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Mar 12, 2024

Good morning! 👋

Game on.

Consumer prices rose 0.4% last month and 3.2% from a year ago.

About as expected. (Read)

We all know the data is more cooked than a Christmas goose based on what we feel in our wallets but that’s moot.

Traders have already decided that the ”print” - that’s Wall Street speak for today’s inflation report - means that the Fed is more likely to hold pat than hike.

At least for now anyway.

Here’s my playbook.

1 – US produces more oil than any country, ever

If you are to believe reports, or at least commonly accepted wisdom, the US has fallen way behind when it comes to oil production and US oil stocks are absolute garbage.

Not so.

According to the US Energy Information Administration – the EIA - the US produced more crude oil last year than any nation at any time. Ever.

This catches a lot of people by surprise.

Crude oil production in the United States averaged a staggering 12.9 million barrels per day last year and reached a high in December of more than 13.3 million barrels per day. (Read)

To put this in context, the next three largest producers – after the US, Russia, and Saudi Arabia which together account for 40% of global production - Iraq, China, and Canada, combined to produce 13.1 million barrels per day or slightly more than what was produced in the US alone.

Big oil is just fine, thank you.

And those divvies... better than ever!

Keith’s Investing Tip: I hope you’re on board one way or another. The growing backlash against all things EV points to sustained dinosaur juice demand. It’s no accident that increases in energy and shelter accounted for 60% of today’s inflation reading.

Should you buy an energy company right now?

Before you consider one of the majors or an ETF, you’ll want to understand why and which one.

I know it’s a shameless sales plug but hear me out.

Not all oil companies are the same; each of ‘em has separate investment characteristics, dividend risks and opportunities. Uncle Warren prefers Occidental, but I think there’s another that’s a better buy.

If you have this sorted, excellent and well done!

If not or you’d like to join the OBA Family, I’d love the opportunity to earn your trust, goodwill and business. Upgrade to Paid

So endeth the sales pitch.

2 – Upside down 30% and not selling

Pfizer’s gotten pummeled as ‘Rona revenues have fallen off. Investors are pricing it like the company will go outta business.

As much as I hate being upside down 30% or so, I don’t mind the smackdown under the circumstances. Not for nothing, but the drop is peanuts compared to tech pullbacks over the years.

Management is laser focused on oncology and could have 8-10 blockbuster drugs in play by the end of the decade.

I see $50B in new topline sales on the horizon. (Read)

Perhaps more.

Keith’s Investing Tip: Investing isn’t rocket science but people like to think it is. One of my mentors summed this up quite succinctly... the best time to buy (great companies) is when others are selling despondently. And having learned the lesson the hard way a dozen times over, I agree.

3 – Southwest Airlines trimming forecast because of Boeing’s shenanigans

Sometime ago I told you two things:

What’s happening – doors that fall off, parts that aren’t working, control surface problems - could be the end of Boeing as we know it; and,
That Boeing’s problems would take a toll on individual airlines.

I also urged you to buy Airbus and Embraer while shorting, avoiding or buying puts on Boeing.

Now, let’s add Southwest putskies to the list.

Dallas-based Southwest Airlines has trimmed its forecast because it’s expecting to receive just 46 737s, down from the 79 expected and can’t meet anticipated flight operations schedules which, in turn, means a drop in projected revenues and profits. (Read)

A quick look at the charts makes me think that $19.50 a share could be the next “gate check.”

I wonder if there will be baggage fees... oh wait. 🤦‍♂️

4 – AirBNB

My guess is scores of owners will decide that building an AirBNB empire isn’t worth the hassle now that the company has banned indoor security cameras in the name of privacy. (Read)

I see insurance costs rising, BNB stock falling and what could be a slew of cool properties coming back on the market within the next six months.

Putskies would normally be the play here, but Wall Street and legions of individual investors will make that a riskier than normal proposition. So I’ll be watching for deals on really cool properties including converted box cars, treehouses, yurts and even a castle instead. (Read)

5 – MyPOV on the Reddit IPO

I’ve been getting lots of questions about the Reddit IPO lately.

My $0.02.

Run the other direction.

IPOs are as rigged as the game gets.

They're a sure thing for Wall Street insiders, not the investing public.

Here’s why.

IPOs are led by insiders who view them as “exits” and a quick path to billions. They're underwritten by investment bankers looking out for their own interests.

The motivation is all wrong.

Company insiders want out because they can make a quick buck.

Investment bankers want in because they can make a pile from institutional investors.

The investing public is cannon fodder.

MyPOV: Give any company going public a few quarters to prove itself. Then and if it does, buy. There is NO rush when it comes to world class stocks. Ever.