Category: INO.com Contributors

ETFs To Play The Banking Situation

Posted on by Matt Thalman

With the collapse of Silicon Valley Bank, everyone is looking at the banking industry. Some think it has more room to fall, while others believe now is the best buying opportunity we have seen in a decade.

At this time, I believe it is too hard to pick which direction banks or the market overall is heading.

My reason for saying that is that very few people fully understand the real risk to the banking system at this time.

A few weeks ago, Wall Street banking analysts gave banks good stock ratings. Janet Yellen, the head of the Treasury Department, recently said the banking industry was healthy. Even Jerome Powell, Chairman of the Federal Reserve, recently sat in front of congress and testified that the banking system was solid and well-capitalized.

Well, that certainly wasn't the case for SVB.

While I understand that when Janet Yellen or Fed Chairman Powell make these statements, they are speaking about the whole industry, not one-off banks, as we saw during the financial crisis in 07-08, it only takes a few small cracks in the system to open the flood gates.

And when the 15th largest bank in the U.S. fails, it's hard to ignore that crack, despite the argument that SVB is different from most other banks because they lend to riskier clients in the form of 'start-up' businesses.

The argument that SVB is and was different may make sense, but if that is true, how do you explain Credit Suisse needing a $50 billion loan from the Swiss National Bank?

Finally, for years we have been told that the banks, both here in the U.S. and worldwide, have parts on their balance sheets that are referred to as 'black boxes.' These are certain businesses or investments that we, outsiders, will never get to see. We will never know what those parts of the bank's business look like, and thus, how can we fully understand how healthy or sick a bank is until it's too late?

Maybe you understand the banks better than I do and still want to invest in them, whether long or short; let me give you some exchange-traded funds that you can buy to profit from a bank industry move in either direction. Continue reading "ETFs To Play The Banking Situation" →

2 Gold Miners With Long-Term Potential

Posted on by Taylor Dart

While the major market averages have taken a beating over the last week, gold (GLD) has been one of the few asset classes to stage a sharp rally, with the metal up 2.5% for the week and over 5% since Thursday’s close.

The outperformance can be partially attributed to the belief that the Federal Reserve may have to rethink its rate-hike plans because of the fragility of the Financial Sector (XLF) with two banks already failing and several other regional banks down over 50% from their highs in a one-week span.

The sharp move higher in gold has fueled a major rally in the Gold Miners Index (GDX) which has soared 11% off its lows with the gold producers providing leverage to the metal, especially costs for the group rose materially last year.

In fact, the $110/oz move in gold has led to a temporary ~20% increase in margins for the producers, partially explaining the powerful performance of the group.

However, a couple of names were left in the dust during this rally, providing the opportunity to add exposure to miners without paying up for names that have already headed into overbought territory.

In this update, we’ll look at two names that have lagged their peers, and why they look like long-term outperformers vs. the index.

I-80 Gold (IAUX)

I-80 Gold (IAUX) was one of the best-performing gold developers in 2022, putting together a 15% return vs. 20-30% declines for many of its gold developer peers.

Unfortunately, the stock has since given up considerable ground to start 2023, down 26% for the year which has placed it near the bottom of the pack among its peers.

The disappointing performance for this junior producer with a ~$700 million market cap (assumes 350 million fully diluted shares) is partially attributed to a ~$65 million financing earlier in the year that led to an increase in its fully diluted share count and the announcement of a bought deal secondary offering by its largest shareholder because of a funding gap as it builds a massive mine in Canada, Greenstone. Continue reading "2 Gold Miners With Long-Term Potential" →

What Will The Fed Do In March?

Posted on by George Yacik

The Federal Open Market Committee meets next week, at which time it is expected to raise its benchmark interest rate another 50 basis points, to a range of 4.75% to 5.00%, if we correctly interpret Fed Chair Jerome Powell’s testimony to Congress last week, when he said “the ultimate level of interest rates is likely to be higher than previously anticipated.”

Before that, the market had expected a 25-basis point increase, equivalent to its most recent hike at the Jan. 31-February 1 meeting. As we know, his comments sent stock and bond prices sharply lower.

Since then, though, we’ve had some serious news coming out of the banking system, namely the failure of SVB Bank and the closure of Silvergate Capital (both regulated by the Fed!) and worries that some of the largest U.S. banks (also regulated by the Fed) are sitting on some huge, unrealized losses in their government bond portfolios.

In this atmosphere, is a larger than expected rate increase next week—i.e., 50 bps rather than 25—justified?

Or should the Fed maybe show a little restraint and raise the fed funds rate only a quarter point?

And if it does, what will be the likely market reaction?

In his Capitol Hill testimony, Powell focused – as you would expect – on the U.S. economy, namely its stronger than expected recent performance, particularly in the jobs market, which in February gained another 311,000 jobs even as the unemployment rate rose slightly to 3.6%.

The Fed seems hellbent on making up for its past errors of overly long, overly loose monetary policy by ramming through rate increases no matter how much harm they might cause.

Ignoring the second component of its Congressional mandate, namely promoting full employment, the Fed is instead totally focused on slaying inflation as fast as possible, even though getting from the current rate of inflation – 6.4% in January — back down to its 2% target will no doubt take some time.

After all, the Fed only started raising interest rates back in March 2022, when the fed funds rate was at or near zero. Continue reading "What Will The Fed Do In March?" →

"50 Cent" Profits From 3-Letter Acronyms

Posted on by Aibek Burabayev

In February 2023, the US economy produced 311,000 jobs, surpassing market expectations of 205,000, and revised down from 504,000 in January. This indicates a labor market that remains tight, with an average of 343,000 jobs added per month over the previous six months.

This is another upbeat NFP report following last month's even stronger data. The Fed now has more ammunition to potentially raise rates by 0.5% at their next meeting.

Let's take a look at how the market reacted to this report.

1 Day Futures Performance

Chart Courtesy: finviz.com

The top three winners last Friday, when the jobs report was published, were VIX, which gained +9.42% in just one day, heating oil futures, which rose by +4.22%, and the Swiss franc, which increased by +2.75%. Continue reading ""50 Cent" Profits From 3-Letter Acronyms" →

Trade With Jim Cramer With New ETF

Posted on by Matt Thalman

Anyone who regularly watches or has only seen Jim Cramer’s TV show “Mad Money” even just once notices that the former fund manager, now a TV personality, makes a ton of stock recommendations while on air.

So many that it is hard to keep up with what companies he likes and which ones he would sell.

Luckily, you will now never have to worry about trying to keep track of his stock picks while he is on air. Two new Exchange Traded Funds will keep track of his stock picks for you and not only keep track of them but give you an accessible, one-stop investment vehicle you can use to follow his advice.

The Tuttle Long Cramer Tracker ETF (LJIM) buys stocks that Jim Cramer tells his viewers on “Mad Money” that he likes. The fund managers also follow Jim on Twitter, so if he tweets that he is optimistic about a stock, the fund can also track those picks. Furthermore, LJIM will also short stocks that Cramer expresses a negative opinion on.

LJIM began trading on March 2nd of, 2023, with an expense ratio of 1.2%. The fund already has over $254 million in assets. The top ten holdings represent 31% of the fund.

However, the fund prospectus explains that LJIM will have a portfolio of between 20 to 50 stocks.

Therefore, the heavy concentration will likely always be present with LJIM. Finally, the balance between each stock held is very close, with most holdings representing just slightly above or below the 3% mark.

The fund holds a very diverse group of stocks. The largest sector is technology, with 18% of assets. Then electronic technology makes up 14.78% of assets. Health technology, consumer services, and finance round out the top five sectors in LJIM.

LJIM is a worthy investment if you are a disciple of Jim Cramer and want to own the stocks he recommends to TV viewers and social media followers. Continue reading "Trade With Jim Cramer With New ETF" →