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☕ BYD just launched a hybrid pickup that should terrify the entire industry

May 15, 2024

Good morning! 👋

Inflation’s cool, markets hot.

Here’s my playbook.

1 - Something’s up at Walmart

CNBC is reporting that Walmart’s Chief People Officer, Donna Morris, has issued a memo recalling remote employees working in Dallas, Atlanta, and Toronto to a new headquarters in Bentonville, Arkansas. (Read)

Normally, I’d regard this as just another news item.

However, the announcement comes ahead of Thursday’s super-anticipated earnings report which - given how these things are usually timed - makes me think that something significant is getting ready to go down at Walmart.

As I noted yesterday to the super-savvy Stuart Varney, it’s one earnings call I’ll be watching very closely. (Watch)

WMT is flat in the low $60 range as I type but I don’t think it’ll stay that way for long.

Trade Idea: An ATM straddle – meaning buying both a call and a put at the money – could work nicely. Or consider waiting for earnings to jack volatility, then Sell Cash Secured puts and go shopping at a discount, a strategy I encourage the OBA Family to use regularly.

I could even make the case for being long Walmart but simultaneously short Amazon, a two-part position known as a “pairs trade.” You can do the same thing, practically speaking, with options but that’s beyond my ability to cover in today’s email.

As always, do NOT attempt these trading strategies if you have no idea what I am talking about. Stick to investing, instead.

Keith’s Tip: Stocks like Walmart are very much “prove it” or “lose it” because they’re going after entrenched companies, in this case Amazon. We’ll see.

2 - The AI race is hotter than ever

Google announced its most powerful models to date including Gemini 1.5 Flash which can summarize conversations, capture images, video, and even extract data from documents and tables. The company also announced Gemini 1.5 Pro which can make sense of up to 1,500 pages or summarize up to 100 emails.

Meanwhile, open AI has announced its newest AI model GPT 4.0 while Amazon’s Q Business is moving forward, too.

And, not for nothing, rumors are flying that Apple may onboard some version of Chat GPT, even though it's already supposedly working with Gemini.

For what it’s worth, I think Apple could be using all this as a smoke screen for its own native AI, built on Apple chips, of course. That would be consistent with Apple’s m.o.

Meanwhile, Microsoft is still the undisputed heavyweight.

MyPOV: I hope you’re on board one way or another. There is no doubt in my mind that AI will go down as one of the greatest single investing opportunities in recorded human history if not THE biggest. Kelly Evans about fell over the first time I said that on CNBC a while back, but the narrative is working its way around these days.

3 – Roaring Kitty may have created an entirely new generation of bag holders

The casino – oops, sorry, the financial market - is evidently still full of punters.

Net retail investor inflows – meaning how much money came rushing into yesterday’s buzzsaw – are down significantly from 2021 when meme-mania last captured the investing public’s fancy.

Still, Roaring Kitty’s musings turned markets upside down.

I’ve heard that both stocks – AMC and GameStop – were halted 34 times because conditions were so nuts. Not surprising considering the tally for those caught offsides may now exceed $1B. And counting.

While I hope that everybody who played along made out like proverbial bandits, I suspect we’ll find that an entirely new generation of bag holders has been created.

Keith’s Investing Tip: Situations like this make it abundantly clear why risk management should be an integral part of the purchasing process, not an afterthought which is how most investors think about it if they think about it at all.

4 – Did Powell just backtrack?

Fed Chair Jerome “JPow” Powell just said that his “confidence is not as high as it was” that inflation is cooling after seeing data from Q1 this year.

While he did say that the next move makes it “more likely” that we – the Fed – hold policy rates where they are, I am leery.

So are the markets.

The greedy bastards club anticipated 6 rate cuts this year but now sees just two... starting in September or November.

My guess is we get one or none.

5 – BYD just launched the pickup truck the entire automotive industry fears

The company unveiled a mid-sized hybrid pickup truck it calls the Shark in Mexico while saying it doesn’t give a rip about the US market.

BYD, in fact, says anywhere but the US.

And tariffs.... pfffft!

The Shark, btw, has a 500-mile range. (Read)

Make no bones about it, Detroit faces an existential threat while Toyota and Nissan just watched Godzilla come out of the proverbial bay.

Something to think about even if you don’t want to: US politicians in both parties think they’re being smart but the tariffs they’re so proud of may have just damned the US auto industry into oblivion. You’ll definitely want to think twice about which automakers to buy and which to avoid like the plague. Upgrade to paid.