Markets, Trump, Election, Oil, RECO, Sell some NKTR
Magnificent 7 short barometer
I am concerned about the major equity markets in the months ahead. We are in unprecedented times with a bubble in AI, first stagflation in 50 years, election interference, war and heavy market intervention among a few other things.
It's official, the U.S. is joining Canada moving towards 3rd world status. Trump became the first U.S. president to be convicted of a crime, it will probably be appealed but never the less, most Americans and the world see it for what it is. Use any means possible to prevent Trump's reelection, some calling it law fare. In a 3rd world country he would go straight to jail, but in America they use a biased legal system in a heavy popular Democratic state, New York.
There was a new poll out May 29th that shows how idiotic this whole Trump trial issue is. The poll reveals that 67% (and 74% of independents) said a conviction or not would not matter on how they vote in November. And 25% of Republicans said they would be more likely to vote Trump if he is convicted. There are tons of comments, here is a handful -
House Judiciary Chair Jim Jordan (R-Ohio), thinks many Americans believe it’s true when President Trump says “They’re coming after my freedom because I'm fighting for yours,” Mr. Jordan said, “And I think the country sees that even more clear today, and that’s why I think he’s going to win.”
Sen. Tim Scott (R-S.C.) called the case a “hoax,” “sham,” and an example of the “weaponization of the justice system against their political opponents.” “This was devastating for the average American watching,” he added.
Reactions were mixed from legal analysts. While some expressed agreement with the verdict, other reactions ranged from disgust to dismay. “It’s a sad day,” Harvey Kushner, chair of the Criminal Justice Studies department at Long Island University, told The Epoch Times.
The verdict against former President Donald Trump “changes nothing” for Americans who are struggling to pay for groceries, gasoline, rent, and electricity, said North Dakota Gov. Doug Burgum. “The common sense of the working people of America is rising up right now because this is going to be the last straw for some of them,” Mr. Burgum said.
Tesla CEO Elon Musk lamented the historic conviction of Donald Trump, calling it “troubling.” “The American people as a whole should decide who is president,” he posted on X, which he owns.
Senate Majority Whip Dick Durbin celebrated the historic and unprecedented conviction. “Today’s verdict is another reminder that Donald Trump is unfit for public service. Now, it is up to the American people to decide if he is worthy of the seat behind the Resolute desk in the Oval Office,”
Sen. J.D. Vance (R-Ohio) says he has never heard his constituents “so frustrated and so angry at what they’ve seen”
This judge, Juan Merchan should have never been involved in this case because of huge conflict of interest. He is a staunch supporter of the Democrats and Biden campaign and his daughter Loren is a campaign manager that makes and raises millions for Biden. She has direct benefit if Trump is smeared and loses support. But as most realize this case is more about politics than law.
Ever since the whole spate of lawsuits began against Trump, it has all back fired against the Democrats and Trump haters. Trump has only gained more in popularity and leads Biden by large amounts in the polls, including the swing states. In the latest CNN poll, Trump beats Biden 49% to 43%. In the latest Harvard-Harris poll, Trump beats Biden 52% to 48% percent. After the Trump conviction, a flood of donations are pouring into his political campaign, over $38 million in less than a day. The world sees the same polls as we do and they know why Trump is beating Biden.
There is still time until the election and polls and things can change but it appears the Democrats and the ruling elte are preparing for a Trump victory. They are scrambling to pass legislation that cannot be changed for 5 years, some calling it 'Trump proofing'. Recently the Biden administration has finalized 37 new regulations and proposed 59 others. For example, their doing this with 5 years of funding for Ukraine, changing EPA rules to cap power plant emissions, ban gas stoves, increase costs of air conditioning. It appears they want their friends to keep making $$ on climate scam.
Who knows what else could happen to try and stop Trump? Whatever it might be, it could surprise markets negatively. I think a Trump and Republican win would be good for markets, but the elites may try to crash them to show otherwise. Anything on the intervention front is possible these days.
In yet another sign of an AI bubble, Texas Utility stock. Vistra Corp. VST has soared over 300% in the past year. It is driven by a narrative that AI will increase data centre power demand so VST will benefit. Sure AI will increase demand, but data centres only use about 2% to 3% of the grids power and the most bullish case, is it climbs to 9% by 2030. If this was just not a pile of hype, all the utility stocks would be up 100% to 300%, but they are not.
Here is my Magnificent 7 short barometer and currently it is not showing a level that would point to a rally or sell off. There has been a little short covering in early May, but not much.
Ukraine is Desperate
Ukraine is losing the war big time with Russia taking territory and Ukraine running out of soldiers and ammunition. In general terms, Russia out shells Ukraine 10 to 1. The neo-Nazis in Kiev are desperate to find ways to get the U.S. and NATO directly involved in the fighting in Ukraine. There is talk of sending NATO advisors and trainers to Ukraine and this may just be a misleading name for soldiers Ukraine has been using U.S. long-range ATACMS missiles (Army Tactical Missile System) to strike targets in Russia occupied Ukraine. However, now they want to push further and strike at targets far inside Russia including cities like Rostov-on-Don, Belgorod, Kursk, Smolensk and possibly even Moscow. It is just a desperate attempt at avoiding defeat at the hands of the Russians. It’s also a sure path to escalation and direct warfare between the U.S. and Russia that could lead to World War III and even a nuclear exchange. Again more uncertainty and surprises for markets.
Oil Correction Over?
The Fed has lost control over the gold market, but not oil. The Biden Administration is desperate for lower oil prices to cool inflation, probably the number 1 election issue. They dumped oil out of the Strategic Reserves ahead of 2022 mid term elections and they might try it again ahead of the November elections. The US Department of Energy is expected to release nearly 1 million barrels of gasoline from the Northeast Gasoline Supply Reserve, created after Superstorm Sandy in 2014, and to be soon shut as part of President Biden’s March government funding package. It is not much in the total supply picture, but reveals their thinking.
Oil corrected down to support levels on heavy shorting. Portfolio managers were net sellers of crude and fuel futures and contracts in the reporting week to May 7, with the equivalent of 143 million barrels sold in the six most important futures and options contracts. And today. June 3rd, oil is dropping down through that support and could test the $70 area. I think there are growing recession fears driving this and perhaps fears of Biden releasing more SPRs this summer. Then again the most likely cause is just pure manipulation to drive energy prices down ahead of the election. This will damper inflation numbers too so the Biden Campaign may get to brag about interest rates coming down with probably one 1/4 cut ahead of the election.
It looked like we witnessed most of the weakness in oil as volume and open interest soared in the later part of May, indicating new long positions. However, those new long positions may be getting stopped out today. Volume has surged today and it will be interesting to learn in the next couple weeks if heavy shorting drove prices down.
US government agencies are warning of higher-than-usual hurricane activity this year as warm sea temperatures and falling wind shear conditions could result in seven major hurricanes in the season beginning June 1, more than double last year’s three hurricanes. With climate scam we hear these dire warnings every year, but maybe this is the year a big one hits the gulf. After all, it is only a matter of when, no matter what the forecasters say. Either way, in the long term I am very bullish on oil&gas.
Recon Africa - - TSXV:RECO - - OTC; RECAF - - - Recent Price - C$1.20
Entry Price - $0.56 - - - - - - - Opinion - buy
RECO sees a constant attack by the environmentalists always claiming RECO will harm the Okavango Delta, a UNESCO World Heritage Site. Even though where RECO is drilling these next two wells is 260 kilometers from the Delta and 50 kilometers from the Okavango river.
RECO will soon start drilling the first well so speculation will rise and sellers will hold off for results. The stock should start firming up and if you have not bought any yet, I would not wait long. Also a JV deal with a major is possible and that could pop the stock.
In the May 23rd news release -Brian Reinsborough, president and chief executive officer, commented: "Our operations teams and contractors are working diligently to ensure we remain on schedule for a June, 2024, spud of the high-potential Naingopo exploration well, the first exploration well in the Damara fold belt. Our drilling teams are now in Namibia, with the Jarvie-1 drilling rig undergoing routine maintenance and certification ahead of its planned move to the well location in the first week of June, 2024. Advanced planning work has also commenced for our second Damara fold belt exploration well, prospect P. Excitement is building ahead of drilling, as recent investor meetings in London and industry conferences have highlighted the significance of the Naingopo well given the large potential for oil and gas resources. With the completion of our recent financing, we are well positioned to execute our drilling plans going forward. And finally, we have progressed our joint venture process to the next level of negotiation, as we are in advanced discussions with potential joint venture partners and expect to conclude negotiations in the coming weeks."
On the chart we have a double bottom and close to breaking resistance. I expect we will see the stock fill the gap between $2.30 and $3.60 on any good news of JV or drill results.
Nektar - - - - NASDAQ:NKTR - - - - - Recent Price - $1.44
Entry Price - $0.68 - - - - - - - - Opinion – sell half
There is no news, but I don't like how strongly the stock sold off last week. Short term it is over sold and at support so it should rebound. However, to protect profits I am suggesting to sell half. If it breaks down through support, it could quickly fall to $0.90 and I will probably suggest selling the rest and same thing on a good rebound because I am leery on tech stocks for the coming months.
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