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GE’s value could slip to lowest among large U.S. industrials

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Regular Crux readers know we’ve been following GE’s epic collapse as Porter Stansberry and other prominent investors have called out its hidden mistakes. You can catch up on our recent stories herehere, and here.

From Reuters:

General Electric, which was the most valuable publicly traded U.S. industrial conglomerate at the beginning of the year, could sink to the No. 4 spot after a prolonged selloff that has shaken confidence in the company.

Valued at close to $580 billion at the turn of the millennium, GE has dropped to around $125 billion and it was surpassed in value by 3M in January for the first time since the 1970s.

At one point last week, the gap between GE and fellow U.S. industrial Honeywell International was $6 billion, or 5%. The difference between GE and United Tech Corp’s market values fell to $15 billion.

Helping to narrow the gap is a 45% slide in GE stock over 2017 and a 16% fall this year.

Driven in value by a series of investments in several sectors during the 1990s, GE is now paying the price for focusing outside its traditional industrial manufacturing turf, while its rivals have enjoyed a more steady ascent thanks to a sharper focus on their industrial roots.

“All the large-cap diversified industrials like Honeywell, United Technologies and 3M to name a few, have benefited from some of the money that’s come out of GE,” said JPMorgan analyst Steve Tusa, who has a five-star rating on Thomson Reuters Eikon for recommendation performance.

“You’re really talking about maybe a mid-teens stock at 2020 … $20 I think is a very long-term target that really isn’t in the equation at this point,” Tusa said of GE’s shares, which closed at $14.64 on Monday.

Tusa rates GE’s stock “underweight” with a price target of $14.

But some analysts are optimistic about GE’s stock and future prospects.

William Blair & Co analyst Nicholas Heymann believes that the worse could be over for GE, and its shares are likely to begin stabilizing before moving higher as 2018 progresses.

“I think GE shares have been a bit oversold due to excessive fears about liquidity,” Heymann wrote in a note.

Heymann cites higher oil prices, improving performance of GE’s aviation and healthcare businesses, and the recent nomination of three “exceptionally talented” directors to GE’s board. He has an “outperform” rating on the stock.

GE shares slid even after the company replaced Jeff Immelt as CEO last August with John Flannery. His turnaround plan, which includes cutting jobs, slashing GE’s dividend and a possible break-up of the conglomerate, is likely to take a year or more to show results.

When Immelt took over in September 2001, GE was the most valuable U.S. publicly traded company. But during his tenure, which ended July 2017, the stock price fell about 40%.

Over Jack Welch’s stint as CEO from 1981 to 2001, GE’s value rose from $13 billion to several hundred billions of dollars. Welch has since written or co-written bestselling books on management

Continue reading at Reuters…


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Stocks

Why the bull market will be over by November

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From Justin Spittler, Editor, Casey Daily Dispatch:

“I want to talk about death.”

I heard an extremely successful trader say this last week. He was speaking to a room full of investors and business executives. The group included Doug Casey, Bill Bonner, E.B. Tucker, Nick Giambruno, and David Forest. There were also two other traders from Wall Street in the building.

We all came together to attend an exclusive investing conference in Miami’s South Beach. There, we discussed huge money-making opportunities that almost no one else is talking about. We also talked about the biggest threats facing investors.

Over the next few days, I’ll share some of the best ideas from that conference with you. But first, let me tell you how we got on the subject of death. You see, this trader wasn’t talking about a loved one who recently passed away… or even the idea of death…

He was talking about the death of the bull market…

Specifically, the bull market in U.S. stocks. Yes, the one that just turned nine years old last month.

Now, I know many investors can’t imagine this bull market ending. That’s because U.S. stocks have rallied despite sky-high valuations, weak economic growth, and record debt levels.

Nothing could get in its way. As a result, many folks think this bull market will run forever. But that couldn’t be further from the truth.

As you’re about to see, this trader thinks that this bull market is running out of steam fast. In fact, he believes the market could top out in “six to seven months.”

I’ll tell you why in a second. But let me first introduce this mysterious man.

I’m talking about Jeff Clark…

Jeff is a master option trader. He used to manage millions of dollars for investors in Silicon Valley.

He also has an incredible track record. You see, Jeff’s generated 389 winning trades since 2004, which is when he started sharing his trading ideas with the public. That includes 82 triple-digit winners and 296 double-digit gainers.

As if that weren’t impressive enough, remember that this track record covers 2008 and 2009, which were two of the most volatile years ever for stocks.

You see where I’m going with this. In short, it pays to listen to Jeff, especially when the market gets turbulent.

And right now, he’s saying that the U.S. stock market is wobbling on one leg. The warning signs are everywhere.

Unfortunately, I don’t have time to share all those warning signs with you. But I can tell you one of the biggest reasons he’s turned bearish…

Volatility has come storming back…

You can see what I mean below. This chart shows the CBOE Volatility Index (VIX) since the start of last year.

The VIX, or what most people call Wall Street’s “fear gauge,” measures how volatile investors expect the market to be over the next 30 days.

A high VIX generally means that investors are fearful. A low VIX generally suggests that investors are complacent.

You can see that the VIX stayed below 16 for pretty much all of last year. It also dipped below 10 several times. This is extremely rare. In fact, last year was one of the least volatile years on record. Nothing could faze investors.

It’s been a much different story this year. As you can see above, the VIX has exploded higher this year.

This tells us that investors have woken up. They care about bad news again. That means we could see even more volatility going forward.

And that’s a huge deal. According to Jeff, volatility soars just before major bull markets roll over and die. It happened during the final innings of the dot-com bubble, and again just before the 2008 financial crisis.

In short, the recent explosion in volatility could mean that the market’s about to tumble…

And given how low volatility’s been, Jeff says that “there’s a potential for a very powerful move.” And after that, “most investors will be screwed.”

Still, it’s not time to hit the panic button. Jeff thinks we’ll see one more major rally before the market tops out six to seven months from now.

In other words, we still have a chance to make a killing in U.S. stocks.

Sadly, most investors will let this opportunity sail right by them. They’ll either panic sell or hold their stocks through the coming crash. Neither is a good strategy.

If you really want to juice your returns in the months ahead, you’ll want to learn how to trade options. But the good news is that Jeff can help.

You see, Jeff says that the best time to be an option trader is when volatility is rising, like it is right now.

Jeff will be keeping a close eye on the VIX as we head into the week, and especially as he puts together his next Delta Report trade recommendation. To take advantage of this opportunity, you should consider signing up for his Delta Report advisory today.

But first, check out this video presentation. It details another of Jeff’s favorite indicators to use when searching for short-term, high-upside opportunities in the options market.

Regards,

Justin Spittler
Buenos Aires, Argentina


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Boeing, Raytheon charts show defense stocks still have upside

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The largest name in aerospace and defense, Boeing has major exposure to military-grade aircraft, rockets and more. Shares of the manufacturer rallied 130 percent between February 2017 and February 2018 before being dragged down in March.

After finding its floor of support, Boeing’s stock has been bouncing back. Moreno pointed out that it recently made a rounded bottom pattern, which helps technicians predict a stock’s future path.

When Moreno added the height of the rounded bottom pattern to Boeing’s ceiling of resistance at $340, he came up with a potential price target in the $360s. Unless Boeing’s stock breaks down below its $313 floor of support, Moreno was bullish on the uptrend.

“Moreno believes there’s a good reason to be positive here,” Cramer said, adding that Boeing’s Chaikin Money Flow oscillator, a tool that measures buying and selling pressure in a stock, is in positive territory.

“Boeing is only a few points away from breaking out to the upside,” Cramer said. “If the stock can rally $5 bucks from here, Moreno thinks the next $25 bucks could be smooth sailing.”



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This market ‘wizard’ just predicted another rally

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From Nick Rokke, Editor, Palm Beach Daily

They call him the Gandalf of Wall Street…

For those who don’t know, Gandalf is the wizard from the Lord of the Rings series whose predictions often turn out right… just like Marko Kolanovic’s do.

Kolanovic is one of the most respected market forecasters out there.

He came to prominence after forecasting the August 2015 flash crash. He was only a couple days away from calling the September bottom. And then he called the top in October before the market pulled back over 12%.

Predictions like those helped make Kolanovic one of JPMorgan’s top strategists.

Here’s why I’m telling you about Kolanovic…

Last week, he made his latest prediction. He told Barron’s that—despite the recent 7%-plus drop in the S&P 500—the market would rebound off strong earnings.

“The market will recover,” he said. “We are less than two weeks from what we think will be the strongest earnings season in recent history.”

This is a bold prediction…

You see, when earnings go up, stock prices typically follow. And we’re about to see the strongest earnings season in the past 20-plus years.

If you’re nearing retirement or just starting to put together your retirement plan, here’s why you should follow Kolanovic and add some equities to your portfolio…

Wall Street Isn’t Playing Its Usual Game

In January, I told you Wall Street liked to play a shady “bait-and-switch” game with investors.

The game allows for analysts to make higher valuations in the present… but then gives companies an easier target to “beat” their earnings estimates later on.

It works like this: Analysts start the year with a relatively high earnings estimate. But as the year progresses, they slowly lower it.

The adjusted earnings allow companies to clear a lower hurdle.

This “bait-and-switch” game makes it easier for companies to beat expectations… and for their stock prices to pop after earnings are announced.

And it happens a lot… especially when earnings growth isn’t very strong.

But this isn’t happening right now…

Beating Expectations

Today, earnings are growing faster than analysts have predicted. Instead of revising estimates downward, they’re revising them upward.

This rarely happens, and never to the extent we’re seeing today.

The chart below shows changes in the earnings per share (EPS) estimates in the first quarter of the year over the past 20 years.

As you can see, analysts have revised EPS estimates upwards only four other times before 2018

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Analysts haven’t revised earnings upwards since 2010 and 2011. Those were pretty good years for the S&P 500, too. The index shot up 12% over that span (despite a 19% drawdown in the middle because of Greek debt contagion fears).

Before that, analysts last revised earnings upward in 2004 and 2005. The S&P 500 was up a total of 12% over those two years as well.

Those numbers are far from exciting… But they are signs the market should continue upward.

Strong Earnings Will Push the Market Higher

Typically, the market follows earnings. That’s why people like Kolanovic aren’t worried about the recent dip.

Now, I know the market is volatile. But a lot of the pain is coming from news that doesn’t impact profits (see yesterday’s Daily).

The economy is still strong. Businesses are thriving. And earnings will trump all other news. You’ll want to own equities going into this earnings season.

Regards,

Nick

Crux note: Equities are poised for a rally… But if you’re looking for additional income outside the stock market, you may want to consider what the folks at Palm Beach call Washington’s “Private Pension Plan”…

The best part is, you don’t need to live near Washington, D.C. And you don’t have to spend hours on the phone, or waiting in line at a government agency.

Learn more right here.


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