Buy Berkshire
After this round of interest rate rise, the US stock market again ushered in the stage of the bottom. Although feel the market did not fall to the end, but these two days rebound also have a certain reason.
Inflation continues to rise is the main incentive for the 75Bps rate hike. Energy prices are at the heart of keeping inflation high. If crude oil prices continue to rise and June CPI data does not come down, then the Fed will take a more "market-expected" approach to rate hikes.
Stocks and energy prices are thus tied together.
But it wasn't just U.S. stocks that tumbled after the rate hike. Crude oil also tumbled. $CLmain(CLmain)$ fell 8% last week, and U.S. oil stocks like $Chevron(CVX)$ $Occidental(OXY)$ lost 15% to 20%.
The fall in oil prices gave the U.S. stock market hope of lower inflation, which is the logic of the rally.
If oil prices continue to fall, stocks will continue to stabilize.
There are three bearish factors for oil prices:
- The Federal Reserve sharply raise interest rates, drag a broad category of asset performance
- Biden will visit Saudi Arabia in mid-July, which could ease the supply problem
- Russian crude oil production is expected to increase further
I think the second point will be the main driver of oil prices in the near term. To win the mid-term elections, the Democrats need to tame inflation, not just by raising interest rates, but by tackling high oil prices.
I'm on the fence about the current market, but still looking to pick up some good bargains after the big drop. With stock filter, I checked the market value of more than 100 billion, PE<10 stocks, the screening results are as follows:
Among the 20 stocks, which cover oil, banks, pharmaceuticals and large-cap ETFs, one of the brightest is $Berkshire Hathaway(BRK.B)$ , which now trades at a historically low PE ratio of 7.
Last lunch with Warren Buffett may be expensive, but Berkshire is too cheap to pass up. I choose to do a sell put at 250 strike price.
Sell PUT Recommended table:
| Ticker symbol | Annualized income | Expiration date | strike price | Premium |
| $BRK.B 20220708 250.0 PUT$ | 14% | 2022/7/8 | 250 | 1.86 |
| $ATVI 20220715 72.5 PUT$ | 26% | 2022/7/15 | 72.5 | 0.97 |
| $VMW 20220715 115.0 PUT$ | 40% | 2022/7/15 | 115 | 2.3 |
| $SIMO 20220715 80.0 PUT$ | 33% | 2022/7/15 | 80 | 1.4 |
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Buy Berkshire