Market Talk
The government's transition may not be easy to change back to more fiscal conservatism from the democrats agenda driven ways. Rapidly changing policies, even well meaning, can have near term implications on the economy. Indeed, the major indices have somewhat fallen in the past month alone. For example in just one month - the S&P 500 decreased by about 0.48% and the Nasdaq about %3.28%. Even more, the Russell 3000 by decreased by 0.56 % and the Small Cap Russell 2000 decreased by approximately 5.72%
The market sentiment, since the election has somewhat faded with concerns about inflation, stagflation with slow growth and higher inflation. Add jobs cuts with unemployment increasing over the coming months is raising eyebrows in the trading and investing minds. For example, imposing taxes on imports can initially create higher inflation. The goal could be to create more made in America but that end can be elusive, with mixed initial results. Uncertainty regarding a dangerous world on the global stage is something to watch regarding market triggers. On the other hand, a positive development in the Ukraine may be underway which could lead to more overall optimism including the markets.
The above preamble makes near term stock predicting like "a guess". In this light, the mode here has been to "lighten up, risk off" on some stocks in favor of the sidelines with dry powder. You may have noticed the "Stock Talk" of small cap risk stocks has been down played recently. When market corrections do happen, the more speculative stocks with no earnings can get hit harder.
Stock Talk
Kratos Defense & Security Solutions, Inc. (KTOS)
KTOS stock has been covered here since the 20's. In other defense stocks of larger companies, we see even though they produced good earnings, the share price got hammered. The suggestion to trade some KTOS while it was in the 30's was made here. The nature of the KTOS defense business pointed to holding some shares since it was pointed out here in the 20's. The stock sits at $25 the day before earnings report. About nine cents eps in earnings is estimated. Recent contracts have been announced, but its too early to know how it will play out in the near.
KTOS is working in defense areas such as drones and hypersonic rockets, testing as well as 3D printing and satellite communications that are all sorely needed to keep up with our adversaries. At some point - KTOS is anticipated here to outperform the market. However, just "when" the "pops" will show up is hard to predict in the current climate. Perhaps holding a some small position and trying to "trade" around the market volatility is one way to play KTOS. On the other hand, we will see tomorrow how the market views the stock.
Altria Group, Inc (MO) : Steady earnings and a near 7 to 8% high dividend to reinvest. The recent earnings report beat estimates with a buyback in process. There was a recent court decision that could adversely impact their importing of NJOY devices. However, an updated ACE-2 vape is in development and planned for manufacture in the US places such as Richmond VA. The view here is to hold some MO and watch developments.
Permian Resources (PR): With easing of past natural gas restrictions, a new renaissance back to cleaner and reliable energy that nat gas brings. Holding some PR. A current 4.2 % dividend rate is not too bad to hold a few PR shares and see how things play out with natural gas and oil prices in the Permian basin of America.
Kinross Gold Corp (KGC) : This gold miner reported earnings of 20 cents eps, where about 23 cents was predicted. The Jones report has been following KGC for awhile. It seems unless Gold heads over the $3 k mark and it sticks, that KGC may trade in the $9 to $12 range. It seems to be almost like dead money. The interest rate of just over 1% is not enough to keep watching KGC unless something changes in gold pricing. The central banks may have programs on that will keep Gold constrained at these levels.Dry Powder. Maintain some dry powder manage your portfolio according to your best views and interests to make some money!
_________________
If you dare ... Stay tuned and aware ....
For now, we close by noting that any views on the market and stocks on any particular day may change in the future days to come. That is why we watch and see how our views match up with the reality of the time. But trying to look ahead a few months into the future may be a way to do things. If you think too deep about world events and the recent alliances forming, projecting ahead can be a dicey endeavor. In all - we use the word maybe "some", not "too much" and play it accordingly. Remember, never get arrogant in our various notions because things do change in the market and individual stocks are subject to many factors outside of our control.. So we try to -stay aware.
With all the above caveats and attempted prognostications, I will close this post. Stay tuned for more opining on the market and stocks to watch.
________
