When’s the last time you bought a car and what was your rate on the loan? I purchased my first new vehicle back at the end of 2017, the 2018 Chevy Equinox. I had just made my final payment on the vehicle last month, days before a drunk driver took it upon himself to crash into my parked car while I was on the tarmac, returning home from the Texas Cigar Festival. My rate on the vehicle was 2.99%. I recently purchased my second new vehicle off the lot, remaining with the Chevy family with a new 2024 Colorado, this time putting the first 1,000 miles on the machine within the first week while driving it back home to the Midwest.
With my 850-credit score, the rate on my loan came in at 7%. Thank you, Jerome Powell, for the higher financing cost. I can see why sales across the automotive industry remain below 2019 levels. Luckily, my Equinox barely depreciated in value throughout the 5+ years of ownership, and I was able to put a nice down payment on the new vehicle.
Macroeconomic Viewpoint
How hard will the market and the economy be hit throughout these next two weeks? Arguably, this can be the make-or-break for the market as we receive CPI & PPI data over the next two days and Nvidia (NVDA) reports earnings next week on the 22nd. It’s wild how just a few years back, a videogame graphics card designer became the most important technology company in the next era of the US economy and the backbone of the market’s rally. My biggest miss was from 6-7 years ago. I was having a conversation with an HPC engineer at Chevron about how they were testing PlayStations in their HPC environment due to the hardware’s rendering speed. Never would I have imagined that this bit of information could have put me in early retirement. If only I had done my due diligence…
So, what’s going to derail the upcoming market rally? Inflation or NVDA? Some economists, including myself, anticipate inflation to come roaring back with a vengeance in the coming months as the macroeconomy remains influx. The University of Michigan Survey of Consumers Sentiment Index for May came in at 67.4%, down from 77.2% in April, well below consensus estimates of 76%. The report suggested that the one-year outlook for inflation jumped to 3.5% while the five-year outlook rose to 3.1%. I anticipate these figures will be coming in at the lower end as analysts tend to wear rose-colored glasses when taking into consideration negative macro factors. We shall see later this week what direction the May CPI/PPI readings take us.
I have no doubt NVDA will report strong results; however, given the recent verbiage from management at Palantir (PLTR) and Super Micro Computer (SMCI), the macro environment may be shifting to a sooner-than-anticipated slowing of growth. If these two firms, each of whom is heavily, heavily involved in AI, whether on the software or hardware side, are a precursor to Nvidia’s earnings next week, one may be seeking to hedge their bets right about now.
I’ll be updating my guidance on Nvidia this week and should have an update by Friday’s report. I’ll be sure to link the information for y’all to review in anticipation of their earnings release. I haven’t had a chance to update my forecast on PLTR quite yet; however, I did release my updates on SMCI the other week. I’m still generally bullish on the name, especially given the pullback.
Super Micro Computer: Growth May Slow In 2025
A lackluster report by Nvidia could very well derail some of my high-conviction names in the tech sector, including DELL, ORCL, IESC, WIRE, and KLAC.
Microeconomic Updates
In reviewing uranium names for this quarter’s cycle, I have picked up on some interesting data points as the industry is revitalized. It is becoming increasingly apparent that firms are seeking to balance capacity between long-term SPAs and spot market-based agreements. In addition to this, I’m seeing a certain degree of price convergence between spot and long-term contracts. This very well could be a driving factor in new mining capacity coming online as spot prices are pulling up long-term prices rather than dragging them down.
Encore Wire (NASDAQ: WIRE)
A premium subscriber reached out to me this week regarding Encore Wire (WIRE) as it pertains to its trading chart.
WIRE Is The Missing Element (NASDAQ: WIRE)
The question was related to the post-earnings price action, which appears to be relatively flat-to-slightly down. Though this is common during a run-up, I do not believe the slight sell-off is an indicator of investors losing interest in the name. From my perspective, the stock has run up pretty far over the last few years and this may be nothing more than a rebalancing effect, a retracement wave from the run-up, or just some market digestion. Stocks don’t just go straight up or straight down; they oftentimes experience some degree of retracement as a result of investors expecting a top or bottom to have occurred.
Shares appear to be hovering around the 0.382 retracement. Shares very well could go as far back as the 0.618 and hit $271/share in the near-term. Honestly, I wouldn’t be overly concerned with short-term movements in the stock. The long-term strategy still stands as discerned across my recent publications covering Eaton Corp. (ETN) and IES Holdings (IESC). Though this company can be actively traded given the waves, I’d say just maintain the holding and watch the valuation materialize.
Uranium Is The Name Of The Game
(CCJ, UEC, UUUU, BQSSF, URA, URNM)
Another subscriber had recently asked me about uranium stocks and how to play the strategy. Given the recent news cycles, it’s no surprise the industry is coming into question. Truth be told, I’m always surprised when my trading charts “predict” the market. There’s no question that I’m a better research analyst and long-term investor when compared to a tactical trader; however, in some cases, companies or industries that have a significant amount of institutional interest can be modestly predictable as they utilize the exact same models as I to work out their trading strategies. Below is the previously reported chart of URA, followed by an updated chart. Though my timing was a bit off, the pattern materialized.
Is Uranium In Another Bubble? (NYSEARCA: URNM) & (NYSEARCA: URA)
From my perspective, the bull case for uranium mining couldn’t be any stronger. Despite the pullback from recent highs in the spot market, uranium pricing remains elevated and appears to be stabilizing at a higher price as long-term contracts are settling at ~$80/LB of uranium. Given the severity of the supply/demand imbalance forecast through 2030, increasing from 50MLBPA to 400MLBPA and beyond paired with the increasing nuclear capacity hitting the grid over the next 25 years (per COP28, 22 countries have agreed to increase capacity by 3x through 2050), I anticipate this dispersion to only worsen, forcing a massive price increase that may dwarf oil’s -$30-to-$115 rally seen in 2022.
The question ultimately comes down to how to invest in the industry. Does one invest in the tried and true powerhouse Canadian producer Cameco, or the smaller exploration companies, or take a more passive approach with the ETFs? Each strategy has its perks and risk profiles. Cameco has the potential to offer some massive upside risk as the firm recently acquired Westinghouse’s nuclear assets, including SMR design and development. This will place Cameco front and center in the next generation of nuclear production across North America as data centers slurp up more and more power capacity. To reiterate a portion of my thesis, I expect each data center to be paired with an SMR throughout 2030+ to offset the baseload and ensure 100% uptime.
What about exploration companies? aka, Junior Miners?
Keep reading with a 7-day free trial
Subscribe to ThePeachPit to keep reading this post and get 7 days of free access to the full post archives.