As I write, it’s the first day of Q3 earnings season — and we’re off to a strong start.
When the banks are doing well, America is usually doing well. I’m bullish.
Here’s what I’m thinking…
1. Will Nvidia save the stock market again?
After getting our first taste of earnings, and I’m doubling down on this call.
Remember how markets were teetering in May? Three regional banks had failed… the S&P 500 was limping along like a wounded dog, and Wall Street was betting against stocks.
The mood flipped on a dime, sending the S&P 500 ripping higher through the summer:
Our work suggests another earnings-driven rally is locked, loaded, and ready to fire.
This time, the big upside surprise will come from one of two places…
- #1: NVIDIA: Nvidia’s earnings will blow everyone away (again). A friend of mine, an executive at one of Asia’s top AI companies, just messaged me: “Working on a deal today and was informed Nvidia chips have a 52-week lead time. Crazy!”
- #2: Retailers, restaurants, and travel: Americans continue to spend dollars like they’re printed from thin air. Oh wait, they are. These stocks are expected to have the highest growth of any sector this quarter.
If you’re looking to pick up some pre-earnings bargains, remember to focus on great businesses profiting from disruption.
2. Cyberattacks scare the hell out of me.
Some teenager half the world away can drain your bank account at the click of a button.
Far more money has been stolen by kids behind keyboards than gangsters with guns.
The world’s biggest and supposedly safest companies are not immune. Bleach maker Clorox CLX got hacked recently. Some of its factories were forced to shut down, costing up to $400 million in lost sales this quarter. Ouch!
Here’s what Clorox shareholders thought of the news…
Casino operator MGM Resorts International MGM is another recent cyber victim. Hackers crippled its computer systems, which will dent profits by $100 million.
Cyberattacks are a huge problem with no permanent solution.
But I’ll go back to the line I live by: “Pessimists sound smart; optimists make money.”
Instead of dwelling on how hackers can light a portfolio on fire, we bet on savvy entrepreneurs fighting back. Thanks to the stock market, we can piggyback on their successes by investing in their companies.
3. American factories are being reinvented…
Hercules can carry up to 3,000 lbs. on its back while traveling the length of 10 football fields.
Robin handles around 10 million packages every single day.
These aren’t cute superhero nicknames.
They’re two of Amazon’s AMZN top-performing robots.
Machines are transforming factories across America.
As a share of the overall workforce, manufacturing jobs have never been a smaller slice of the pie. Yet America cranked out more stuff than ever last year, as this chart shows:
This was made possible by robots. Lots and lots of robots.
Amazon employs roughly 750,000 “Hercules and Robins” in its factories.
Robotics are going to drive a big wedge between the haves and have-nots.
Meanwhile, GM and Ford plants are idle due to striking workers.
Tesla’s shareholders are sitting back and laughing at Ford and GM:
This is the big divide I’m talking about, and it’s only going to grow.
My job is to put you on the right side of this trend.