Earnings season kicks off in earnest Wednesday as JPMorgan Chase & Co. (NYSE: JPM) reports before the bell, which puts it on our Fortune Research Weekly Watchlist this week.
Financials in general should have had a good third quarter, but they’ll have an even better fourth as interest rates rise alongside commodity inflation that is still ripping.
To that point, it’s the Global Energy Crisis — that’s right, we added another capital letter — that remains the big attention grabber across financial media headlines.
Shoot, even the boring ol’ dirty coal market is commanding front page news!
Source: Bloomberg
I can’t remember the last time that happened, but I can remember that our long coal play for this winter — CONSOL Energy Inc. (NYSE: CEIX) — was down 4% Tuesday and you should buy any dips in small increments (a tenth of a stake or less at a time).
If you were nibbling away, you’re doing it right. You don’t want to miss out on this one over the long cold winter ahead.
To that end, I want to draw your attention to another coal producer, Peabody Energy Corp. (NYSE: BTU), which produces thermal coal in several U.S. regions and metallurgical coal in Australia.
Each of those commodities is still vertical and producers have yet to lock in 2022 prices. BTU was down a little Tuesday despite Powder River Basin coal prices moving to an Earth-shattering all-time high of $31 per short ton.
Source: Argus, Fortune Research
To give you an idea of how enormous that is, Peabody produces over 100 million tons of coal at a little over $10 cost. If actually sold at these prices, BTU would generate over $2 billion in profit in 2022.
Compare that to their total revenue last year of $2.8 billion.
Big difference.
Fortune Research Weekly Watchlist: Oct. 12, 2021
So BTU comes in to replace high beta stocks which haven’t done much lately, presumably due to the upcoming options expiry on Friday.
Everything else is the same, though, with our longs UNG, IWM, TQQQ, SPXL and especially ETHE all still in play — even more so if we get a little selloff by Friday.
And our shorts — FXI, EWY, GLD, TLT and EWH — all still look solid too. TLT in particular is beginning to creep up as interest rates relax, and FXI is up 5% in a week, making each one a perfect candidate to go the other way on.
Source: Bloomberg
Buy the dips and sell the rips, folks!
I’ll catch you Wednesday with our FREE TRADE… so stay tuned.
All the best,
Matt Warder
Fortune Research
