(+) Things are Heating Up

Now that we’ve officially declared “Global Warming” as misleading, having rebranded it to “Climate Change”, the world seems to be heating up faster than ever. Both land and ocean temperatures are hitting record highs and the only thing rising faster seems to be the Nasdaq. Yep, while it’s certainly hot on the whole of the East Coast, Wall Street is en fuego.

I stated a couple months back that I felt the pundits who were calling for a market selloff were missing the big picture and that is being proven out. Things are looking very good for US stocks right now and I think this will continue. Globally, if there’s one place you want to invest, it’s likely right here.

There is a changing world order right now. After years of China’s resurgence and the increase in globalization, we are now taking a massive step back. Covid and the war in Ukraine, along with China’s saber rattling over Taiwan, is causing companies, and whole countries, to reconsider their supply chain risks.

Do you want to (Apple anyone?) have all your manufacturing based in China? And your electronics industry dependent upon semis from Taiwan (the US?)? These are unacceptable risks for companies. Meanwhile, costs in China have risen to the point where it’s no longer a no-brainer decision from a cost perspective. This is shaking up the world order.

Bringing manufacturing back to the US will take years. And trillions in investment. The process is just beginning and will only pick up steam. Here’s a great link to a guy who I find to be brilliant. It’s worth the 5 minute watch and I would recommend getting on his daily email list as well…

The Greatest Reindustrialization Process in US History || Peter Zeihan

The result of reindustrialization here, along with controlling our own food and energy supplies, is that the US looks great compared to any other country from a top down investment standpoint.

From Tailwinds perspective, and correlating this into a shorter-term stock market view, I believe the geopolitics I just mentioned set the stage for years of opportunity here. Meanwhile, I’m also bullish in the short term for another reason altogether. That would be our political system.

Without trying to get into politics, suffice to say that our government believes it has a blank check to give money away. We are in the process of implementing a 3 trillion dollar infrastructure package, just bailed out regional banks and are trying desperately to forgive all student loans. In short, both republicans and democrats have zero concept of how to balance a checkbook and the Washington money machine is only going to keep printing.

I believe this will result in very sticky inflation and very mild recessions for the foreseeable future. In this environment, stocks are likely to perform well. Companies can raise prices and profits will grow. Consumers will suffer, but investors should do fine.

So, I’m sticking with my call that the market goes higher. The Goldilocks scenario seems to be taking place in the US and I see no reason to panic. Instead, I see the microcaps having a chance to catch up with the broader market.

Valuations got ridiculous in 2021, with many worthless companies getting massive valuations. The inverse happened over the ensuing 18 months with great companies trading in to crazy cheap levels. We are in the early stages (for micros) of resetting to reasonable valuations. This can continue for a while without fear of overvaluation in our stocks.

Anixa (ANIX) had a big day on Friday. Perhaps this article in The Daily Mail was responsible? The highlight from the piece, “Breast cancer vaccine ‘could eliminate disease by 2030’: 15 women who survived aggressive tumors are still in remission up to five years later after receiving experimental shot — now doctors believe a cure is in sight.” If/when investors start believing in the potential of this vaccine to be a cure for all breast cancer, this stock could finally make its move to new highs.

Quest Resource (QRHC) had a minor hit piece published over the weekend on Seeking Alpha. Claiming the debt levels are unsustainably high and likely to lead to equity dilution, the piece doesn’t take into account the coming acceleration in gross profitability as they company has dealt with their integration issues from a large acquisition. Buying opportunity next week?

INmune Bio (INMB) had a big week with three press releases and hitting new 52 week highs. With AAIC this coming week and a string of catalysts in front of the company, I’m hopeful the uptrend only gets stronger from here.

The chart also looks like we’re seeing a big breakout from a huge base. My read is that a move through $12 starts us towards the next real resistance at $20. Let’s go!!!

DFC Advisory Services LLC, dba TW Research Group (TW) is an investment platform for investors seeking unique, disruptive micro-cap stock investment opportunities. We primarily focus on growth stocks listed in the US with market caps under $300 million.