☕️ What to make of the Fed’s moves as an investor

Howdy! 👋 

The markets are so jumpy that they're an insult to people who are actually jumpy. 

Don’t get sucked in. 

Successful investors know better… and your portfolio will thank you. 

When in doubt, zoom out. 

Here’s my playbook. 

1 – Fed schmed 

I saw yesterday’s rally ahead of the Fed announcement and posted the following: 

My instincts, turns out, were correct. 

Shares tanked. 

Now, they’re up ahead of the opening. 

Get used to it. 

Market mechanics are such that this kind of stuff – the up one day, down another or even one hour and another – is a) going to be a far more regular occurrence and b) potentially an extraordinary source of profit potential for smart investors. 

I hope you took advantage of the situation or, at a minimum, are planning to do so. 

Keith’s Investing Tip: Contrary to what many investors think, it’s no longer enough to buy great stocks. HOW and WHEN matter considerably. So – I submit – you’ll want to use tactics that combine all three. 

One other thing to consider. 

Many people believe that investing isn’t for them or that somehow it’s something the everybody else does when they can’t. 

I disagree. 

You CAN absolutely do this. Furthermore, it is absolutely possible to be successful in today’s markets! I’d love to help if that’s of interest. If you’re covered or simply content to fight for Wall Street’s table scraps, that’s okay, too. 😀 

2 – The most interesting deal I’ve seen in a while 

Not Amazon’s first rodeo. 

Last week the company struck a similar warrant-linked deal with Qualcomm for custom AI chips, modeled on Oracle’s warrant-for-supply pact with Bloom Energy. 

This week, Generac issued Amazon a warrant to acquire up to 1,693,745 shares at $200.9266 per share, with 307,954 shares vesting immediately and the rest vesting in tranches tied to how much Amazon actually pays Generac for backup power generators, up to $8 billion total. (Read) 

Those warrants total up to $340 million, and Generac shares jumped more than 40% in after-hours trading on the news. Initial generator deliveries alone are expected to hit $2.4 billion in 2027 and 2028. 

Several things make the deal unique: 

1. The warrants vest based on Amazon’s spending, not time. In other words, Amazon’s got to buy for Generac to get paid. 
2. Generac is an old-line name that’s getting rebranded as an AI infrastructure play overnight.  
3. $340 million in warrants against a company with a $10.3B market cap backing a supply relationship that could be as much as $8B. 

It’s a new playbook and one that – I suspect – could soon involve names like Eaton, Vertiv and Cummins – all of which could jump substantially if another “Amazon” comes to the table. 

That’s neither here nor there. 

Many investors are focused on AI or power or both but the real “tell” here is that a company like Amazon is willing to pay in stock instead of cash which means they’re giving up profit potential to ensure supply in something that’s a lot scarcer than the public recognizes. 

Keith’s Investing Tip: Keith’s Rule of the Back Page applies… the reasons why deals like this get done can be more important than the deals themselves. And – drum roll please – a sign of ginormous profit potential. 

3 – OpenAI reports 6 new instances of concerning model behavior … since March 

This is spin city. 

Now OpenAI is reporting 6 new instances of “concerning model behavior” … since March. (Read)

How convenient 🙄 

I was born in the middle of the night… just not last night. 

Push for unrestricted AI development, destroy critics, bash legitimate concerns… then roll over and try to control the narrative after a whistleblower destroys that narrative and catches the public’s attention. 

Now – suddenly – OpenAI apparently wants to be the safety advocate, while Anthropic’s Sarah Heck said yesterday that companies can’t operate on an honor code – “we can’t be checking our own homework.” 

It’s the oldest trick in the book. 

Privatize profits and socialize risk before the sh_storm they now know is coming. 

Disgusting, imho. 

I’ll be steering clear of both OpenAI and Anthropic’s IPOs unless there is a radical change in leadership at the very top. 

You? 

Keith’s Investing Tip: Companies that suddenly grow a conscience do that for a reason and – hint – it’s usually not the one that makes sense to the rest of us. 

4 – Semiconductors have a people problem – here’s who profits 

Only 3% of U.S. engineering grads go into chipmaking which is why 73% of chip employers say they can't fill open roles. According to a new McKinsey/SEMI Foundation report, the U.S. is facing a shortfall of up to 157,000 skilled semiconductor workers by 2030 (Read). 

That sounds like bad news for the whole industry but that’s not true.  

It’s only bad news for those who aren’t already building. 

Invest accordingly. 

Micron for example is racing to finish America's first advanced memory fab in Boise, with another under construction in Clay, New York. TSMC and Intel are already running fabs in Arizona. Samsung's $35 billion buildout in Texas starts production later this year. 

These plants – which I’ve personally laid eyes on – are monsters. 

A new competitor trying to enter today doesn't just need capital, land and permits — they need workers that don't exist yet. 

And that’s the investing opportunity. 

I’ve long believed that the labor market is about to get a face lift.  

Robotics.  

Fabs have used robotic wafer handlers and automated equipment for years. What's new is the next wave – humanoid robots like Tesla's Optimus and Figure AI's units, already doing real pilot work lifting, sorting, and handling material in warehouses and factories. 

The 6th Wave is coming to life – albeit very differently than a lot of folks expect. 

Make sure you and your portfolio are ready. 

There will not be a second chance and – frankly – I’d hate to see you miss it. 

Click to enlarge.

5 – Nike; the ultimate dividend stock? Pfft 

Some smart people are calling Nike the ultimate dividend stock now that its dividend is 4.5% and the highest in the Dow if I have my facts straight. Others say it could double. Still more say it’s an incredible turnaround story in the making. 

MyPOV? 

Still a bug in search of a windshield. 

• Nike may lose its slot in the Dow – and that would send indexers running the other direction pressuring the stock’s price 

• The direct-to-consumer strategy it embraced a few years ago has backfired spectacularly, opened the shelf to competitive brands like Hoka and On which means that earnings and revenue projections may be fantasy land. 

• Customer loyalty is a fraction of what it used to be with widespread complaints about quality, design and utility racing around the athletic community. Anecdotally, I raced in Nike exclusively for years as a triathlete but left the brand when its shoes began falling apart, the footbox changes and designers engineered shoes that would last 100 miles so they could boost repeat sales… never to return. And I’m not alone. 

• China is a trainwreck. Anta and Li-Ning have matured into real competitors, and younger Chinese consumers have shifted toward On, Hoka, Adidas, and domestic outdoor labels like Kailas. I have heard anecdotally that of a Shanghai run club of 30 people, only 3 are in Nike shoes. CEO Elliott Hill's own words: "we've become a lifestyle brand competing on price in China." Ouch!!! 🤦‍ 

Keith’s Investing Tip: A rising yield on a falling stock is a math trick, not a milestone. 

Bottom Line 

Money isn’t just about keeping score. 

It's an opportunity to inspire, uplift, and encourage those around you. 

So do some of that… the uplifting part. 

Share a smile, a warm word, or a hug with someone who needs it. 

The world is a tough place right now. Small gestures – even if they are not financial – make a powerful difference. 

You got this — I promise. 💯 

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

Keith 😀