Steel Wheels

Hey Influence Traders,

You know what time it is?

Weekly Roundup time!

A big loser this week? Crypto —  it got smashed by a tsunami of bad news.

One winner? Investors — again! — because Licia Leslie hosted a live event and showed how her candlestick-based system slays it.

(If you missed it, you can catch the replay HERE.)

The Highlights

      • A 1,667-square-mile (!) iceberg broke off the Antarctic and is floating around the Weddell Sea
      • More taxes are coming
      • More climate executive orders
      • Crypto takes a beating
      • Steel is on the rise

DC Action

      • Infrastructure Counterproposal – Republicans put a $568 billion counterproposal to the Biden administration’s spending plan on the table. It was received poorly by the White House.

Biden immediately drew up a counter to the counter of $1.7 trillion, which reduced the price tag of his initial proposal by $550 billion.

The President is holding firm on energy and climate provisions, but has expressed a willingness to cut some research and development funds.

      • Global Taxes – The Treasury Department has proposed a global minimum corporate tax rate of at least 15%. There is currently no global minimum tax rate.

“Treasury underscored that 15% is a floor and that discussions should continue to be ambitious and push that rate higher," the department said in a statement, adding …

“Treasury was heartened by the positive reception to its proposals and the unprecedented progress being made towards establishing a global corporate minimum tax."

This comes as Biden has proposed raising the corporate tax rate from 21% to 28% and has called for increasing a U.S. minimum tax on multinational’ foreign earnings to 21%.

Critics argue these proposals will make the U.S. less competitive compared to other countries that have recently cut their corporate rates.

Treasury Secretary Janet Yellen has said that establishing a global minimum tax rate could help to end a “race to the bottom" on corporate taxes and help ensure countries are able to raise sufficient revenue to provide public services.

      • Climate Executive Order – The President signed an executive order directing several federal departments and agencies to analyze the risks climate change poses to the U.S. financial system and federal government.

Yellen has begun developing a “whole-of-economy” strategy meant to clear a financially stable path to carbon neutrality.

The order directs Yellen to work with the leaders of financial regulatory agencies to assess climate-related financial risks and potentially develop recommendations to “improve climate-related disclosures and other sources of data, and to incorporate climate-related financial risk into regulatory and supervisory practices.”

The Federal Reserve and SEC have also taken steps to ramp up their oversight of climate-related risks.

The order also directs the Labor Department to potentially kill the rules imposed by the Trump administration that limit the ability of investment firms to consider environmental, social and corporate governance (ESG) risks to pension funds.

      • Crypto Taxes – Biden has proposed that cryptocurrency transfers over $10,000 be reported to the IRS.

The proposal would also double the IRS workforce over a decade, which goes along with plans to invest $80 billion into the IRS to improve compliance and revenue collections.

“As with cash transactions, businesses that receive crypto assets with a fair market value of more than $10,000 would also be reported on," announced Treasury.

The news contributed to the massive crypto slump.

      • Crypto Litigation – The crypto news just kept coming this week as SEC Chair Gary Gensler announced that federal financial regulators should “be ready to bring cases” against bad actors in crypto and other emerging technologies.

“As we continue to stay abreast of those developments, the SEC and FINRA (the Financial Industry Regulatory Authority) should be ready to bring cases involving issues such as crypto, cyber and fintech,” Gensler announced.

“We need to do whatever we can to ensure that bad actors aren’t playing with working families’ savings and that the rules are enforced aggressively and consistently,” Gensler said.

PowerMoves Portfolio Roundup

There’s a lot happening in our Power Moves Portfolio and its Starting Lineup of active trades.

Trading guru Andrew Giovinnazi read my writeup on Ford (Ticker: F) and agrees that it is off to the races, so he acted accordingly …

      • The F June 18/ July 02  13-/11-strike call diagonal spread was $1.30 when I entered and is $1.70 now for a 33% gain. Our plan is to keep rolling this out and aim for a 100% return.
      • Well, the four oddball TPI Composites (Ticker: TPIC) June 18 50-strike calls for $1 ended up OK, but the total lack of liquidity got me nervous — so we closed two calls at $1.50 and two at $1.75 for a 65% total return. This is a great stock to revisit on pullbacks.
      • General Electric (GE) is a play on green energy. We own the GE June 4 14-strike calls for a $.16 credit. That is a 5% return to own the calls outright. The play in GE is just selling 13 puts on pullbacks until we see a breakout.
      • The Vale S.A. (Ticker: VALE) position is down a bit in the five VALE June 18 22-strike calls and 20-strike puts we own for $1.60. We have sold three of the five puts at $.50 and am really just waiting here. We might buy some stock against the puts (200 shares) and see if things bounce, but we’ll wait for under $20 for that. That would create a “married put.” Right now the commodity play that was burning up has slowed.
      • We own four Taiwan Semiconductor (Ticker: TSM) June 18 120-strike calls for $3.10 and one TSM June 18 100-strike put for 1.95. We’ve taken in $470 against them via TSM calls we sold and QQQ put spreads we closed. The stock is so volatile it might have a hard time getting back to even on the calls, which is where we sit. I might end up with a 1×2 call repair trade that I will outline this weekend but TSM was just $119 last week.
      • Palantir (Ticker: PLTR) is $.50 away from break-even and at this point I want to ride the stock I own (200 shares) and the four PLTR June 18 17-strike puts. If we get to around $24, which is where PLTR was prior to earnings, we will have a 10% return overall. 

Power Mover of the Week

The nominees are …

      • Hackers, Again – It’s not just Colonial Pipeline that’s paying off hackers. CNA Financial (Ticker: CNA), one of the largest insurance companies in the U.S., paid $40 million in late March to regain control of its network after a ransomware attack.
      • Middle East Peace – Israel and Hamas agreed to a cease-fire to end their 11-day conflict.
      • Oat Milk – The vegan food company Oatly (Ticker: OTLY) went public with a $10 billion valuation. Shares shot up 26% after hitting the exchange.

But my Power Mover of the Week is – Steel.

Demand for steel is accelerating, with a number of U.S. manufactures profiting from the rise.

And it’s causing ripples across the economy as steel workers, some of whom are earning $85k-plus, are spending that money.

Steel will continue to benefit from any level of infrastructure spending — and more on an interesting name at the end of today’s letter.

Power Loser of the Week

The nominees are …

      • Bill Gates – Recent allegations surrounding his divorce, sketchy workplace behavior, and close friendship with Jeffrey Epstein have tarnished the image of America’s favorite billionaire.
      • Fossil Fuels – The Group of Seven nations agreed to phase out fossil fuel subsidies and immediately stop financing international coal projects.  

But my Power Loser of the Week has to be … Crypto.

Bitcoin dropped and closed the week below $36,000 after China warned that it intends to crack down on cryptocurrency miners, Elon made some (more) controversial tweets and the U.S. intimated that the IRS would be clamping down on cryptos.

Bitcoin is down around 30% on the week and Ethereum (Ticker: ETH) around 40%.

Not pretty!

Ripples Are Colliding in the Steel Industry

You know what cars and bridges have in common? They both require steel.

And steel prices are at record highs with demand continuing to surge.

The industry has seen significant consolidation, which has allowed it to better manage supply …

At the same time, tariffs on foreign imports imposed by the Trump administration have kept cheaper imports out.

Nucor (Ticker: NUE) is the country’s biggest steel producer and is also currently the top performing stock in the S&P 500.

And while the big guys, like NUE and U.S. Steel (Ticker: X), are awesome, I really like the up-and-coming players …

That’s why Cleveland-Cliffs (Ticker: CLF) is being added to the Power Moves Portfolio Starting Lineup.

Keep an eye out for details this week in the Option Pit Stop. (Don’t receive that free letter? Simply email support@optionpit.com to be added to the list.)

CLF is an independent U.S. iron ore mining company and is a supplier of iron ore pellets to the North American steel industry from its mines and processing facilities located in Michigan and Minnesota.

I love the management team – they’ve cleaned up the balance sheet and made some real #PowerMoves …

CLF has invested in its own facilities and executed two strategic acquisitions that have helped to solidify its competitive position and make it a leader in steel production in large portions of the U.S.

Its acquisition of AK Steel and ArcelorMittal US has given CLF great footing in the expanding automotive segment. Those purchases created an integrated steel company by giving them iron mines and blast furnaces.

CLF also has an important competitive advantage in the form of its vertical integration and access to high-grade pellets and metallics in the U.S.

“We are running 24/7 everywhere,” CEO Lourenco Goncalves recently stated.

Unions affiliated with CLF report that some of their members are making upwards of $85,000. Those wages are impacting local economies as workers spend that money.

Steel is rippling through the economy!

Cutting Through the Noise for You.

Frank

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