Oct 5
Vice President Harris can’t have it both ways. Either she stands with Israel or she doesn’t. Harris met with Arab American and Muslim leaders in Michigan on Friday, part of an ongoing effort to stem defections from a pivotal group of voters who have fiercely criticized President Biden for his staunch support of Israel’s wars in Gaza and now Lebanon. See the Washington Post.
Do Arab Americans and Muslim leaders stand for liberty or do they stand with Hezbollah, Hamas and Iran all of which advocate genocide against the Jewish people and the eradication of the nation state of Israel?
Even today the dominant culture of the United States reflects the influence of the story of the Jewish people. The Jewish culture is positive. Can we say the same about the modern Muslim culture?
Oil prices are the biggest global economic risk factor. Iran produces about 2 percent of the world’s oil supply, which it sells mostly to China. But the greatest liability to the global economy would be if Tehran blocked access to the Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea, because about 20 percent of the world’s oil passes through there. See NYT DealBook.
And that is right. Watch the Strait. But if Iran tries to block the Stait the U.S. will join with Israel in military action against Iran.
Iran is an enemy of the USA. Even if Iranian production is shut in, the global oil market is well supplied. It is important to remember that Saudi Arabia and Iran are adversaries.
I would not chase oil.
Markets and Stocks
The market is okay. My target is 6,000. But stocks are not cheap. So buy on dips and focus on vault stocks. A vault stock is a company that you can buy today and forget about for a decade, with the very high probability that the stock will double in real terms-inflation adjusted-in a decade. AXP, KO, WMT, COST, PEP and JPM are vault stocks. There are many other vault stocks.
Eli Lilly is a vault stock. It is very expensive but its portfolio of drugs should see dramatic growth as the GLP 1 class is prescribed for uses other than weight loss. Importantly, LLY is working on Alzheimer’s drugs.
A new stock idea: CME Group, symbol CME. The company offers financial products such as options and futures. It is a play on the growth of global financial markets and volatility. The stock trades at 22x. The catalyst for a strong move is the probability that the company will announce a $5-$6 special dividend in December. The stock is trading around $225.
Couer announced an acquisition of another silver company. The transaction will be all stock. The deal will be accretive when it closes. I continue to like CDE. But it is a trade.
The yield on the 10 year Treasury rocketed higher on Friday. The September employment report was much stronger than expected. Traders were caught offside. They were worried about a recession. That fear was misplaced-at least for now. Never put too much weight on one employment report. Still, the economy does appear to be quite healthy.
But inflation is falling. On Thursday we should get a positive report on September CPI inflation. The Cleveland Fed is looking for a number around 0.1%. Lower energy prices are helping a lot. The average price of gasoline is $3.17 a gallon.
I look for Treasury yields to fall over the coming months. The yield on the 10 year surged on Friday. The yield is 3.98%. Mortgage rates are priced off of the 10 year. Mortgage rates were up 0.17% on Friday. Home builders sold off. I continue to like TOL and derivative names like HD and SHW.
Sunnova is tanking on the news that Biden will impose additional tariffs on SE Asian solar panels. I think Sunnova will bounce back.