What to know today

  • “For every pro, there’s a con.”
  • Elon activates his AI plan.
  • Get paid on the regular.
markets

Things Are Less Than Robust

And markets are getting messier.

This is what Peter Boockvar is talking about in his June 19 StockPick Interview.

The major equity indexes were mixed to negative on Thursday, reflecting an ambiguous economic picture.

Decreasing activity has implications for inflation – good ones – and earnings – not good ones.

“So, the US economy, from all the things that I analyze, is remarkably mixed and uneven,” Boockvar says. “For every pro, there's a con. For every bright spot, there's a dark spot.

“And I think in the aggregate, it feels like a one, one-and-a-half percent-type economy. It's not a recession, but it's not growing robustly.”

Twenty-five of the 30 names in the Dow Jones Industrial Average were in the green, Salesforce $CRM leading the price-weighted index higher by 0.77 percent for the day.

And the S&P/TSX Composite Index posted a modest gain, probably on the mini-surge for crude oil prices.

But the S&P 500 and the Nasdaq Composite were both lower, as was the Russell 2000.

Initial claims for unemployment insurance ticked down to 238,000 from 243,000 but exceeded a consensus forecast of 235,000.

Thursday’s incoming data show a similar pattern: Initial jobless claims for the week ended June 15 were lower than for the week ended June 8. 

But the 238,000 print exceeded the consensus forecast and is the second-highest since last August. And the previous week’s count was revised upward from 242,000 to 243,000.

Continuing claims for unemployment insurance also beat expectations, 1.828 million versus 1.81 million, and were up from 1.813 million the previous week.

That’s not necessarily a good “beat” or an encouraging increase, unless you’re only in it for the rate cuts.

The S&P 500 has made seven new all-time closing highs in June, but more stocks are making new lows than are making new highs.

As Boockvar notes, recent price action at the index level reflects “mega big tech stocks that are benefitting from a lot of AI excitement.”

The S&P 500 is a market-cap-weighted index, so Nvidia’s $NVDA ever-increasing escape velocity can carry the whole thing higher.

“The better those stocks do, the more helpful it is to that index,” the chief investment officer at Bleakley Financial Group observes.

Through Wednesday the S&P 500 had posted a gain of about 14 percent so far in 2024. But, as Boockvar points out, an equal-weighted version of the index would show a gain of about 3.5 percent for the same period.

“The rest of the market is much more mixed.” The major dispersion and divergence in performance among individual stocks reflects the lack of visibility on economic growth.

Investors are piling into the stock(s) they think will generate the most growth. They’re also seeking out companies with balance sheets strong enough to absorb elevated interest rates.

Boockvar identifies the commodities sector, including The Mosaic Company $MOS for its potash and fertilizer assets, as an area of opportunity in this market.

He also says Under Armour $UAA is undervalued right now but is poised for a comeback with the return of founder Kevin Plank as CEO.

Boockvar’s last idea is precious metals, including gold and silver. “We remain very positive on those too.”

deep dive

Elon Has No AI FOMO

This project is gathering substance.

Both Dell Technologies $DELL and Super Micro Computer $SMCI closed in the red today.

It didn’t start off that way.

There was a lot of upside at the open in the aftermath of Michael Dell’s Wednesday X post revealing that his company is “building a Dell AI factory with Nvidia to power Grok for xAI.”

Elon Musk jumped into the thread to confirm that Dell will provide half the servers for the project and that Supermicro will provide the other half.

Dell Technologies rose as much as 8.29 percent on Thursday, June 20, 2024, after Michael Dell announced his company is building a factory for Elon Musk’s AI project.

DELL traded as high as $161.52 within the first 15 minutes of the opening bell at the New York Stock Exchange, up 8.29 percent from its previous close. It ended Thursday’s session at $148.52.

SMCI surged as much as 10.22 percent, reaching $1,014.02 versus a Wednesday closing price of $920.01. Its last quote during the regular session was $917.64.

Super Micro Computer $SMCI was up as much as 10.22 percent on Thursday, June 20, 2024, on news of its participation in an AI project with Elon Musk.

Musk intends for xAI to compete with Microsoft $MSFT-backed OpenAI and Alphabet $GOOGL in the artificial intelligence space. He was a co-founder of OpenAI but has lately criticized its security methods.

Musk’s new project raised $6 billion last month in a series B funding that values xAI at $24 billion.

The initial bumps for DELL and SMCI indicate both the huge long-term potential for AI as well as energy built up during a rare midweek holiday.

Nobody wants to miss out, especially Elon.

deep dive |
June 21, 2024

Elon Has No AI FOMO

DIVIDEND STOCKS

How To Generate Reliable Income

It’s a good way to rise above a mixed-up market.

They’re called “Dividend Aristocrats,” and they’re among the most consistent cash-generating companies in the world.

They earn that nickname by raising their dividends for more than 25 years in a row. That’s a long time, and that’s a lot of value creation.

It’s also a great way to put some ballast in your portfolio for periods when the path up and to the right is neither straight nor steady.

With investors, traders, and speculators increasingly akimbo, indexes more and more mixed, and the growth cycle showing signs of age, a little consistent income is a good thing.

General Dynamics $GD has increased its dividend every year for more than 30 years.

From the Research Desk, we learn that Wall Street is particularly bullish on two Dividend Aristocrats right now.

The global aerospace and defense outfit General Dynamics $GD, which has increased its dividend every year for the past three decades, is yielding 1.8 percent at current levels.

War on two continents and tension rising seemingly everywhere at the same time has boosted demand for its materiel, including aircraft, combat vehicles, and submarines.

GD is also getting its own AI boost as an early adopter in the security, defense, and intelligence space.

The stock is up more than 15 percent in 2024 and nearly 40 percent over the trailing 12 months. 

Nineteen Wall Street analysts rate GD a “buy,” five rate it a “hold,” and one rates it a “sell.”

Pentair $PNR, yielding 1.16 percent as of Thursday’s close, has raised its dividend every year for nearly half a century.

Pentair $PNR has increased its dividend every year for almost 50 years.

Hydration is essential for human beings, and the US must upgrade its aging water infrastructure. That means demand for the global water treatment company’s services.

PNR is up double-digits in 2024 and more than 30 percent over the past year. Thirteen analysts rate it a “buy,” and seven rate it a “sell.”

The consensus sees the share price rising by 15 percent over the next 12 months.

That’s in addition to the normal dividend growth.

past issues

read more from our daily investor newsletter