The Fed needs to shut up

St. Louis Fed President James Bullard roiled markets by saying he can’t rule out a 50-basis point hike in March. And, predictably, stocks have gone right into the toilet.

MyPOV: The Fed still does not recognize—or worse, is deliberately ignoring—the damage reckless commentary like this causes. The Fed needs to shut up.

The situation reminds me of Alice in Wonderland, as the Mad Hatter and the White Queen attempt to make Alice believe their absurdities are true. “The rule is, jam tomorrow and jam yesterday—but never jam today.” 🤦‍♂️

Meanwhile, make sure you have your hedges in place and concentrate on the big value stocks, particularly those with high, stable dividends.

Sadly, many investors have no idea how to find ‘em but it’s really not as tough as you’d think if you know what to look for and have a consistent process in place.

I recently spoke about both at length with Ed D’Agostino of Mauldin Economics, using your most pressing questions about current market conditions to guide our conversation.

I hope you find our conversation helpful and—dare I say it—possibly quite profitable, too! (Watch) And if you’re pressed for time or simply would rather scan along, here’s a transcript for your reading pleasure! (Read)

As usual, I’ve got a few ideas.

China strikes back; bans LMT and RTN

This is rich.

What’s happening. China’s commerce ministry banned Lockheed Martin Corporation and Raytheon by putting them on China’s sanctions list over sales to Taiwan. According to various reports, both companies can also no longer invest in China, senior management is barred from entering the country, cancelled residence permits for any staff in China, and imposed fines that are double the contracted amounts of their arms sales to Taiwan. (Read)

The way I see it… a) China’s probably already stolen enough tech that they can put the ban in place in an effort to pander to global opinion, and b) Beijing just did Washington’s job.

What this means for your money. There are two ways to invest when it comes to China: in China or because of China. The latter is clearly better.

Neither LMT or RTN currently sells defense products to China (although Pratt & Whitney, a subsidiary of Raytheon, sells aircraft engines and landing gear to China’s aviation industry). A ban on product sales of $0 is $0 in lost revenue for Lockheed, and any sales decline from Pratt & Whitney will likely be offset by the gain in the Raytheon Missile & Defense segment.

The One Bar Ahead® Family has known about both companies for quite some time, and chances are good that anybody following along is grinning ear to ear. LMT has tacked on 21.22% over the past 12 months while RTX has put on 5.98%. The S&P 500 is down -5.31% over the same time frame, according to Yahoo!Finance.

U-rah!

Ich möchte bitte einen McPlant Burger bestellen

Game on. McDonald’s is rolling out a McPlant burger, along with non-chicken McNuggets, at its restaurants in Germany. (Read)

Purists will cry foul, but they’re missing the point.

There are so many people on the planet that fake food will be required to feed ‘em all. In fact, it’s part of a much bigger theme I call “synthetic biology.”

Picking winners is tough right now, but essential, because traditional agriculture will come under incredible pressure. And yes, food prices will become dramatically more expensive… at least for the “real stuff” anyway.

OBAers: We’re already tracking this, and I’ll have new research for you in the months ahead, along with fresh recommendations—pun absolutely intended! 😊

It’s a no-brainer, particularly if you’re hungry (for growth & divvies)!

Another Chinese CEO is missing

Many Westerners make a fundamental mistake when it comes to China by viewing it through our cultural lens. China plays by an entirely different rulebook.

Beijing will not hesitate to clamp down on anyone who it deems a threat.

• Jack Ma vanished for a while, then, as I told you would happen, surfaced only after he became a philanthropist interested in the Chinese people’s good.

• Ren Zhiqiang, a real estate tycoon, disappeared after criticizing Xi Jinping. He’s rotting in jail… for 18 years after a “trial.”

• Guo Guangchang, often called the “Warren Buffett” of China, vanished in 2015. Only to resurface as he “assisted” authorities in an investigation.

Now a prominent Chinese investment banker, Bao Fan, has reportedly gone missing. A recent company filing with the Hong Kong Stock Exchange notes that China Renaissance, Bao’s company, has been unable to contact him. Shares are off -30%, no surprise there.

Most Western investors still cannot get it through their thick skulls that shares of BABA, Tencent, and others come with massive hidden risks. Worse, many continue diversifying into Chinese-dominated ETFs because they’re being told that’ll “reduce the risk of loss,” but in doing so, they fail to realize that also damns them to exceptionally risky profits.

What to expect when IPOs you aren’t expecting surface

The IPO market was frozen rock solid at the beginning of the year after an abysmal 2022 that saw just $6.2B raised, with only 2 listings north of $250 million each, according to Liberum data. Not surprising, deal-makers hunkered down in their bunkers. Lawyers, founders, and early investors were nowhere to be seen.

Fast forward to last week. Dealogic reports that 5 IPOs raised $1.17 billion in proceeds last week alone, crushing the previous week’s $193 million while also making it the busiest week in 15 months. (Read)

What this means for your money. IPOs are still a rigged game; there’s no getting around that right now, barring massive reform. But the uptick in deal flow is important because it’s confirmation of something we talk about frequently: that there’s a lot of money on the sidelines that’s keen to get to work.

Good!

A rising tide raises all boats.

Bottom Line

Your future is simply dreams you haven’t made happen yet.

What the fruitloops are you waiting for??!!

Let’s finish the week strong!

Keith 😊

PS: If you’re worried about current market conditions, you’re not alone. But know this… there IS a path forward, and it’s one history suggests could be very profitable for savvy investors who recognize the opportunity and who have the right playbook. Please join me as I discuss both with the super savvy Ed D’Agostino. (Watch) Or, if you’re pressed for time and simply want to scan along, click here to read the transcript. (Read)

---