Good Morning,
A fascinating few weeks in the bond markets and you could either listen to me go on about it or listen to the Head of Fixed Interest and FX at CBA Martin Whetton who speaks from a slightly better position of authority.
Now to other things and after having a stellar run Tesla may feel a jolt this week...this happened yesterday:
So Tesla, after putting on a lazy 70% more or less in 3 months, has its CEO making signals he's about to dump $20 billion of his own stock. Funnier thing is his brother Kimbal Musk dropped $100 million worth of the stock on Friday, literally hours before Elon flagged the sale.
Normal market. Criminals running the show.
Investible ideas:
Pork. At the end of September McDonalds announced the return of the McRib. For those not up to speed with the MCD menu it's boneless pork ribs on a burger thing.
Historically this has always been an indicator that pork prices are in a short term low. Usually this coincides with the fall season when hogs are in a cyclical low as well. Think about how much pork Maccas needs to buy to fill these sandwiches and you get an idea of how they're more like a commodities trader than a fast food restaurant.
Here's a swine chart from 2001 to 2011 showing key times the McRib was offered.
Let's pull up a chart for Lean Hogs and see if there's a dip...
It gets even better because not only is Ronald McDonald stuffing buns full of cheap stuff, they also need to buy less beef for the regular patties. Here's Live Cattle futures. Strong as an...well...ox I guess. I wouldn't want to be buying this if I had to sell a Big Mac at the same price as last month. Yes I know they hedge their prices but go down that path and it gets complicated to explain...
Better yet. When the McRib is available the S&P 500 has a higher daily return then when it is not available.
Stats from 2010 to 2017...
However from the point that the McRib was announced to now the S&P 500 has rallied about 9%. If you think the market has already priced in the pork burger rally then it might be time to diversify into specific areas.
Specifically fertiliser still has a way to go in my opinion so I'm still looking at Incitec Pivot on a break upwards.
On Friday I entered META, the ETF composed of companies that are building the Metaverse. The Metaverse will be a horrible place run by corporations that you'll have to visit to do your shopping and meet people. Basically Chatswood.
But seriously there's some great names in that ETF including Meta, previously known as Facebook, Nvidia, Amazon and a host of other companies making the new online world for us. Take a look you won't be disappointed.
All the best,
James
James Whelan | Investment Manager
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