies. Task notes that Cisco kind of deserves the hated name moniker - after all it's down nearly 20% from since mid-summer 2019.
It's the truly revolutionary ideas and industries where we can find future 100- or even 1,000-baggers, says Willard, and space exploration has the potential to be the largest such revolution ever. People are spending too much time worrying about what demand might be for Virgin Galactic's $250K space flights, and not nearly enough time appreciating the technologies that will arise from such activity. Publicly-traded pure plays for space are tough to find beyond SPCE, but Willard is also an owner Aerojet Rocketdyne Holdings (AJRD) and Boeing (BA) on the space idea. He's also an investor in privately-help SpaceX (SPACE).
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Alpha Trader #13 - Don't fight the Fed - Tony Dwyer talks with Alpha Trader Jan 14, 2020

Canaccord Genuity Chief Market Strategist Tony Dwyer joins Alpha Trader hosts Aaron Task and Stephen Alpher to kick off the podcast's 2020 season.
Dwyer was among the more bullish strategists last year - and he remains constructive on stocks - but the market's big rise leaves the S&P 500 (SPY) only about 5% below his 2020 target. At the root of Dwyer's bullishness last year was the Fed's about-face, with a switch to rate cuts throughout 2019 vs. the previous years' rate hike cycle.
Currently, a number of technical and sentiment factors are pointing to over-exuberance, says Dwyer, and he's expecting a modest pullback in stocks (timing to be decided upon). The bull market remains intact though, and Dwyer would be a buyer on the dip, particularly in economically sensitive sectors like financials (XLF), industrials (XLI), and information technology (XLK).
Dwyer believes there's been a generational shift in thinking at the Fed, with the central bankers now way more worried about the U.S. becoming the next Japan or Europe, rather than inflation getting to perky. It could be a "very, very long time" before the Fed embarks on another series of rate hikes.
Dwyer also weighs in on the Fed's massive injections of liquidity into the repo market. Smart folks can argue about whether this is simply necessary plumbing or a stealth QE, and Dwyer is happy to defer to their opinions. Bottom line, says Dwyer: "Who cares?" Call it whatever you wish, but the Fed is telling you it's going to inject tens of billions into the system each month. Invest accordingly.
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Guest Episode - Value Investor's Edge Live With Flex LNG's CEO Jan 07, 2020

We're sharing an episode from our Value Investor's Edge Live podcast, hosted on our The Investing Edge channel, in place of our normal Alpha Trader show (which will return next week). This episode features our host, J Mintzmyer of Value Investor’s Edge, speaking with Oystein Kallekev, CEO of Flex LNG, about the overall LNG shipping markets, US-China potential, and IMO 2020 impacts. Shipping has been one of the most buzzed about sectors in the market in recent months, and J is one of the leading experts in the field. We hope you enjoy.
Topics Covered:
1:45 minute mark - Start of discussion- Market review: LNG sentiment now terrible?
4:15 - What market differentials exists between modern and older carriers?
8:05 - Precisely what sort of premium can investors expect to see?
9:35 - Any clear impacts or benefits from the US-China 'Phase 1 Deal'?
13:45 - Do steam propulsion LNG carriers have a future?
17:15 - Any major new technologies on the horizon? 2030 carbon reduction?
22:15 - What about TFDE propulsion? Is there a clear future for these?
26:00 - Are there any direct impacts coming from IMO 2020 regulations?
30:40 - Are you planning to increase your charter coverage into 2020?
35:35 - What are your capital allocation priorities with extra free cash?
40:05 - Will dividends be closely tied to earnings going forward?
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Alpha Trader #12 - The coming reflation: Michael Gayed talks with Alpha Trader Dec 31, 2019

Alpha Trader concludes its first season with an interview of Michael Gayed, a prolific and well-followed Seeking Alpha contributor, and also the editor of The Lead-Lag Report.
Inflation expectations have bottomed out, argues Gayed, and if reflation is the theme going forward, that means good things for some lagging equity sectors - notably financials (XLF), emerging markets ([[EEM]], [[VWO]]), and commodities like energy (XLE). On the flip side, reflation would mean just the opposite not just for bonds (TLT), but for anything yield sensitive - REITs ([[IYR]],[[VNQ]]) come to mind.
The government needs inflation, says Gayed, to ease the burden of the many trillions in debt it owes. The Federal Reserve needs it as well, he contends, to allow it the room to raise interest rates from still-extreme low levels that it might have the space to ease during the next downturn.
When reading economic tea leaves, sometimes simple is best. The average home contains massive amounts of lumber, says Gayed. Thus lumber prices can be fairly directly connected to expectations for the future of construction and housing. And if you can figure what's going to happen with construction and housing, you've probably got a pretty good idea of what's going to happen with the economy. For the moment, the action in lumber (up big over the last few months) is giving Gayed confidence in his reflation theme.
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Alpha Trader #11 - Alpha Trader looks back and ahead Dec 24, 2019

Alpha Trader's 11th episode features hosts Aaron Task and Stephen Alpher riffing on the year just passed, and mulling what might be to come in 2020.
Before getting into 2019, Task reminds just how poor 2018 was - with negative returns across pretty much every asset class of note. That red ink came alongside what turned out to be the end of a multi-year Fed tightening cycle. 2019 brought with it Fed easing, and the market responded by moving sharply higher. The "soft landing" having been achieved, the Fed appears happy (for now) to sit on the sidelines in 2020.
The current period reminds Alpher of the mid-90s, when markets had a bit of a rough go it in 93-94 while Alan Greenspan and company were hiking rates, but bounced in 1995 when the Fed eased a bit. The soft landing set the stage for several more years of a bull run. Staying in the mid-90s, Task digs out The Maestro's famous "irrational exuberance" quip, and says there's nothing approximating that right now. He notes a recent poll in which most respondents said the market was down this year (S&P 500 is up 27% at the moment)!
Being bullish for 2020 doesn't mean it's straight up from here, and the hosts remind the late-90s bull move had sizable hiccups in 1996, 1997, and 1998. They remark that there hasn't been a bear in a long run of Alpha Trader guests - from Eddy Elfenbein to J.C. Parets to Ryan Detrick to Jim O'Shaughnessy to Mark Dow to Jon Najarian.
Task also comes back to the Fed's repo operations which is injecting 10s of billions of dollars into the reserve system each month. He wonders if there's a parallel with the Fed's 1999 liquidity injections to stave off Y2K fears. The Y2K worry proved to be unfounded, and the Fed's goosing did little but help create the final blow-off top of the 90s bull market.
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Alpha Trader #10 - Trading game has changed, but alpha remains - Jon Najarian chats with Alpha Trader Dec 17, 2019

Alpha Trader's 10th episode features longtime options trader Jon Najarian. Well-known for his CNBC appearances, Jon (along with his brother) is currently hanging his shingle at Market Rebellion.
Don't even try to profit by reacting to the headlines, says Najarian. The machines are way ahead of even the most sophisticated traders. Instead, he says, have a plan in place for what names/sectors are going to be able to sustain a move after the headline has worn off.
Getting to specifics, Najarian has put in place his plan for the trade war. He thinks there will be a resolution (and indeed both sides appeared to acknowledge a deal while this episode was being taped), but also that China - its economy under pressure thanks in part to trade - will continue to pump massive amounts of liquidity into the markets. His largest derivative position at this time is thus the iShares Emerging Markets ETF (EEM).
Najarian is a big fan of the CME's newish Micro E-mini futures contracts, which allow individual investors to get in the futures game with far lower capital than even the E-mini futures. And it's not just about opening a position with a very modest margin requirement, but small players can now more easily tweak those positions as the time and price changes.
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Alpha Trader #9 - What the bears keep getting wrong - Mark Dow talks with Alpha Trader Dec 10, 2019

Alpha Trader's ninth episode features Behavioral Macro blog author and former hedge fund manager Mark Dow.
Dare we say, "goldilocks?" The economy continues to move forward without inflation moving higher, says Dow. As for asset prices, lingering fear of the financial crisis is keeping animal spirits somewhat in check. Add it up, and Dow sees the Fed happy to stay on hold well into the next year even as short-term rate markets are (kind of) pricing in another rate cut in 2020.
Dow puts to bed the idea that central bank liquidity is driving the economy and the stock market higher. He notes both the economy and stocks surged from 2015 on even as the Fed was pulling liquidity from the markets (until the recent rate cut cycle). Instead, we can thank the big surge in growth to the big post-election fiscal stimulus package, and as that's worn off, the GDP numbers have come down to more sustainable levels.
Dow reminds that folks are more likely to take on risk when they're comfortable in their jobs and their situations. And we can add in a third factor - when they see people around them making money. Those three items - far more than the level of interest rates - drive risk-taking.
How is Dow positioned going into 2020? He's long for the reasons stated above, but also because he believes there's a "shortage" of both high-quality assets like Treasury paper, and stocks. If you think the permabears are upset now because of their failed macro call, says Dow, wait until valuations go even higher as investors look to put money to work in a stock shortage environment.
Bitcoin is the most "pattern-perfect" asset he's ever seen, says Dow, and what the charts are telling him now is that it's dying. Assets in bull markets typically don't make significantly lower highs, says Dow, and that's what Bitcoin has done.
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Alpha Trader #8 - Talking tariffs, holiday sales, and OPEC at Alpha Trader Dec 03, 2019

The eight episode of Alpha Trader features longtime energy trader Bob Iaccino of Path Trading Partners.
Asked to handicap this week's OPEC meeting, Iaccino doesn't expect additional production cuts (nor does he see the cooperation for cuts in the future). One reason is OPEC's dwindling influence over the global crude market. He notes the previous cut had little effect, and OPEC likely realizes it would take a drastic reduction to really move prices higher. Another reason is the Saudi Aramco IPO - the company is now answerable to shareholders instead of The Kingdom, and is likely to have greater focus on things like profits and dividends.
On whether the beat-up energy sector (XLE) might be a good investment, Iaccino isn't so sure. Not "big on correlations," Iaccino believes that if you've got an opinion on crude oil, you ought to be trading crude oil futures, not energy names, nor ETFs like [[USO]].
Prior to chatting with Iaccino, Task and Alpher talk about Monday's tariff news - first the president re-imposing tariffs on Brazil and Argentina, and then Commerce Secretary Ross reiterating that December 15 is the deadline for China to make a deal or face higher tariffs. If 2019 has been the year when companies were able to sail past the difficult tariff news, will 2020 be the year when higher costs catch up?
The Fed meets this week, and isn't expected to continue with the rate cut cycle - news that surely won't sit well with the president. The central bank takes heat from everyone, but with the end of rate cuts (for now), it's worth considering whether the Fed has accomplished the so-called "soft landing."
Speaking of the economy, the early overall holiday sales picture is looking strong, with the online juggernaut continuing, but retailers like Walmart (WMT) and Target (TGT) adjusting very well, particularly with their in-store pickup initiatives. Amazon (AMZN) has been the category killer, but if Walmart and Target - with their well-located real estate - are going to become distribution centers, perhaps the onus is now on the House of Bezos to adjust.
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Alpha Trader #7 - The last sustainable edge: Talking with Jim O'Shaughnessy Nov 26, 2019

The seventh episode of Alpha Trader features Jim O'Shaughnessy, who helms O'Shaughnessy Asset Management, and is the author of several book on the market, including the seminal What Works on Wall Street.
"Arbitraging human nature is the last sustainable edge," says O'Shaughnessy when asked if "what worked" when that book was published (1997) still works today. In other words, yes, systematic and rules-based strategies still have a place for investors looking for alpha.
Passive investors, suggests O'Shaughnessy have one point of failure - things are cruising along, the market drops 20%, they start reading the headlines, panic, and sell ... often at the bottom. Active investors have an additional point of failure - that they will abandon a possibly successful, but underperforming strategy at just the wrong time.
Turning to the more practical, O'Shaughnessy talks about one favored strategy, and that's buybacks. It's underperformed of late, but the data going a long way back is pretty definitive - companies that are active in returning cash to shareholders do significantly better over time than those who spend the money otherwise. To be more specific, large-cap companies that are cheap, operate with low leverage, and are high-conviction in their buybacks (5% or more of the float) are the ones you want to look for.
Prior to chatting with O'Shaughnessy, Task and Alpher get ready for Black Friday by looking at some recent retailer earnings - in particular strong numbers from Walmart (WMT) and Target (TGT). Results and the 2019 price charts (up and to the right) suggest the consumer is doing just fine and both companies have successfully navigated the China tariffs.
The hosts also consider the rise in animal spirits as evidenced by what's quickly become a sizable wave in M&A activity. It might prove to be a harbinger of a Santa Claus rally as investors place bets on who's next to be taken over.
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Alpha Trader #6 - Talking Gold and Stocks with Scott Bauer and Ryan Detrick Nov 19, 2019

The sixth episode of Alpha Trader features not one, but two guests, with hosts Aaron Task and Stephen Alpher speaking to longtime gold trader Scott Bauer and stock market strategist Ryan Detrick.
First up is Detrick, who talks about the record-breaking length of this economic cycle - currently 124 months and counting. While this may suggest the bull run is getting long in the tooth, Detrick notes nominal GDP has grown just 50% over the 10 years, or roughly inline with post-war economic up-cycles. It suggests to him that there's room to run.
Detrick also reminds that the Fed has just completed a series of three 25-basis point rate cuts. The central bank did the same in 1975, 1995, and 1998, and on average, the S&P 500 was up 10% six months later and 20% a year later.
As for sectors, Detrick is excited that the financials (XLF) and industrials (XLI) look to be rotating into market leadership. Another favorite headed into 2020 is technology (XLK). But aren't stocks expensive? At 17.5 next year's earnings, says Detrick, the valuation of the S&P 500 isn't all that fancy when you factor in just 2% inflation.
And the question on everyone's mind: Holiday rally? Detrick checked the stats for years (like this one) where the S&P 500 has been up 20% YTD going into November. In those years, the market was green in November 100% of the time (7 out of 7), and green in December 86% of the time (6 out of 7).
While looking for a bounce in gold in the short term, Scott Bauer isn't as bullish on the longer-term prospect for the yellow metal. Why? Gold this year has benefitted from geopolitical worries and sluggish economic growth. Over coming years, Bauer expects many of these concerns to fade and global economies to synch upward - both should work to pressure gold prices.
As for actionable trades, Bauer is looking at the options market, and taking advantage of the current low volatility and his bullish short-term outlook. Low vol means options are relatively cheap, and he's got his eye on a March call spread at the CME struck nicely above the current price. The potential payoff, says Bauer, is 5-to-1.
Longer-term, Bauer isn't a huge fan of options as the premium can get too expensive. Instead he would recommend the Micro Gold contract on the CME, which has much lower margin requirements, thus allowing individual investors easier entry and the ability to scale into larger positions.
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Alpha Trader #5 - The Man Who Solved The Market with the WSJ's Greg Zuckerman Nov 12, 2019

The fifth episode of Alpha Trader features hosts Aaron Task and Stephen Alpher talking to the WSJ's Greg Zuckerman, author of The Man Who Solved The Market: How Jim Simons Launched The Quant Revolution.
Already a highly accomplished mathematician and successful commodities trader, Jim Simons in his mid-40s wanted more, and took his particular set of skills to the far deeper world of stocks. Equities trading then (the mid-80s) was dominated by fundamental analysis, but Simons didn't know the first thing about dissecting a balance sheet or income statement.
Simons (and team) relied instead on harnessing massive amounts of data into purely algorithmic strategies for trading stocks. Money soon began rolling in by the truckload - since 1988, Renaissance Technologies' flagship Medallion Fund has generated average annual returns of 66% and trading profits topping $100B. It's also changed the financial world. Today, so-called quants are the largest players in the markets, accounting for about 30% of stock trading.
Renaissance is famously secretive, but Zuckerman somehow found a few to open up (just a bit), including Jim Simons himself. It makes for a fascinating story. Sorry, no trading strategies are revealed!
Prior to their chat with Zuckerman, Task and Alpher mull last week's big move higher in interest rates. The surge in yields across maturities for now does away with the inverted curve, though it's only modestly sloped upward. The 10-year yield, however, remains relatively low compared to levels seen just a few months ago. Was last week's action the start of a larger trend?
Also up for discussion is today's highly-anticipated launch of Disney Plus (DIS), and what that might mean for the world of streaming, Netflix (NFLX) in particular. At $6.99 per month, Disney's service is a good deal cheaper than Netflix's most popular plan. While large numbers of folks might not ditch Netflix for Disney, the days of Netflix's pricing power may be coming to an end.
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Alpha Trader #4 - Jim Grant Talks The Fed, Uber, And A Long Idea Nov 05, 2019

The fourth episode of Alpha Trader features hosts Aaron Task and Stephen Alpher talking to Jim Grant, the founder and editor of Grant's Interest Rate Observer.
The business of modern-day central banking, says Grant, is the business of manipulating the most sensitive price in capitalism - the rate of interest. If Jay Powell can't seem to get anything right, it's because the very nature of his job assures he'll be wrong. At least, notes Grant, Powell hasn't taken the U.S. down the path of negative interest rates (yet).
Of the pressure Powell is getting from the man who appointed him to the role, Grant reminds this sort of criticism goes back to the days of Andrew Jackson, but Jackson - with Twitter unavailable - was perhaps a bit more tasteful about it.
Turning to the credit cycle, Grant believes we're at a precarious stage. Exhibit A is Uber, which at the Grant's offices is known as "interest rates on wheels." The company has about $12B in losses over the past few years, and today sits no closer to profitability (or even a path to it). WeWork is a similar story that at least got sniffed out before being sold to the public. Over the course of a few weeks, it went from a $50B valuation to needing a bailout to stay afloat. Efficient Markets Theory anyone?
Grant then brings up a unicorn maybe you haven't heard about, and that's German fintech player N26. Its co-founder over the summer told the FT, "In all honesty, profitability is not one of our core metrics." This, says an incredulous Grant, "is the kind of thing that causes the market gods to hurl down thunderbolts at us mortals."
Moving to long ideas, Grant is a fan of Altria. Yes, it's in the business of selling a product many don't approve of, but the inelasticity of demand for cigarettes over the years has been nothing short of remarkable. Altria continues to generate an enormous amount of cash, allowing for a current dividend yield of 7.5% - positively mountainous in these days of microscopic interest rates.
Prior to chatting with Grant, Task and Alpher discuss the latest Fed rate cut and employment report. The Fed on Wednesday gave off the vibe that it's done with the "mid-cycle adjustment," and the strong jobs number on Friday, for now, is making the central bank look good in that assessment.
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Alpha Trader #3: A divided Fed and a divided U.K. - The CME's Blu Putnam Oct 29, 2019

The third episode of Alpha Trader features hosts Aaron Task and Stephen Alpher talking CME Group Chief Economist Blu Putnam, with topics moving from the Fed, to Brexit, and then back to these shores and the U.S. economy.
The Fed is surely cutting rates this week, says Putnam, but the FOMC is quite divided - some are arguing that rate cuts aren't needed, and others are pushing for an even faster pace of monetary ease. He's going to be very interested in how Fed Chair Jay Powell navigates these differences at his post-meeting press conference.
The Fed's new bill-purchase facility isn't necessarily normal open-market operations plumbing, says Putnam, but neither is it a new QE program. There was no doubt some stress in the repo markets earlier this month, but Putnam reminds that volatility in overnight rates was way higher in the 90s, so perhaps today's market participants have just been put to sleep by the past years' calm conditions. As for the QE question, Putnam says there's a big difference between what the Fed is doing today and its program of a few years ago: QE involved the purchase of vast amounts of long-dated paper, while the current actions involve only very short maturities.
Moving across the pond, Putnam says Brexit is going to happen in one form or another, but what we're seeing is a lot of jockeying about who leads the U.K going forward. The Tories are divided and Labour is divided - the question for both is how they can play Brexit and then come out in power next year and beyond.
Ahead of the talk with Putnam, Task and Alpher continue to scratch their heads about how rate cuts are even part of the conversation given a 3.5% unemployment rate. Is President Trump really influencing the Fed, or is Jay Powell's "mid-cycle adjustment" just an attempt at what in The Maestro's days was called the "soft landing?"
Earnings season is well upon us, and Task notes that larger amounts of S&P 500 companies than normal are topping estimates. Is it good news, or just a good job by managements of massaging expectations? And finally that nagging question - when does Amazon (AMZN) stop being a big grower and start paying a dividend?
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Alpha Trader #2 - Watch The Price, Not The News With J.C. Parets Oct 22, 2019

The latest episode for Alpha Trader features hosts Aaron Task and Stephen Alpher talking with J.C. Parets of All Star Charts. J.C. is pure technician - caring not a whit about any of the news, but instead purely focused on what the charts are saying. And what is he hearing? Stocks for the last couple of years have essentially been in a consolidation following an historically strong bull market. This sort of pattern typically resolves in a continuation of the previous trend - meaning a fresh bull run lays ahead.
Making Parets even more optimistic is market sentiment. He notes that pessimism today - with equity markets globally more or less at all-time highs - is greater than it was last December, when markets were falling apart. Strong price action alongside terrible market sentiment is a "killer combination," he says.
It's not just stocks. Bitcoin, gold, and the dollar also have price charts, and J.C. has interesting outlooks on all three.
Ahead of the chat with Parets, Task and Alpher mull last week's surprisingly hawkish comments from the usually dovish Chicago Fed President Charles Evans. Markets have priced in another rate cut at the Fed's late-October meeting. Is a surprise in store?
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Alpha Trader #1: Talking markets with Eddy Elfenbein Oct 15, 2019

Eddy Elfenbein runs the must-read Crossing Wall Street blog and is portfolio manager for the AdvisorShares Focused Equity ETF (CWS). Elfenbein is notable for creating a Buy List of 25 stocks to get into at the start of the year, and then sticking with those names for the next 52 weeks. Also notable: Said list has topped the return of the S&P 500 for 13 straight years, and is set to do so again in 2019.
In this initial episode for Alpha Trader, hosts Aaron Task and Stephen Alpher talk markets with Elfenbein. To preview: With the S&P 500 possessing a yield well above nearly the entirety of the Treasury yield curve, Elfenbein has a hard time finding a reason to be bearish.
Checking the 2019 Buy List, Ross Stores (ROST) is among the stronger performers with a 34% gain. Elfenbein describes the company as very well-run, with management that tends to disappoint with guidance, and then thrill with actual results. Eagle Bancorp (EGBN) is having a rough run (down 13%), but Elfenbein remains a bull. Hurting the stock, says Elfenbein, are overblown worries about the bank's tangental connection to a financial scandal.
Among other topics covered is the implosion in WeWork (WE), and what that might mean for the markets. Far from the indication of a bubble, says Elfenbein, the WeWork saga may point to very healthy times. He reminds of a couple of decades ago when companies with no indication of any sort of real business model were coming public at multi-billion dollar valuations. Now that was a bubble.
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Alpha Trader: Meet the Hosts - Aaron Task & Stephen Alpher Oct 08, 2019

Welcome to the trailer episode of Alpha Trader - Seeking Alpha’s latest podcast which dives into the most important market news and provides insights on upcoming market events. In this trailer, hosts Aaron Task and Stephen Alpher introduce themselves by chatting about a couple of the best and worst trades of their career. The first full episode is scheduled for release on October 15.
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Introducing "Alpha Trader," A New Show From Seeking Alpha Sep 27, 2019

Alpha Trader is a weekly investor-focused podcast produced by Seeking Alpha that will dive into the most impactful market news and set the stage for upcoming market events. Hosted by Aaron Task and Stephen Alpher, episodes will be available every Tuesday, and will include discussions with market experts on topics relevant to active traders.
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