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Peace talks set up a monster rally

Mar 29, 2022

Good morning!

There’s an old expression about taking horses to water.

Chances are you know the one.

Most investors just didn’t want to hear what I had to say … that the rally would start when people least expected it and the markets will take off like a rocket when peace breaks out.

Yet here we are.Futures are pointing to a higher opening this morning and a 4th straight day of gains for both the Dow and the S&P 500 as well as a back-to-back upside session for the Nasdaq.

All three indices closed yesterday at 6-week highs. What’s more, the Dow and S&P 500 are within 5% of all-time highs set last January. Nasdaq is within 10% but still technically in correction territory.

Three guesses where you want to be buying and the first two don’t count!

Here’s my playbook.

1 – Sorry, a flat yield curve does NOT forecast a recession

The 5-year Treasury yield is still higher than the 30-year yield after going “inverted” for the first time since 2006.

Legions of economists are falling all over themselves about how this move precedes a recession. Traders moving real money are focused on 2 year and 10-year yields which remain normal for now.

Flat rate curves simply mean investors see future inflation as lower. (Read)

Low-multiple stocks are dirt cheap and can grow rapidly. Big tech, in particular. I’ll be issuing a brand-new recommendation in the April edition of One Bar Ahead™ that releases Friday if you’re interested or that’s helpful. (Get the stock)

2 – Peace talks set up a monster rally

Russian and Ukrainian delegates are speaking again in Istanbul. Forgive me for being a broken record, but the markets will take off like a rocket if there’s a breakthrough. (Read)

Anybody not on board will get left behind, an observation I made yesterday with the super-savvy Stuart Varney. (Watch)

Meanwhile, expect China to make a grand entrance as a global peacemaker if talks “fail.” Russia says it’s pulling back to create trust but that strikes me as code speak for they got their butts kicked.

3 – Dark Pools are undoubtedly licking their chops as Robinhood extends hours

Robinhood adds extended trading hours. The move is ostensibly to address customer concerns that they couldn’t trade during regular market hours because they’re working or otherwise preoccupied so they couldn’t “trade” or react to important market news. (Read)

4 – Kroger says me too, please

Kroger’s seen the explosive revenue growth that Walmart and Amazon have enjoyed in their respective ad businesses and wants in on the action.

No surprise here … the former started last year and has already generated $2.1b while the latter is growing nearly 30% a quarter with the latest figures showing $31 billion.

Kroger is starting to offer ad slots on its ecommerce sites and making it programmatic, meaning that it’s offered through three leading advertising management platforms. (Pacvue, Skai and Flywheel Digital)

Kroger stock could be worth a look! (Read)

I so love an underdog!

5 – How higher taxes will impact you even if you’re not a 1%er

President Biden is pitching the largest recorded tax hike in history as inflation rages on. He hopes to raise $2.5 trillion by taxing Wall Street, the ultra-wealthy and implementing a modified wealth tax along with a global minimum tax.

Here’s why you should care:

Higher corporate taxes reduce wages for low-skilled workers, youth, and women in the workforce.
Every 1% increase in taxes translates into additional inflation and could result in a 0.17% increase in retail goods prices. The largest increases will hit products most likely to be purchased by low-income households.
Higher taxes reduce demand for stocks which means anybody in the lower or middle class will experience lower growth and performance in their retirement accounts or savings.
And, finally, higher taxes will create an economic disincentive for money to remain in this country. There will be an entirely new wave of creative accounting ahead.