Weekly Raid #37 - Nuclear is the New Clear
Goooooood Morning Traders. Happy Hump day again
Shortened weeks always throw me for a loop as I can never accurately get the days correct for trading.
News is slow today again, but there are still some things to watch.
Lets jump in
News of the day
News out today is limited again, but there are a few more items than yesterday. First on the docket is a few Fed speeches. These are spread out though, we have Collins this morning before the market opens and then Harper later this afternoon. There has been a lot of talk going around lately about a potential rate pause, and even a potential cut. I guess that will remain to be seen. The talking today looks to be the usual grandstanding so I wouldn’t expect much of substance from it.
At 9:45 we have the S&P Global PMI numbers out. Both services and manufacturing are expected, and like the regular PMI, we are looking for expansion with a print of over 50. At this point, I think it’s pretty clear to the average person that regardless of the Government's “official” numbers a recession is more or less here. So we need to focus on getting solid numbers back out of both the manufacturing and services sector to help promote additional employment and help some of the struggling folks.
Finally, up at 10 this morning is the ISM services PMI. And similar to the S&P we are looking for both a beat of the expectation and a print over 50. I think if we get some positive numbers the market could pop and it would bring a lot of stocks with it.
Today’s topic of Marco Discussion is energy. In Australia, there is a potential LNG strike looming, and in the rest of the world, the Saudis and Russians have agreed to extend cuts to production. This sent energy futures soaring and could have some additional sweeping repercussions.
Energy obviously is important to most developed nations since that is how we heat our homes, run our cars, and on a larger scale run our factories. If the price of Oil stays elevated and LNG spikes and stays it could be a very expensive winter again for energy prices. That would put additional strain on a lot of lower and middle-class families as they start to need to make a choice between food and shelter or something disposable and expendable.
This will start to stunt the economy in a pretty major way and will eventually spill over into the debt that consumers have piling up around them. Credit cards will be first, it always is because there are no real consequences other than your credit score dropping. Next will be cars, but just the ones people severely overpaid for during COVID. You know the $1,000/month Jeeps. Then it will spill into the economical cars like corollas and civics. Finally, it will spill over into housing, which is when everyone will realize there is a problem, but in typical government fashion, it will be too late.
That was obviously a pretty dark rabbit hole to fall down, but that is how recessions spread. There is a simple way to fix that though, and that is additional energy output domestically. We have plenty of oil under us to offset the cuts and actually turn into a net exporter of oil. There are also several cleaner alternatives such as solar and more appropriately nuclear energy. If the powers at be can pull their heads out of their assess long enough to actually solve a problem I think everything energy-related is completely avoidable.
In the meantime, watch uranium and oil stocks for a boost. Many countries are back on the nuclear grind, and the ones that don’t need copious amounts of oil.
Top of today’s watchlist are Uranium stocks. Unlike usual I don’t have a specific stock I am looking at. 3 major tickers are CCJ, BHP, and NXE. All offer some pretty significant exposure to the element and if energy continues to trend in the way I think it will uranium will be a solid hold.
I am watching PYPL as well this morning. We look to be bouncing off of the VAL for the year and this could set itself up for a solid short. The trade would be invalidated if we trade over the VAL and close there.
Finally, I looking at GME going into earnings after hours today. I won’t play it today but will keep it on the watchlist for a potential squeeze on good earnings or good news. I personally think this thing ends up back from where it came, the single digits, but that’s a personal opinion.
As always trade well and Good Luck