Weekly Outlook for the week of 26.06.2023

Considering the amount of stuff that happened with Geo-politics during the weekend, it is really nice to see the markets not reacting that badly to those news. I think that the market is more waiting for the news that is going to up during the week, in regards to the home sales, and see if the cooling in the housing market is going to continue, or if last weeks, new homes data is going to be shown in the pending houses data. There is also a large even on Thursday with Jerome Powell speaking, so that is also going to move the markets. However overall this does look like a potentially quite week.

According to data because of the last full week of June was a negative one, this gives a lot of hopes that the month of July is going to rise quite nicely for us to come there are some trading ideas for the coming week that if you would like to have a look at you can.

  1. $MMM : This is one stock that you can have a look at, which settled its lawsuit with the counties and cities in the US in regards to all the forever chemicals that they used for their ear plugs and other devices. Even though the number was a shattering $10.3 Billion USD, that amount is going to be paid in 13 years, and if the companies past is showing anything for the future, that is just 2 years of its net income which it can very easily offload for the next 13 years. This was also shown in the Friday’s stock activity with the stock going up by 4% at the start of the day before closing the day in the green, when the whole market was in the negative territory. I think that this could be a great buy for the coming months, as the issues with the lawsuits leaves the companies news filter, and some positive news comes up with its earnings and capital creation, which is averaging at around 20%.
  2. US 10 year and 2 year bonds: With the current rates being at the highest level for the 2 year and the 10 year in almost a decade, We think that this is the best time to buy some 10 year bonds, and sell 2 year bonds to be able to gain from when the curve turns back from being inverted. This can also be a good hedge overall, as the yield curve tends to normalize, as there are some economic downturns becomes more of a possibility, allowing you too gain from this trade, if you have long portfolio.
  3. $9009 and $4661: Interesting position can be created here with these two Japanese stocks, as we see a great opportunity here. 9009 owns 20% of the 4661 stock, which value is worth almost double the market capitalization of the 9009 total market cap. Even though 9009 is a great profitable business on its own, this stake alone is worth double the current market cap of the entire stock, meaning that this is a greatly undervalued stock that we think has great potential to get back to the par value of at least the value of its stake in 4661.

This where the picks for this week, but overall we think that there is a lot of opportunities in the overall market, as almost all the gains for this year’s S&P 500 have been fueled by the 7 largest stocks, but we think that there is going to be more movement in the rest of 99% of the stocks in the index. You can also email us your trading ideas, and we can have a look at them and get back to you over email.

Thank you for reading until next week for the stock picks.