Are these tech stocks worth picking up? Jeffries thinks so


Investment bank Jeffries has selected several tech stocks it thinks could energise portfolios across the rest of 2021.

Jeffries tech stocks

The background

As reported by CNBC, analysts at Jeffries have been scouring tech and semiconductor stocks to see which could perform best throughout the year.

Investors are looking for a mixture of growth and value stocks to add to their portfolios. Technology equities, incorporating semiconductors and micro-components manufacturers, could potentially be on their radars.

It should be stressed now, however, that the world is currently experiencing a global chip shortage. The raw materials needed to create chipsets and other nanotechnologies have seen prices skyrocket throughout the year. This has caused long supply chains and even slowed manufacturing output from the likes of Apple and Tesla.

Back to the equities, Jeffries has warned against taking extreme positions on either growth or value stocks. Instead, the tech firms listed below could be used to strike a balance between the two.

The tech stocks

Jeffries has identified an international collection of stocks split over three subsectors as those to watch.


Samsung and its affiliate Samsung SDI are both on Jeffries list. The bank believes these can be snapped up at a reasonable price. Several Taiwanese companies, including Delta Electronics, Unimicron Technologies, and Nan Ya PCB also make it to Jeffries’ shortlist.

As to be expected, a fair number of Chinese stocks have been flagged as potentials by Jeffries. In this category, laptop manufacturer Lenovo and electronic components supplier BOE Technology Group are considered reasonable price stocks.

Away from Asia, Apple makes the list, despite slowing growth warnings the California brand gave during its latest earnings report. Ericcson makes the list too.


Jeffries likes Korean firm SK Hynix, a manufacturer of memory semiconductors, and Taiwan’s TSMC. Both companies have been flagged as growth stocks at a reasonable price. Novatek Microelectronics, another Taiwanese tech firm, makes the list too.

Texas Instruments, Skyworks Solutions, KLA, and Qorvo are the US semiconductor manufacturers that piqued Jeffries analysts’ interest. European manufacturers on the bank’s quality list include STMicroelectronics and BE Semiconductor Industries.


NortonLifeLock, the US IT security specialist, is considered a quality stock by the Jeffries team. China’s Venustech joins NortonLifeLock on the bank’s quality stock screen.

Elsewhere, Indian company Tech Mahindra has been eyeballed as a stock with high growth potential.

Didi Global: When is the IPO and where can I trade it?


Didi Global, China’s rival to Uber, is looking to raise $4 billion in what could be one of the biggest IPOs in years. Books were covered on the first day of the build, meaning the company comes with an estimated valuation of $62 billion to $67 billion. That would place its market capitalisation some way behind Uber’s $95bn but well ahead of rival Lyft’s roughly $19bn valuation.

The company is offering 288 million American depositary receipts (ADRs) at $13 to $14 each, with a midpoint implying it would raise $3.9bn, making the second-biggest IPO this year behind Coupang Inc. Pricing is due to be finalised Tuesday/Wednesday this week with the stock beginning trade on Jun 30th. The company will list on the New York Stock Exchange under the ticker symbol DIDI.

Didi boasted in SEC filing that it operates in 16 countries and revenues of $6.4 billion for the three months ended March 31, 2021, with net income turning positive at $800m. Rather like Uber and Lyft it has not been profitable before then, racking up $1bn+ losses in each of the last three years.

Uber sold its China business to Didi in 2017 for $7bn and retains a 12% stake in the company after the IPO. The largest shareholder is SoftBank Group, which owns 21.5% ahead of the IPO.

Thematic investing: investing in technology


Our next instalment in the thematic investment series looks at which tech stocks to buy. Investing in technology can pay dividends – but it can also prove tricky too. 

Thematic investing: tech stocks 

Investing in technology: what you need to know 

Technology is an all-encompassing term. It covers an enormous range of sectors. Everything from your smartphone to electric vehicles to productivity, and more besides sits within the technology sphere. Even companies like Disney, with its Disney+ streaming service, or Amazon with its Amazon Web Services offer, are considered tech stocks. 

The best tech stocks to buy will be entirely up to you and what your investing or trading goals are. Be aware that, because of the sector’s diversity, there are many different types of company with differing compositions, market caps and characteristics within the technology space. 

Some might be multi-billion-dollar behemoths like the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google). Others might be market disruptors like Uber or Spotify. Some firms will be well established with vast cash reserves. Others might up-and-comers might be burning through capital but with rapid share appreciation to match.  

That said, tech stocks are amongst some of the best performers. Indices dedicated solely to technology and related firms offer some considerable potential returns for instance. The Nasdaq 100, listing the top 100 US tech stocks for example, is up over 43.8% as of May 25th 2021. The Dow Jones US Technology Index is also showing similar numbers, up 47.92% year-to-date. 

Remember the risks when searching for tech stocks to buy 

Technology is all about innovation. It never stands still. Because of that, even the best tech stocks can be a risky investment. Huge capital investment is needed to ensure a company’s solutions and products remain at the head of the pack. A company can disappear completely if a rival develops a product or service consumers and the market prefer. 

Some tech firms’ valuations have been questioned too. We mentioned Uber earlier. That’s a company that has admitted it may never be profitable. Is that worth the risk for investors?  

Then there are general economic patterns to consider. When times are tough, luxury items like brand new smartphones may not sell well. Thus, the manufacturer’s share price may fall, along with companies supply components and raw materials needed to build a new smartphone.  

When times are good, and consumers have more cash to spend, there might be higher demand.  

Inflation woes play a part too. As recently as late May 2021, we’ve seen tech-sell offs generated by fears that inflation may bite into tech manufacturers and providers’ profitability. This was triggered by a spike in bond yields and general uncertainty around the economic picture caused by the global Covid-19 pandemic. 

All investing and trading is risky. Investing in technology can prove doubly so. Only invest or trade if you are comfortable with any potential losses. Do your research and understand how to pick stocks before committing any capital.  

What are some of the best tech stocks to watch? 

Again, what is the best stock will depend entirely on your individual budget and circumstances. Consider a wide range of different sectors and industries covered under the tech umbrella.  

Diversification, i.e., getting exposure to several different industries, stocks, and sectors, is used by investors to mitigate risk. If one stock performs badly, the theory goes, the other stocks or assets in your portfolio can help protect against that by performing well. 

With that in mind, the below may be tech stocks to buy if they meet your individual criteria. 


AMD makes semiconductors and micro-components used to build everyday essentials like phones, laptops and so on. Its main product line covers graphics cards, microprocessors and motherboard chipsets.  

As of May 25th, 2021, AMD stock was up just over 47%. It also looks like it has a bright future. Latest quarterly earnings saw AMD revenues expand 93% year-on-year, reaching $3.45 billion. Operating income for the quarter was $662 million while net income was $555 million – a 243% increase from the prior year. 

We mentioned earlier how technology companies must invest heavily to keep up with the pace of innovation. In the case of AMD, its investments are a form of protection. Due to intense demand, chipset raw materials are at a premium right now. To avoid shortages, AMD recently inked a $1.6bn wafer supply deal with GlobalFoundaries.  

GlobalFoundaries will be supply necessary components between 2022 and 2024 under the terms of the deal. AMD is now developing second and third generation Epyc server chips – a product of high interest to AMD customers. 

According to the Analyst Recommendations tool on the Marketsx trading platform AMD is rated as a buy by 52.9% of analysts. 


Apple is one of the most recognisable brands on the planet. As tech companies go, they don’t come bigger than the Californian company. Its clean-cut branding combined with a reputation for innovation and useability make its products hot property. Because of that, Apple often makes an appearance amongst the best tech stocks. 

Apple’s latest round of earnings, coming in April 2021, saw the company enjoy yet another blowout quarter. Companywide sales were up 54% y-o-y. iPhone sales shot up 65.5% during this period, spurred on by the launch of the new iPhone 12. Mac and iPad sales outperformed even Apple’s flagship product, notching impressive 70.1% and 79% annualised growth. 

In monetary terms, total revenues were up 53.7%, totalling $89.58 billion. Earnings per share (EPS) beat expectations at $1.40 vs. the estimated $0.99. 

Apple stock is up across the year. It was trading for around $80 in May 2020. Flash forward to May 2021, and AAPL is exchanging hands for about $126. Analyst forecast is bullish with analyst consensus heavily weighted towards buy. 


ASX-listed Xero is carving out a position as a global leader in cloud accounting.  

In its 2021 financial year, the Wellington, New Zealand-based software supplier, managed to expand its subscriber base by 20% to 2.74 million worldwide. Stand out geographies included: 

  • 17% growth in UK customers – 720,000 subscribers 
  • 18% growth in US customers – 285,000 subscribers 
  • 40% growth in Rest of the World customers – 175,000 subscribers 

Growth is carefully pared with stock performance. It’s something to consider when investing in technology stocks. Xero’s average annual 25.1%, which ranks better than 85% of the companies in Software industry, according to analysts GuruFocus.  

The 3-year average Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) growth is 86% – better than 97% of software companies profiled by GuruFocus. Taxes, Depreciation, and Amortization 

Xero’s future is entirely focussed on expansion. It regularly tells investors it has a preference to re-invest cash generated to drive long-term shareholder value. But because it reinvests so much, Xero may not have major profitability going forward. Something to consider. 

Investing in technology: reiterating the risks 

When looking at tech stocks to buy or trade, consider the risks. While you can make money, there is a risk of capital loss. Do your research before committing any capital and only invest if you are comfortable with any potential losses. 


Billionaires, blocks & stocks: super rich shareholders cash in


Some of the world’s richest shareholders are reaping major windfalls from equities sales in 2021.

According to research by Bloomberg, the likes of Amazon’s Jeff Bezos and Google’s Sergey Brin are turning to stock sales to improve their already substantial fortunes.

A 14-month long bull market is helping industry insiders cash in. $24.4bn worth of equities have been offloaded in the period up to the first half of May 2021, compared against the $30bn sold in the same manner throughout the whole of 2020.

The bulk of these sales have been undertaken via trading programmes, a common practice for shareholders of this status.

Usually, large shareholders will sell stock in planned intervals. However, it’s the prolonged stock market rally that’s really made these deals pay off. Whether they were planned or just coincided with the current equities boom is up for debate. The key motivations to sell now are:

  • Valuations coming under pressure from rising inflation
  • Investors becoming wary of potential tighter post-Covid measures from the Fed
  • Joe Biden’s proposed capital gains tax hike

Who is selling?

The following names were mentioned by Bloomberg has being key stock sellers:

  • Jeff Bezos – Sold $6.7bn worth of Amazon shares in 2021
  • Mark Zuckerberg – Sold $1.67bn worth of Facebook shares since November 2021 through the Chan Zuckerberg Foundation charity
  • Larry Ellison – Sold $552.3m Oracle shares
  • Charles Schwab – Sold $192 worth of shares in his eponymous brokerage
  • Sergei Brin – $163m worth of Alphabet stock
  • Eric Yuan – Sold $185m of Zoom shares

One thing to note is that all of the above are involved in big tech players. Typically, such entrepreneurs’ portfolios are heavily weighted to tech stocks. It’s where they generate their wealth after all. However, divesting such levels of stocks makes sense. It’s rarely a great idea to bet solely on one horse, even if said horse has made you a multi-billionaire.

These stock sales will have further ripples away from equities markets. Hundreds of millions could be about to be poured into areas like art, real estate, and philanthropy.

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Stocks steady after tech hit, UK economy resilient, US inflation in focus

Morning Note

Tech stocks have steadied somewhat and shares in Europe are a tad higher this morning, but global stock markets remain in defensive mode. The Dow Jones fell more than 1.3% and the S&P 500 was almost 0.9% lower on the day, even as the Nasdaq composite closed well off the lows to end the day flat. NDX was marginally weaker with the 50-day SMA holding as resistance around 13,375, but the index recovered from the low of 13,094 to finish at 13,351. Apple, Alphabet, Tesla and Microsoft all dipped, weighing on the broader market, but the likes of Exxon, Home Depot and JPMorgan also dragged the broader market down in a day characterised by broad-based selling. European markets were steeply lower on Tuesday, having taken the cue from Monday’s drubbing on Wall Street. The FTSE 100 ended the session –2.5% under 6,950.

Stocks are steadier this morning, with the FTSE nudging 0.7% higher in early trade to 7,000 and the Dax up 0.3%, but investors will be fearful that yesterday’s volatile session is a taste of things to come. For example, the Vix futures term structure is in a fairly steep contango through to October, suggesting investors are concerned about markets going off the boil over the coming months following the strong run-up through the first 4 months of the year. US futures indicate a lower open later.

In early trade today, the FTSE 100 led gains in Europe with miners up on rising prices in China, whilst Diageo rallied as it said profit growth would by 14% this year and restarted a £4.5bn share buyback programme. The FTSE 250 rose 0.4% in early trade as figures showed the UK economy grew by 2.1% in March, meaning it contracted by just 1.5% in the first quarter. The UK economy is far more resilient to lockdowns than at the start of the pandemic, but hopefully, this flexibility will not be tested again. Undoubtedly the true hit to the economy won’t be known until government interventions and the furlough scheme end.

Asian markets have been choppy with Tokyo down 1.6% and the ASX in Australia offer another 0.7%. Shares in Taiwan were hammered, down 8.6% at one stage before ending down more than 4%. Shares in mainland China were higher, and the Hang Seng rose. Iron ore futures hit another record high even after Chinese authorities moved to cool the market earlier this week, whilst coal futures were limit up. Shares in Xiaomi listed in Hong Kong rallied 6% on reports it could be removed from the US black list. Any thawing in US-China relations could be positive for proxies like the AUD.

Oil rose as data showed a drop in inventories, whilst market participants continued to wager on a strong demand-led recovery as OPEC stuck to its forecasts for 2021. API figures showed a decline in US stockpiles of 2.5m barrels. OPEC stuck to its view that demand will rise by 5.95m bpd this year but lowered the immediate Q2 outlook by 300,000 bpd because of rising coronavirus cases in India. The Colonial pipeline shutdown continues but it ought to be restarted almost fully by the end of the week. There have been reports of panic buying of gasoline at US forecourts. Beats loo roll I suppose.

Inflation is the watchword, so today’s US CPI numbers are going to be closely watched. The data, due at 13:30 BST, is expected to show consumer prices up 3.6% year-on-year in April, and +0.2% vs March 2021. Core prices are seen rising 0.3% month-on-month. We were always going to get some hot numbers coming through this summer (base effects, supply chain trouble, higher commodity prices), and the market was always going to freak out a bit. The question is really for later – at what point does transitory turn into something more lasting? Wages are the key. Federal Reserve officials still see the pick-up in inflation as temporary. Fed governor Lael Brainard was the latest to ram this message home, saying yesterday that Friday’s jobs report highlights “the value of patience… remaining patient through the transitory surge [in inflation] associated with reopening will help ensure that the underlying economic momentum that will be needed to reach our goals.”

Jolts job openings figures show the US economy is hungry for labour. A record 8.1m postings were recorded in March, well above the estimated 7.5m. Hiring is not keeping pace – US employers added 770,000 jobs in the month and only 266,000 in April. It underlines a tightness in the labour market that unemployment levels are not truly reflecting. As noted before, this underscores worries about wage push inflation taking hold as businesses struggle to hire workers. The run-off of Federally funded unemployment benefits ought to help – seven US states are ending the support this summer, saying the stimulus cash is preventing people finding work.

US job openings on 12th May 2021.

Tech selloff drives broad retreat

Morning Note

If you are looking for inflation signals, China’s factory gate prices are a pretty good leading indicator. So today’s report showing that producer price inflation rose 6.8% from a year earlier in April, the fastest pace in more than three years, could be of concern. Tomorrow’s US CPI numbers are going to be closely watched. On Friday we saw the market show that an easier-for-longer Fed ought to help risk assets. But whatever the Fed tries and sticks to in terms of its employment mandate, the bond market will move if inflation takes off. The wage component of the jobs report was underappreciated. A lack of employees will drive up wages and end prices. Wage-push inflation is more ‘dangerous’ than cost-push.

My worry is we have a perfect storm of wage-push, cost-push and demand-pull pressures that won’t be as transitory as the Fed thinks (ignoring the fact that inflation is here already, has been for years in asset prices, just not in the narrow gauges used by central banks). US 10-year yields at 1.62% are at the highest in a couple of weeks, whilst 5-year breakeven inflation expectations remain elevated at multi-year highs above 2.7%.

The inflation story matters for the stock market as rising inflation expectations push up nominal yields and the discount rate on the tech/growth/momentum parts of the market that have underpinned the last decade’s bull run. We saw this yesterday. Tech stocks took a beating and dragged the rest of the market down with them. The Dow Jones retreated into the red in the closing part of the session, having earlier hit a record high, as the Nasdaq composite tumbled 2.5%. The Nasdaq 100 fell more than 2.6% and closed below its 50-day simple moving average for the first time the end of March. Tesla fell 6%, the ARK Innovation ETF was 5% lower and Apple fell over 2.5%. The heavy weighting of tech in the broader market left the S&P 500 down 1% for the day. Overnight Asian markets fell sharply, with the Nikkei 225 off 3% and the Hang Seng down 2%. The more commodity focused ASX dropped 1%. US futures point to further losses when Wall Street opens later.

This is shaping up to be another tech bleed as we saw in September last year, with a sea of red on the boards in Europe this morning. Tech stocks in Europe took the cue from across the pond, dragging the major bourses lower but the risk-off tone is permeating the whole market. The FTSE 100 retreated under the psychologically important 7,000 level, having hit a post-pandemic high of 7,164 in the earlier part of Monday’s session. NatWest fell over 3% to 190p after the government offloaded a 5% stake at this price. IAG fell close to 5% as investors showed more displeasure at the government’s green list. Scottish Mortgage dropped over 4% on its exposure to the US and other tech stocks. Whilst this was a tech-led sell-off, the worst sectors are the reflation plays (i.e, the new ‘momentum’ stocks) – basic materials, financials and energy. On the Stoxx 600, the worst sectors this morning are consumer cyclicals, tech and basic materials with only a handful of stocks in the green.

Meanwhile, oil, gasoline and heating oil fell as fears of a prolonged outage of the Colonial pipeline eased. The company said it is working in phases to have the pipe working again by the end of the week. Weaker risk sentiment in the Asian session also sent crude futures lower.

Gold remains well supported on the 38.2% as bulls pause.

Gold chart performance on 11.05.2021

UK preliminary GDP figures are released tomorrow. I’ve previewed what to expect from Wednesday’s printing. Click here for my predictive analysis of the nation’s GDP movements and what it means for the economy moving forward.

Thematic investing: Tech & and the Fourth Industrial Revolution


New technology impacts our lives daily, but what about investing. The fourth revolution is coming and may present some of the best investment opportunities for you. 

Thematic investing & the Fourth Industrial Revolution 

What is the Fourth Industrial Revolution? 

You might be asking yourself “why should I invest my money in this sector?”. Thematic investing is, like the name suggests, picking stocks and companies to invest in based around a particular theme. In this case, we’re talking about the Fourth Industrial Revolution (4IR). 

This is all about disruptive technologies; technologies that change the way we live and the way we work. That includes things like: 

  • Artificial Intelligence (AI)
  • The Internet of Things and great device connectivity (IoT) 
  • E-commerce 
  • Blockchain 
  • Social Media 
  • Healthcare & genomics 
  • Electric vehicles (EVS) 
  • Cloud computing 

How widespread will the 4IR be? 

Unlike other industrial revolutions which tended to be local (think the UK’s massive steam-powered mills and factories in the North of England), the Fourth Industrial Revolution is well and truly global. Today’s advancements in interconnected technologies mean communicating and working with partners around the world has never been easier. 

4IR looks like it could be one of the best investment opportunities because it is likely to touch all areas of the economy. When you’re using your smartphone to shop online, facetime a friend or relative, or use any app, you’re already feeling its effects. 

The Covid-19 pandemic has blended with FIR to push remote working platforms like Microsoft Teams and Slack to the forefront of people’s working days. Tesla is pioneering electric vehicles, not just in personal transport, but also in developing electric trucks for transport & logistics purposes. 

AI, big data and increasingly powerful computing power has also seen a huge rise in data sciences and analytics in any number of fields, for good or for ill. Burnley FC might be using AI to help scout the next generation of football players for its academy, while others have used it to sway elections – who else remembers the Cambridge Analytica scandal? 

Advances in robotics is making manufacturing faster, as well as changing up warehousing operations. Ocado, the UK online grocery retailer, has pumped substantial money into proprietary warehousing robotics technology for instance. 

The World Economic Forum Founder and Executive Chairman Professor Klaus Schwab, a former engineer, believes this is only just the beginning.  

In his book which gave FIR its name, Professor Schwab said: “Prior industrial revolutions liberated humankind from animal power and made mass production possible and brought digital capabilities to billions. This fourth industrial revolution is fundamentally different – characterised by a range of new technologies that are combining the physical, digital and biological worlds. It is impacting all disciplines, economies and industries, and ultimately may even challenge ideas about what it means to be human,”  

We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. 

The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in fields such as AI, robotics, the Internet of Things, autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing. 

So, what does this mean for people exploring thematic investing? Are there any stocks to watch out for? How can you get involved in this worldwide event from an investors’ standpoint? 

Finding the best investment opportunities in the Fourth Industrial Revolution 

Thematic investing is summed up by Exchange Traded Funds (ETFs). These are funds that track markets and indices based around a theme, grouping together stocks based on that theme. Investing in such a fund gives you exposure to a number of stocks at one time, without relying too much on any individual stock. 

In this space, there are many ETFs available. The ARK Innovation ETFs from stellar investor Cathie Wood’s ARK are a good case study here. There are five current ARK exchange traded funds: 

  • ARKQ – ARK Autonomous Technology & Robotics ETF  
  • ARKF – ARK Fintech Innovation ETF  
  • ARKK – ARK Innovation ETF 
  • ARKW – ARK Next Generation Internet ETF  
  • ARKG – ARK Genomic Revolution ETF 

There are other, new funds that are offering investors the chance to invest in a cluster of 4IR stocks. The VanEck Social Sentiment ETF, which is listed as BUZZ on the New York Stock Exchange, lists many tech and social media companies pioneering Fourth Industrial Revolution industries. 

What’s interesting is the BUZZ ETF also uses 4IR tech to select its constituents. An AI algorithm scours the internet to find stocks that are causing the most positive buzz on social networking and news websites. Those getting praise from investors are added – provided they have a minimum market cap of $5bn. 

You may also wish to invest in a single company, rather than a stock. If you were looking at 4IR thematic investing, then you’d be looking at companies involved in the sectors mentioned earlier in this article. So, for EVs, you might want to consider Tesla, e-commerce you might pick Amazon, or big data you might invest in Palantir. 

A diversified portfolio would be a good approach here. Diversification means your portfolio would not lean too heavily on a single stock. With the variety of sectors falling under the 4IR umbrella, there are still ways to invest thematically without overexposing yourself in one particular direction. A mixture of ETFs and stock picks may present the best investment opportunities for you, should you decide to pursue such a strategy.  

Of course, any investment strategy, requires careful analysis and research. It also comes with inherent risk. The value of your investment can go up or down. You could come away with less money than you deposited. Always do your due diligence prior to committing any capital and monitor your open positions carefully. 

Tech roars back as investors Martingale on Tesla, ITV shares down (after Morgan departure?)

Morning Note

Tech roars back: As I said last Friday, this is the kind of market that will trap bulls and bears alike. So yesterday was the classic Turnaround Tuesday as tech came roaring back following Monday’s sell-off. The Nasdaq 100 raced 4% higher and the Composite index rose 3.7%. We can put some of this down to short covering, but equally it seems the market cannot make up its mind in terms of rotation and bond yields. Today’s 10-year auction will be key – a sale of 3-year paper yesterday went off rather well and helped eased yield concerns, with the 10-year dropping 5 basis points to 1.54%. Asian shares failed to pick up the baton and European shares were mixed in early trade on Wednesday after eking our small gains on Tuesday, which followed Monday’s solid rally. The DAX trades near its record high, whilst the FTSE was down 0.5% in early trade under 6,700.


The risers among the tech space were among the big momentum stocks of last year: Tesla rose 20%, Peloton +14%, Baidu +14, DocuSign and Zoom both +10%. Beware these markets – they will take out both shorts and longs. Whilst the rally in tech lifted all boats, the Dow Jones only managed to rise 0.1%, slipping sharply in the last hour of trade after hitting another intra-day high at the top of the session. The S&P 500 advanced 1.4% to 3,875. This huge volatility in such a large stock as Tesla is going to be important. The sheer number of ETFs with exposure to Tesla and – by extension Bitcoin – is vast.


Martingale: a gambling system of continually doubling the stakes in the hope of an eventual win that must yield a net profit. Now yesterday we talked about Cathie Wood of ARK, who said she’s used the market pullback in tech stocks to dump some more liquid stocks, which also happen to make money, like Apple, in favour of her ‘highest conviction’ bets, which promise to do so some time in the future. Now this strategy of doubling down paid off handsomely yesterday as Tesla – the Innovation fund’s biggest holding – rebounded 20% and the ARKK Innovation ETF rose 10%. Timing matters a lot in investing, and I would argue that Cathie got a bit lucky with the bounce back being so strong, particularly as we are yet to see the impact of today’s 10-year bond auction across the pond, which could have serious reverberations around global markets if it goes off like the last 7-year sale. Moreover, I think yields will rise further – historically they are way below where they should be on an expected growth basis. This was one day, and momentum continues to trail value, and ARKK is still down over 20% from the peak set earlier this year. Continually Martingaling like this is surely not an advisable investment strategy, no matter how successful you have been before: past performance and all that…  


Anyway, tech soared yesterday, and volatility was crushed. The market wants to go up even as higher bond yields make people worry about tech valuations. Despite this, short positions on Tesla are estimated to have delivered $4.2bn in profit so far in 2021, according to estimates from Ortex. On the other hand, losses on GameStop short positions are estimated to have lost traders a total of $11bn YTD. Those losses rose again on Tuesday as GME surged another 27%. The put-call open interest ratio stands at a sturdy 3.37, with short interest at 23.6% still, according to Refinitiv data. GME was up another 5% in after-hours markets – at what time does the Street start to weigh in properly on the business’s fundamental case. I can see someone looking to grab a headline by supporting the fundamental case. Current consensus rating is at $16.80, implying a roughly 93% downside. YTD it’s up 1,200%.


Biden’s recovery plan will boost the global economy, according to the OECD. When you dump 10% of GDP on the world’s economy in stimulus, I’d be mighty surprised if that were not true. What’s more of an issue is just how much money is being printed vs the benefit to the economy. It’s not going to be a terribly efficient use of cash. No one is that bothered about this now – but it could become a problem once the economy is back to normal. Morgan Stanley raised its 2021 US GDP forecast by .5pp to 8.1% Q4 noting that reopening is progressing, vaccinations are ramping up and the labour market is gaining momentum. 


Amid and because are very different things. You can say shares are down ‘amid’ a regulatory investigation, or you can say shares are down ‘because of’ an investigation. The latter is more forceful, the former safer for writers and commentators if they are unsure why shares are doing what they are doing – sometimes shares go up or down for no reason at all. ITV shares are down over 4% this morning after the departure of Piers Morgan. Are they down because of this event or just amid his departure? Investors may be a little worried about the loss of ratings for GMB – it wasn’t exactly doing that well before he joined and its primetime slot will have repercussions for ads. Love or loathe, Morgan boosted ratings. It could also be that investors are worried about an investigation over comments made by Morgan on air. Shares were hit yesterday after it revealed the way in which lockdowns have hit ad revenues, but indicated things are picking up and Studios can drive new growth. DB today calls it a buy. You cannot be owning ITV and worry about one host, can you?


A clear pandemic winner, JustEat reported revenues rose 54% to €2.4bn, whilst adjusted EBITDA came in ahead of forecast at €256m, driven mainly by growth in Germany, Canada and the Netherlands. It still doesn’t make a profit on an IFRS basis. The company expects continued strong demand through 2021 as the momentum from lockdowns persists beyond the end of restrictions. New customers have been attracted to the platform and even if they don’t order as much, consumers are fairly sticky once they land. The company said it processed 588 million orders in 2020, representing a 42% increase compared with 2019 as it enjoyed three consecutive quarters of order growth acceleration last year. Investors will be pleased to see the improvement in Delivery efficiency as this lower-margin business makes up a much larger part of group earnings – the share of Delivery orders rose to 26% from 18% in 2019. The Brazilian business is picking up momentum but management reiterated that they remain willing to sell the 33% stake in iFood “if appropriate offer is made that reflects the size and superior growth of this asset”. JustEast says it has turned down several bids, the highest of which amounted to €2.3 billion. Shares advanced 0.7% in early trade.


Gold has recovered on the multi-year trend and multi-Fib support around the $1,695 (61.8% of last year’s rally corresponding with the 38.2% retracement of the 2016-2020 rally – see chart below) area to reclaim the $1,714. Level. Next stop for bulls will be $1,724 but yields are key. A breakdown around $1,690 calls for a retest of $1,585 area.

Gold has recovered on the multi-year trend and multi-Fib support around the $1,695.

Gold has recovered on the multi-year trend and multi-Fib support around the $1,695

Copper prices are in consolidation following a 10-year peak that was driven by a speculative pile-on (supercycle bets) and as rising Chinese stocks are starting to reduce the backwardation in the futures curve. Rising yields and a stronger dollar are also a factor. I would see this more as consolidation that a reversal.

Copper prices are in consolidation

Trump returns, big tech faces antitrust concerns

Morning Note

Don’t be afraid: President Trump returned to the White House, but it might not be for much longer. Whilst Trump almost revelled in his victory over the virus, telling Americans not to fear it, Joe Biden’s lead in the polls is rising. Trump has work to do in the battlegrounds to swing back in his favour.

Wall Street climbs on stimulus hopes

Wall Street rallied as we saw decent bid come through for risk that left the dollar lower and benchmark Treasury yields higher amid hopes that policymakers in Washington are close to doing a deal on stimulus. House Democrat leader Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke yesterday but failed to reach agreement on a fresh stimulus package.

Negotiations are due to resume today and whilst the mood seems to be better, getting agreement so close to the election will be tough but not impossible.

The S&P 500 rose 1.8% to close at the high of the day above the  3,400 level but the intra-day high at 3,428 from Sep 16th remains the top of the channel that bulls will look to take out – failure here may call for a retreat towards the middle of the range again.

Stimulus hopes will drive sentiment, but election risk is also a factor. Vix futures for Oct at $30.86 compared with November’s $32.23.

European markets turned lower in early trade on Tuesday as bulls failed to follow through on the relief rally on Monday – still very much range bound.

As noted last week the key is the 3300 level on the Stoxx 50 and 6,000 on the FTSE 100 to signal the market has broken the range. The S&P 500 is closer to doing it.

Benchmark yields rose firmly with 10-year Treasuries breaking out of the recent dull range towards 0.80%, settling at 0.77% near 4-month highs. The 30-year yield also hit its highest since Jun 9th.

With polling and odds improving for a Democrat clean sweep, the market is starting to price in more aggressive stimulus, greater issuance and bigger deficits. Fed chair Jay Powell speaks later today about the US economic outlook at the National Association of Business Economics annual meeting.

Cable eyes Brexit latest Brexit headlines

Brexit talks rumble on – are we closer to a deal? Deadlines are fast approaching and on the whole it seems more likely than not that we at least see a skinny deal or sorts.

EC vice president Maros Sefcovic has been on the wires this morning underlining that ‘full and timely’ implementation of the withdrawal agreement is not up for debate. The British Parliament and government say otherwise.

Meanwhile the European Parliament is not budging on its demands over the EU budget – whilst the recovery fund was announced to much fanfare, it needs to be delivered for Europe’s economy to recover more quickly than it is.

Democrats to target tech giants

Big tech stocks need monitoring after reports that a Democrat-led House panel will call for an effective breakup of giants like Apple, Amazon and Alphabet. It comes after a long anti-trust investigation by the panel led by Democratic Representative David Cicilline.

If approved and legislation is enacted, it would be the most significant reform in this area since Teddy Roosevelt. Certainly, the concentration of capital in a handful of big tech stocks is worrisome for lots of reason. Even if approved, getting from draft to legislation will not be easy. However, if there were a Democrat clean sweep, it could open the door to some aggressive reforms.

As I noted over a year ago, given that the FAANGs have been at the front of the market expansion in recent years, any breakup or threat of it may act as a drag on broader market sentiment. Calls have been growing louder and louder for the authorities to at least look at antitrust issues for the tech giants.

Political pressure is building – lawmakers sniff votes in tackling big tech. The shift really happened two years ago with the Facebook scandals, which really broke the illusion that Silicon Valley is in it for the little guy.

AUDUSD sinks on dovish RBA meeting

The Reserve Bank of Australia left interest rates on hold, refraining from a cut below 0.25% but maintaining a decidedly dovish bias that still indicates a further cut may occur this year.

The RBA said it will keep monetary policy easy “as long as is required” and will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3% target band. It kept its options open and stressed that it will continue to consider additional monetary easing.

After a decent run since the Sep 25th low AUDUSD was smacked down from its 50-day SMA at 0.7210 to trade around 0.7150. Currently contained by its 50- and 100-day SMAs.

The dollar index broke the horizontal support and the 21-day SMA, with the price action testing the trendline off the September lows. After the RSI trend breach and the MACD bearish crossover flagged yesterday was confirmed. 50-day SMA around 93.25 is the next main support.

The softer dollar gave some support to GBPUSD as it tests the top of the range and big round number and Fibonacci resistance at 1.30 this morning. Markets are also pushing back expectations for negative rates in the UK, which may be feeding through to a stronger pound.

Brexit risks remain but the odds of a deal seem to be better than evens, at least a ‘skinny’ deal that keeps dollar-parity wolves from the door.

The weaker dollar, higher inflation outlook is pushing up gold prices, which have broken above $1,900 but faces immediate resistance at the 21-day SMA on $1,916. Yesterday’s potential MACD bullish crossover has been confirmed.

Palantir IPO: Direct listing moved to September 29th


One of the most hotly-anticipated public offerings of the year is happening next week. Palantir, the secretive data analytics company backed by PayPal co-founder Peter Thiel, will list on the NYSE under the symbol PLTR via a direct listing on September 29th.

The company originally planned to go public on September 23rd, but recently changed the date. Registered stockholders are expecting to sell up to 257 million Class A shares.

During 2020 Q3 around 36 million shares were sold privately at a volume-weighted average of $6.45. So far this year the company has privately raised $900 million at $4.65 per share. The company’s estimated value is between $18 billion and $26 billion.

Spotify and Slack are the only two other tech companies in recent years to have gone public via a direct listing. Palantir is using the same bank – Citadel Securities – that worked with them to help advise it during the process.

How to trade Palantir

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