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He disagrees that this is a large-cap tech rally. Energy, financials, materials and industrials have been leading in the last 3 weeks, instead. In the first quarter this year, the FAAANGs stagnated or dipped, like Amazon and Apple, while the market rallied overall. Delta is the most important factor in the market, but Delta has clearly peaked in the U.S. and globally. This means people are coming out again--flights are way up as well as hotel room rates in Vegas, up double-digits vs. 2019. Also, people are returning to work. There's still a lot of unclogging in the supply chain to come, but it is gradually improving, based on ships anchored off Los Angeles.
CLF made a deal today to buy Ferrous Processing. CLF has been turbulent, but its long-term trend remains intact. This deal secures a source of scarp metal for CC, which they can turn into steel--so this is a strategically important deal. This is the future of steel--of making steel out of scrap metal using electric furnaces. Steel is pricey and will come down eventually, but CLF is making money hand over fist, beacuse they buy cheap raw materials, but sell expensive end products. Also, CLF is delevering. Watch for their free cash flow when they report in a few weeks.
He added to this on the way down over a month ago, around $80. He has enough now. This is such a cheap call option on China, about 10% of their enterprise value. Rather, the value is in the U.S. operations which is doing gangbusters. Las Vegas room rates are 65% higher than in 2019. Shares are popping 5% today on news that Jim Cramer has bought shares.
He's holding on. Saw two analyst upgrades today. The company faces a slowdown in China's economic growth, but he expects encouraging guidance to come.