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☕ Reliable dividends have never been more critical

Apr 17, 2024

Good morning! 👋 

The markets are trying to fight their way green after a few down days. Treasury yields, on the other hand, remain basically unchanged. 

Not that that’s a surprise. 

Here’s why. 

The Fed threw yet another spanner in the works yesterday with ol’ JPow noting a “lack of further progress” on inflation this year after recent economic data shows – ta da – strength and growth. 

Sigh. 🤦‍♂️ 

He says the data hasn’t given him “greater confidence.” 

I say he ought to have his head examined. 

Growth is good, not bad. 

Remember what he’s trying to do and why. 

JPow and his bunch want you to lose your job, make and spend less, and to struggle because doing so helps cool the economy according to his (failed) economic models and doctrine. So, the fact that companies are hiring, people are going back to work and earning a living is bad to his way of thinking. 

That’s messed up. 

Gimme growth, great companies, and even greater people any day of the week! 

I say celebrate success and create the business conditions needed for more people to enjoy it – but that’s just me. 

Anyway... I’ll get off my soap box now. 

Here’s my playbook. 

1 – UAL pops despite a $200M loss from Boeing’s shenanigans 

United posted results that were considerably better than expected. The stock has popped in early going on what is being called strong guidance. (Read) 

Honestly and as much as I dislike the airline personally, this is GREAT. 

Trade idea: The median target price is $60 as I type. I think that’s reasonable if it can deliver. Buying now and selling covered calls all the way up might be an appealing way to juice returns using a relatively conservative strategy. That said, I am hard pressed to see airline stocks as anything other than salmon swimming upstream... the bears are waiting. 

2 – Musk wants his $55B pay pack back 

Delaware stripped Tesla CEO Elon Musk of his compensation package in a super controversial court ruling recently. Now he wants it back. (Read) 

Two things to think about. 

  1. Musk isn’t the only billionaire fighting Delaware which has somehow gone from corporate friendly to corporate adverse in the interest of minority shareholders. That's rich considering that the state makes billions from corporate fees, taxes, and other charges – more than any other state last time I looked, in fact. 
  2. The danger – and it doesn’t matter whether you agree with Delaware’s decision or what you think of Musk – is that courts inadvertently change the way company decisions get made.  

MyPOV: The last thing any shareholder should want is to see things that have led to incredible profitability unwound after the fact; forget about the compensation for a minute. Scuttlebutt I’m hearing suggests there’s a growing number of companies that may go private because of the risks of decisions like this one which, if it happens, creates a smaller playing field for individual investors who would otherwise benefit. In other words, we – you and I – would have fewer stocks to buy. 

3 – Someone just made a “Hail Mary” bet on oil 

Traders are discounting the Middle East conflict. (Read) 

Oil’s back under $85. 

Somebody, however, just made a “hail Mary” bet. 

I caught wind of a 3,000-lot trade on June $250 call options yesterday for about a penny each. 

It's a small lottery ticket for sure, but as noted by Charles Kennedy writing for oilprice.com, one that would pay off handsomely. (Read) 

I’ll stick with my favorite oil company stocks, thank you very much. USO, which I’m asked about a lot, could be a proxy; just don’t expect it to skyrocket. 

4 – Forget about missiles when you’ve got lightning! 

The UAE National Center for Meteorology, a government task force responsible for cloud seeding to induce rain in the United Arab Emirates, has denied that it carried out weather modification tactics before the heavy storms recently flooded Dubai. (Read) 

Most people won’t connect the dots. 

Weather manipulation is increasingly real life, not just Hollywood fantasy. 

Investing implication: Imagine what happens when vast areas of the Middle East and potentially even Saharan Africa become fertile farmland and how that will change global markets. I expect to see this within my lifetime which is why I’m already looking that way for investments. 

5 – Reliable yields have never been more critical 

Millions of investors are struggling to keep up. 

Doesn’t have to be that way. 

Stocks like Raytheon Technologies strike me as a no-brainer. 

It’s beaten down for inexplicable reasons given what’s happening in the Middle East and pays a forward yield of 2.44% that’s been growing at roughly 7.41% over the past year and a more realistic 2.41% over the past 3 years according to Koyfin. 

The company got zonked by engineering/metals problems last year but is fighting its way back and, yet, the stock is still being given up by Mainstreet. 

My favorite setup. 😊 

Keith’s Investing Tip: People want to make investing complicated but, in practice, it’s very simple. In fact, you’ve got to get just a few things right to make out like a bandit including, for example, buying world-class companies making “must have” products and services when nobody wants ‘em. 

Bottom Line: 

Missing opportunity is always more expensive than trying to avoid risks you can't control. 

Just sayin’ 

As always, let’s MAKE it a great day! 

You got this – I promise. 

Keith 😊 

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