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Morning Commentary

STACKING CHIPS

By Charles Payne, CEO & Principal Analyst
2/12/2021 9:35 AM

Ford Motor Company became the latest to warn that a lack of supply of semiconductor chips would harm their business - or more precisely, the production of F-150 trucks. When the top-selling vehicle in the country gets held up, the White House takes notice.

The Biden administration now says that an executive order is in the works to alleviate the problem. The White House will review supply chains and develop a long-term strategy to avoid future shortages. I think it’s another reason to make and stack chips here in America.

Sadly, some will use this development as an excuse to go easy on China.

Whatever the solution might be, it had Wall Street seeing dollar signs. In an otherwise boring session, chip makers dominated, and in the process, dragged the S&P 500 and NASDAQ into the plus column right at the closing bell. The irony is unlike other sessions this week, where the internals were impressive, yesterday’s market breadth was negative.

Market Breadth

Winners kept winning, while many stocks stumbled to new lows. But volume flipped as sellers were more motivated, or maybe buyers were taking a break.

 Market Breadth

NYSE

NASDAQ

Advancing

1,477

1,772

Declining

1,763

2,171

52 Week High

242

442

52 Week Low

8

16

Up Volume

1.92B

4.43B

Down Volume

2.71B

6.23B

Only four sectors were higher, but one was the almighty Technology sector, which powered those aforementioned semiconductor chips.

S&P 500 Index

+0.17%

 

Communication Services XLC

+0.11%

 

Consumer Discretionary XLY

 

-0.28%

Consumer Staples XLP

 

-0.44%

Energy XLE

 

-1.54%

Financials XLF

 

-0.32%

Health Care XLV

+0.19%

 

Industrials XLI

 

-0.21%

Materials XLB

+0.10%

 

Real Estate XLRE

 

-0.18%

Technology XLK

+1.10%

 

Utilities XLU

 

-0.57%

Biden Can Save the Chips While Powell Saves the World

Don’t look now, but the Fed balance sheet edged up to $7.44 trillion and looks like a coiled spring ready to move even higher.

Let’s Get Ready to Bumble

The Initial Public Offering (IPO) parade started back up yesterday with the debut of Bumble (BMBL); the dating app started in 2014 by Whitney Wolfe Herd. She now has the distinction of being the youngest woman to take a company public on a major exchange.

The stock rallied to $79.60 +77% before finishing at $70.31 +63%.

Of course, it’s all about Special Purpose Acquisition Companies (SPACs) right now, which are fast and have less scrutiny - and since they can be anything, it leaves a lot to the imagination of the buyer. They are amazing trading vehicles, but it is difficult to separate hype from a timeline of success. And many will not be successful.

With that in mind, I like the IPO process more as an investor. But I love the SPACs as a nimble trader, where you have to float like a butterfly and sting like a bee.

Portfolio Review

We closed out three positions to take cash in the Hot Model Portfolio to 15%.

 

Today’s Session

Looks like another sluggish start out the gate, but there is more cash piling into equities via ETFs and other routes. 

This week was one of the few where money actually pulled out of bonds as a big slug was going into stocks.  More telling is the fact a plurality poured into US equities.

This is a strong trend and could continue for some time, as bond yields continue to climb.

 ETF Fund Flows

Net Flows ($, mm)

AUM ($, mm)

% of AUM

U.S. Equity

2,549.41

3,316,344.42

0.08%

International Equity

2,157.30

1,167,472.96

0.18%

U.S. Fixed Income

-442.44

984,555.88

-0.04%

International Fixed Income

263.23

129,010.39

0.20%

Commodities

-206.41

144,647.16

-0.14%

 

Comments
Have a great week-end Powerful Payne!

Lorin K on 2/12/2021 11:35:54 AM
Looking forward to 4:00 broadcast .... re-assurance you're prepared to continue to give sound/profitable guidance should the market adjust toward year-end. Thanks for the advice ... been profitable to me for my first 3 1/2 months!! Thank you to you and your team!

Robin Lynch on 2/12/2021 1:08:03 PM
Hey Charles, I love your column and read it every day. As to Biden jumping to help the US chip industry; as Ronald Reagan once said, "The most frightening words in the English language are, "I'm from the government and I'm here to help.""

Doug S on 2/12/2021 1:26:28 PM
I think you're great Charles Payne. And I loved your book.
I also love the good work that you do. Do you recommend Bumble.

Veronica Kimball on 2/12/2021 2:30:46 PM
Great commentary this week, Charles! Truly interesting times. Thanks for your efforts!

Trev on 2/12/2021 2:42:32 PM
Hey Charles U and Maria are the only thing holding fox together Every 1st commercial when go on break is black Commerical I think if u are going to cave they should all be Biden black Tired of all the lies FBI CIA DOJ police all corupt Police watch burn and loot FBI ect have made no arrest for all the polictical crimes only people went to jail innocent when u get outlawyered U can't win I hope we servive the next 4 yrs


garry brewer on 2/12/2021 7:49:42 PM
 

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