“My big concern is not whether you have failed, but whether you are happy with your failure.”

–President Abraham Lincoln

The complexity of unrealized risk

Not the theory of complexity. We have already discussed this. Complexity theory is more about hidden risk – seemingly unrelated networks, camouflaged, but perhaps unexpectedly connected and carrying exponentially increased danger through leverage.

There are other kinds of dangers, my friends. Danger open, understood, always neglected, always ignored. Ahh, the human brain, and its aversion to inconvenience. Why think about the worst case scenarios. They only cost money. Until we wish we had better prepared.

Quietly, the American and Japanese military leaders play out various scenarios at the table level. No, they don’t play Risk. The games are, as I said, “more complex” and include not only military, but economic and socio-political outcomes.

At the human level, the US and Japanese naval and air forces collaborate in joint exercises in and over the South China and East China Seas. This cooperation began under the administrations of President Trump and Prime Minister Abe. They continue in the administrations of President Biden and Prime Minister Suga.

On the other side of the world, Switzerland places an order of 6.5 billion dollars for 36 F-35A fighter jets. The aircraft is manufactured by Lockheed Martin (LMT) and runs on engines built by Raytheon Technologies (RTX).

The F-35A was chosen to replace the aging Swiss Air Force fleet of F / A-18 Hornets manufactured by Boeing (BA) and F-5 Tiger manufactured by Northrop Grumman (NOC). The F-35A was preferred over the updated F / A-18A Super Hornet, again manufactured by Boeing with engines manufactured by General Electric (GE), the Airbus Eurofighter (EADSY) and the Dassault Rafale.

Switzerland becomes the 15th country to join the F-35 program, which, for those who don’t know, is the only fifth-generation fighter mentioned here. The rest are all bloated versions of fourth generation fighters. On deck, Finland is expected to spend $ 11 billion to modernize its own fighter fleet. All of the hunters mentioned above are under consideration for this deal, as well as the Gripen, made by Saab.

Return to Asia.

Chinese President Xi assumes a defiant tone, addressing his nation from above in Tiananmen Square a portrait of Mao Zedong in commemoration of the 100th anniversary of the Chinese Communist Party. Xi pledged “resolute action to completely defeat any attempt at Taiwan independence.” Clearly, it remains on Xi’s side and the party’s side that Taiwan has been autonomous from mainland rule since 1949. Chinese military planes have regularly crossed Taiwanese airspace in recent weeks and months. A dangerous game.

From Taipei, the Taiwan Bureau of Continental Affairs said, “The only way to have positive interactions and the sustainable development of heterogeneous relations is to abandon attempts to impose a political framework on Taiwan and to militarily intimidate Taiwan. . “

Time to find names of types of defense contractors?

The group is in disgrace. The only one I’m still in is Kratos Defense (KTOS) and I would like to personally thank Cathie Wood of ARK Invest for her support in this title at this time.

All kidding aside, Lockheed is trading close enough to its three-month lows after suffering a mini-death cross (or traders swing) (21-day Exponential Monthly Average (EMA) falling below the simple moving average of 50. days (SMA)). However, repeating these two lines remains very possible and could cause a mini golden cross in the short term.

Buy some Lockheed Martin shares? I think I might be late already.


Put it in the books

End of the month, quarter and a half. From above, the session seemed calm. Again. The S&P 500 edged down 0.13%, while the Nasdaq Composite failed to hit a new all-time high at the close, dropping 0.17%. Small and mid-cap indices did little more. Still, trading volume has exploded both on the New York Stock Exchange and on the Nasdaq market site.

For the third time in less than two weeks, trading volumes were heavy for reasons of timing and not conviction as a triple witchy expiration was followed by the rebuilding of the Russell Index followed by the end of the quarter / semester. How strange that the last day of a calendar can still lead to frantic activity given that most people interested enough to do so can track their money daily or even in real time these days, thanks to the modern technology.

Among these major indices, the Nasdaq Composite posted a 9.5% increase for the quarter just ended (5.5% only for June), while the S&P 500 rose 8%. The industrialists of Dow? Only 4.5%, the Dow Transport only 1.7%. Yet these Dow Transports have led all major large-cap indexes since the start of the year, up just under 19%, while the Dow Industrials, S&P 500, Nasdaq Composite and Nasdaq 100 are all up between 12.5% ​​and 14.4% for 2021.

The fear factor

We all think of Amazon (AMZN) like a giant, ready to disrupt anything in its path. Conqueror of worlds. Afraid of nothing. Except maybe the new president of the Federal Trade Commission (FTC) Lina Khan.

Amazon filed a petition with the FTC on Wednesday. The company believes Khan had “already made the decision that the company was a threat to competition, having built his academic and professional career to a large extent by claiming that Amazon was responsible for violating antitrust laws.”

In short, Amazon wants Lina Khan to recuse itself from any investigation involving the company because she has criticized the company in the past. To be honest, I’ve been an Amazon for a long time, but I really don’t have a dog in this fight.

It would seem to a layman (not a lawyer) that Amazon is making a point right here. As an investor, however, I think Amazon is on its way to becoming a dominant player in everything it touches. I also believe that the sum of the parts can be greater than the value of the whole.

Leave Amazon alone? I stay a long time. Divide the business into several parts? I stay a long time. That’s what I think of it.

To burst?

Do you kids see the action at Lands’ End (LE) on Wednesday? The stock closed up $ 6.78 to $ 41.05 (+ 19.8%) with no news. In fact, I haven’t seen any news from the company for over two weeks. “Only” 6.3% of the free float was held in short positions as of June 15th, so it was not a short squeeze on the last day of a quarter or something like that.

We have a classic looking handle cut pattern breakout that did not create a gap during training, but left both the relative strength as well as the stock’s daily moving average convergence divergence. (MACD) seeming rather extensive.

Can you trust this movement?

Shares started to rise at the open Wednesday and continued to move in that direction throughout the day. So far LE has only returned a few cents overnight. What I saw was a very large stock trading volume both for Wednesday and for a very similar day on June 2 which was linked to earnings.

Additionally, options trading volume exploded for Land’s End on Wednesday, enough contracts traded in a day to account for nearly 45% of the stock’s average monthly trading volume. Calls for $ 40 expiring two weeks from Friday, June 16 have been particularly active.

Does anyone know something that I don’t know? Did I miss something? Of course, it looks like it.

Kool and the gang

Remember … OPEC and OPEC-aligned oil producers are meeting today (Thursday) to decide on the next phase of their production policy.

Exxon Mobil (XOM) remains my “big oil” choice. Mainly because they have been forced to realize that they need to evolve.

Economy (All Eastern hours)

8:30 a.m. – Initial unemployment claims (weekly): Expecting 385K, last 411K.

8:30 a.m. – Continuing complaints (weekly): Last 3.39M.

09:45 – Markit Manufacturing PMI (June-F): Flashing 62.6.

10:00 am – Construction expenses (May): Provide 0.5% m / m, Last 0.2% m / m.

10:00 am – ISM manufacturing index (June): Waiting 61.0, last 62.2.

10:00 am – Consumer sentiment in the U de M (March-F): Flashed 102.0.

10:30 am – Natural gas inventories (weekly): Last + 55B cf.

The Fed (All Eastern hours)

No public appearance planned.

Highlights of today’s earnings (Consensus expectations for BPA)

Before opening: (AYI) (2.28), (MKC) (0.62), (WBA) (1.15)

(BA, GE and AMZN have stakes in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)

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