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As US trade disputes spread to Latin America, Europe and a China deal may be pushed into 2020, markets struggled early in the week but rebounded yesterday.

Hong Kong retail sales were hammered in October but China’s manufacturing finally turned upward. Our emerging market signal is positive with EEM trading just above its 50-day moving average.



We will continue to diversify the portfolio and today rise above worldly concerns with a new recommendation that just may capture your imagination and make you money in 2020.

While emerging markets stocks have been mostly going sideways, there are always opportunities to find stocks on the upswing or high quality companies that have pulled back but present “catch up” potential.

Our new recommendation is from the latter group and is a name most members will know well.

It has been a busy week in emerging and global markets.

The MSCI Emerging Markets ETF (EEM) remains in a negative position, just below 20-day and 50-day moving averages. Our portfolio has a 35% cash position and maintains 10% allocation to an ETF that moves opposite the EEM.

Led by the Magnificent Seven, the S&P 500 is a bit overcooked at the moment. Small and mid-caps, on the other hand, are cheap - and appear poised for outperformance in the New Year. So today, we add a mid-cap life sciences company with high upside potential in an emerging area of biology.

In today’s note, we discuss pertinent developments and institutional ratings changes for some of the stocks in the portfolio, including Alcoa (AA), Duluth Holdings (DLTH), SLB Ltd. (SLB) and the SPDR S&P Retail ETF (XRT).

The fabled “Santa Claus Rally” failed to appear this season, prompting concern for the early part of 2025 among many investors. We discuss what it entails for our investment approach.

The first week in April was quiet for Explorer stocks. Looking at what sectors are doing particularly well through the MSCI World index, technology and other cyclical sectors such as energy have outperformed.

Where are the bargains? Consumer staples, Europe, and perhaps even electric vehicle stocks. The EV slowdown can’t be denied – their first-quarter growth rate was a weak 2.7% vs. last year’s 47%. Hybrids vehicles are clearly preferred by many, and on the rise.

Ford (F) reported a down third quarter, but Explorer stocks had a good week with all positions in the black. MP Materials (MP) and Oracle (ORCL) were up 11%, and SQM rose 8%.

The headline of today’s GDP report will likely be more upbeat than the two previous negative growth numbers, instead showing that third-quarter GDP grew at about a 2% annualized pace.

But beneath these numbers, investor sentiment, economic trends, and geopolitical risks are not all that encouraging.

How should investors take all this in and execute a strategy to exploit the situation?

The technology sector is on fire. Before the market opened on Tuesday, the sector was up 5% for the past week, 15% for the last month, and 34% YTD. It’s also up more than 2% on Tuesday. What happened?


The outlook for many sector stocks greatly improved last Thursday. AI, or artificial intelligence, had been seen as a huge growth engine going forward as companies invest heavily in the technology. Those growth projections got a huge shot of adrenaline and the AI phenomenon got real when semiconductor company Nvidia (NVDA) reported earnings last week.

The auto insurance market has been in a deep freeze since the middle of 2021. But now it’s thawing ... maybe even shifting into growth mode. That means huge potential for companies with direct access to the market.

That’s where today’s idea comes in. It’s a micro-cap internet company that offers unfiltered exposure to the auto, home and renters’ insurance markets.

All the details are inside the February Issue of Cabot Small-Cap Confidential.

The market has been trying to climb off its knees this week as we’re finally getting some solid evidence that both inflation and the job market are cooling.

In a seemingly odd twist, in the short term what’s bad for the economy is probably good for the stock market. While that doesn’t mean we’re out of the woods just yet, I’m going to up our risk profile slightly with a potential big winner in the battery industry.

This company is currently qualifying batteries for wearable technologies and expects to move into more consumer markets, as well as the EV market, in the coming years. All the details are inside the October Issue.

Enjoy!

A tough week for markets as concerns over recession, persistent inflation, and geopolitical tensions grow. Explorer stocks were not spared as they all pulled back with exception of Oracle (ORCL) and micro-cap Kraken Robotics (KRKNF). New restrictions on chip-related sales to China hit semiconductor stocks. An almost $8 billion deal by Brookfield Renewable Partners and uranium producer Cameco to buy nuclear services firm Westinghouse is the latest sign of revival in nuclear power after years of decline. The matchup would create something of a Western nuclear powerhouse, pairing a key nuclear power service provider with the largest publicly traded uranium company and one of the world’s biggest owners of wind and solar projects.

This week we sell two positions and go to Japan for a conservative, high quality play on an overlooked but critical part of the electric vehicle revolution.

The subject heading of my last Weekly Update was “The Weirdest Recession Ever (Maybe)”. We’re starting to see why. Because it may not be a recession at all.

Our healthcare system is broken. Insurance costs have risen inexorably. Doctors are frustrated at being paid less than they are worth. Millions of Americans are unable to afford basic insurance. And Americans are in terrible health. Yet previous attempts to fix the system have failed. So President Barack Obama is hunting for a less expensive system that will keep more of us healthy. I say, “Good luck,” sincerely but skeptically, because while I truly desire a better system I believe the institutionalized powers will make achieving change very difficult. In fact, I think what we need for this challenge is not a president but a dictator.

Today’s new addition is an emerging MedTech company that’s developed a whole-organ therapy system to treat liver-dominant cancers.

These are very difficult-to-treat cancers where survival rates are low. But this company’s system, which was just approved for its first indication last summer, is improving the odds.

It’s an exciting story, both from a treatment and investment perspective.