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Dear Old Friend,
Greetings from somewhere over France. While I’m always game for financial adventure, I’m prone to technological mishap. Those Apple Store classes where they teach spry grandparents how to operate their smartphones? Those were likely designed for me… but I’m too stubborn to read an instruction manual or listen to a member of Generation Z tell me what to do…
My VPN was on at the start of the flight, so I couldn’t get online until now. Classic Garrett.
Don’t Look Now… But Financials Are Recovering
What a morning. We’re seeing a breakout move on several beaten-down sectors like retail, energy, materials, and more. Capital flows into the market are extremely strong. I’m going long right now on XRT, OZK, XLB, and XLE. I’m not sure how long this will last – but there seems to be a significant amount of short covering across these various sectors. CF Industries(CF), on which I sold put spreads yesterday, is up another 1.2%, while Intrepid Potash (IPI), coming off a massively oversold level – continues to move higher. This stock is incredibly undervalued.
Where There’s Momentum, There’s Upside
The markets have been in a strong uptrend since May 17. I don’t really have a lot of faith in any rally right now – but it’s clear that the shorts are getting pulverized. Breakout stocks today include various consumer cyclical names like Expedia (EXPE), Caesar’s Entertainment (CZR), and Norwegian Cruse Line Holdings (NCLH). Also, I don’t know what it is about Carnival Corp. (CCL), but this stock is up 20% in a month.
Profits be damned… This is an incredibly resilient market. You do not want to be shorting until we get two to three solid days of negative momentum moves. This is defying gravity right now.
Wait… How Does This Work?
I’m coming back from Switzerland. I have done my best to stay away from politics in the United States. But I’m sitting here reading the work of Mike "Mish" Shedlock.
This article he wrote today suggests something that I never thought possible. He notes that the 1,921-room Hilton Union Square Hotel in San Francisco is… no more.
Its owner had forfeited the property to the lender, First Republic… and now JPMorgan Chase (JPM). The loan was $260,000 per room, which is WAY cheaper than a single bedroom apartment in the city.
This comes a month after a major commercial real estate project sold for 70% off its original price. The city is falling apart.
Something significant is coming… be very careful…
See you out there,
Garrett Baldwin
Florida Republic Capital (Available on Substack)
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.