These Three Stocks Can Help You Read the Markets

Today at around 6am, the bitcoin blockchain halved the rewards it pays to ‘miners’ who secure the network.

It dropped from 12.5 bitcoin per block (a block is produced every 10 minutes or so) to 6.25 bitcoins.

While most people fixate on just the price of bitcoin, your editors here at Money Morning think this is just the latest chapter in the evolution of money.

The scarcity of a cryptocurrency like bitcoin stands in stark contrast to the wave of money creation we’re seeing in the fiat system we live in.

And as I touched upon in yesterday’s piece, we’re reaching crunch time.

What comes next?

Well, myself, Sam Volkering, and Lachlann Tierney sat down with publisher James Woodburn last week to discuss exactly that.

And while we certainly don’t have all the answers, I think we have a unique perspective that you won’t hear in many other places.

Anyway, put aside some time this week and watch this video here if you’re keen to find out more.

Now, let’s lower our gaze a bit and bring our focus back to more immediate matters.

And discuss why just three key stocks can tell you all you need to know about the markets and state of the economy…

Three bellwethers to watch

Driving towards the Westgate Bridge in Melbourne last week I noticed something odd.

Or should I say, I noticed the absence of something.

As I drove, a series of blank billboards were staring back at me, when in previous weeks they’d urged me to refinance my home loan/attend ‘xyz’ event/try out some ‘erotic’ nasal spray…

These white spaces were clearly a sign of the times.

Advertising spend is a great indicator of the health of business confidence. And clearly businesses are cutting back on their ad spend right now.

Will it rebound as we come out of lockdown?

Well, watch the billboards and you’ll see.

It makes oOh!Media Ltd [ASX:OML] a good stock to have on your watchlist. Not necessarily to invest in, but just to keep up to date with.

The company is Australia’s largest outdoor advertiser with 37,000 locations across the country and New Zealand.

The share price plummeted from over $2 to as low as 55 cents in March as the coronavirus panic set in, but it has since recovered to $1.05.

You should keep a close eye on how this company is going as it’s an early tell into the general sentiment of businesses all over the country.

Businesses only increase ad spend when they think they’ll get a good return, so it’s a good gauge of business confidence.

US company Caterpillar Inc [NYSE:CAT] is another important stock for investors to watch.

The company makes much of the heavy machinery used in the construction and mining industries.

Strong sales here suggest a good pipeline of capital-intensive projects, which is in turn good for Australia’s miners of iron ore, copper, and coal.

On that front, things look a bit shaky right now.

As reported on Nasdaq.com:

Heavy-equipment maker Caterpillar Inc. (CAT) saw a slump again in its share price in the past one month. It is down more than 15% in a month.

Caterpillar had suspended operations temporarily at certain facilities in the early months of this year due to Covid-19 pandemic imposed supply chain issues, weak customer demand or government regulations.

Although the company could reopen nearly 75% of its primary production facilities by mid-April, it sees its current second quarter to be weaker than the first quarter. The company had withdrawn its financial outlook for 2020 in March, citing uncertainty of Covid-19 impacts.

A lot of the current pessimism here stems from the virus shutdowns. So, it’ll be interesting to see if there’s a case of ‘catch up’ as economies around the world reopen.

Either way, it’ll provide an early tell for investors.

Lastly, the logistics industry typically is a good place to see if consumers are still spending money. After all, that’s how goods get from A to B.

And this has never been more apparent in the age of internet shopping.

Traditionally, American company FedEx Corporation [NYSE:FDX] is the bellwether stock for gauging this aspect of the economy.

But in Australia, a stock like Qube Holdings Ltd [ASX:QUB] can do the same thing for our local market.

The $4 billion company recently raised $500 million in new capital to ‘pursue growth opportunities’.

It’s worth keeping an eye on as their results reflect a big aspect of the real economy…

Make your investing life easier

There’s a lot of chatter right now on what the future world will look like.

From those that say everything will change, to others who say we’ll go back to the way things were.

It’ll probably be somewhere in between.

But no matter what the future looks like, bellwether stocks like these three in the areas of business confidence, construction plans, and consumer buying behaviour, will be what ultimately drives the economy and in turn the stock market.

Watch them carefully as you navigate these tricky times and listen to what they’re telling you.

You’ll find a lot more useful information than you get in the attention-seeking headlines of the day…

Good investing,

Ryan Dinse,
Editor, Money Morning

PS: In this free report, Money Morning analyst Lachlann Tierney reveals two assets set to benefit as the ‘corona crisis’ worsens. Click here to claim your copy today.


Ryan Dinse is an Editor at Money Morning. He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur. With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle. Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.  


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