When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Global Market Comments
October 5, 2023
Fiat Lux
Featured Trade:
(THE JOHN THOMAS BIOGRAPHY IS OUT)
(WHY WATER WILL SOON BE WORTH MORE THAN OIL),
(CGW), (PHO), (FIW), (VE), (TTEK), (PNR)
(THE BEST TESTIMONIAL EVER)
If you think that an energy shortage is bad, it will pale in comparison to the next water crisis. So investment in fresh water infrastructure is going to be a great recurring long-term investment theme.
One theory about the endless wars in the Middle East since 1918 is that they have really been over water rights.
Although Earth is often referred to as the water planet, only 2.5% is fresh, and three quarters of that is locked up in ice at the North and South poles. Global warming is freeing up some of this, but not fast enough.
In places like China, with a quarter of the world's population, up to 90% of the fresh water is already polluted, some irretrievably so.
Some 18% of the world population lacks access to potable water, and demand is expected to rise by 40% in the next 20 years.
Aquifers in the US, which took nature millennia to create, are approaching exhaustion.
While membrane osmosis technologies exist to convert seawater into fresh, they use ten times more energy than current treatment processes, a real problem if you don't have any, and will easily double the end cost of water to consumers.
While it may take 16 pounds of grain to produce a pound of beef, it takes a staggering 2,416 gallons of water to do the same. Beef exports are really a way of shipping water abroad in concentrated form.
The UN says that $11 billion a year is needed for water infrastructure investment. It says a lot that when I went to the University of California at Berkeley School of Engineering to research this piece, most of the experts in the field had already been retained by major hedge funds!
At the top of the shopping list to participate here should be the Claymore S&P Global Water Index ETF (CGW). You can get is for a bargain now, as it has just fallen by more than 10% since the stock market melt down began.
You can also visit the PowerShares Water Resource Portfolio (PHO), the First Trust ISE Water Index Fund (FIW), or the individual stocks Veolia Environment (VE), Tetra-Tech (TTEK), and Pentair (PNR).
Who has the world's greatest per capita water resources? Siberia, which could become a major exporter of H2O to China in the decades to come.
“The money pouring out of the emerging markets is not bad for the US. We are the oasis in this situation,” said strategist Louis Navellier, of Navellier Associates.
(RESUMPTION OF STUDENT LOAN BILLS AND THE IMPACT ON THE ECONOMY)
October 4, 2023
Hello everyone,
40 million may be the approximate number of Americans who will be looking at a new monthly bill as of Sunday.
That’s when the pandemic-era pause on federal student loan payments ended.
No one is certain, including economists, how this will impact the economy and households, but retailers and lenders are bracing for a hit.
There is a convergence of events happening now. The first bills will be distributed at a time when households are already dealing with the highest interest rates in decades, when workers are striking across the country, and a government shutdown is a possibility when the 45-day payment agreement expires in November.
Financial services firm, Jefferies is warning that “there could be a significant risk to consumer spending ahead,” due to the resumption of student loan payments.
A Jeffries survey which polled around 600 consumers with student debt, showed that about 70% of borrowers plan to postpone big-ticket purchases from October onwards. Additionally, it was shown that many students plan to cut back on their spending on clothing, travel, and food.
We are moving towards holiday season now, so these extra payments that households must make could drag on consumer spending. Pandemic relief payments and forbearances on mortgages and student loans were just some of the factors that led to households having more to spend during the pandemic. Rather than paying off student loan debt, (that had been paused) much of the relief money went towards clothing, house repairs/renovations, travel/entertainment after pandemic restrictions were lifted. The strong consumer demand has played a role in the higher inflation rates over the past few years. Commencement of student loan debt obligations means that households may have to rein in spending once again, so there is a likelihood that consumer demand will fall.
The typical student loan bill is around $350 a month, but at least 10% of borrowers have a payment of over $700.
Student debt obligations may also eat into a household’s ability to maintain savings. The personal savings rate rose early in the pandemic, hitting 34%. However, now it is at the lowest level since the Great Recession, at 4.6%, according to the Federal Reserve Bank of St. Louis.
The Consumer Financial Protection Bureau has also found that student loan borrowers have fallen deeper into debt during the pandemic, with more than half of borrowers holding higher monthly debt-related expenses than they did before the pause on bills began in March 2020. According to the CFPB, more than 1 in 13 borrowers are currently behind on their other payment obligations. Adding student loan bills to credit card bills and auto loans will undoubtedly squeeze households going forward and may contribute to a slowing economy.
My son, Alex, has just started college this year. I am paying for his college fees upfront. So, no student loan debt in our family.
Happy Wednesday.
Cheers,
Jacquie
Mad Hedge Technology Letter
October 4, 2023
Fiat Lux
Featured Trade:
(HARD LANDING RISK BLOWS UP SMALL TECH)
($COMPQ), (AAPL), (ZM), (CPI), (ABNB)
Today’s price action in technology stocks ($COMPQ) offers us one oversized takeaway – an increased recession scare and a lower chance of the mythical “soft landing.”
Remember, for so long, trading models priced in almost no recession in 2024 and that has quickly changed recently with souring fundamentals.
That’s why Airbnb (ABNB) was down 7% yesterday, not because more people will travel in 6 months, but less.
Whether a recession will hit or not is a big deal, because consumers and corporations tighten up purse strings and contracts don’t get done.
That means a reduced budget for cyber security, cloud space, semiconductor chips, and less money to buy iPhones.
What are some of the warning signs I am talking about?
An entrenched inflation problem which many would agree has been incredibly sticky.
Price inflation soared to a four-decade high in the summer of 2022. While it has cooled in recent months, the CPI began creeping up again in July and continued to rise in August.
The second canary in the coal mine is an inverted yield curve.
This happens when longer-term bonds offer higher yields than short-term bonds.
A 10-year US Treasury generally features a lower yield than a 30-year.
When this reverses and short-term bonds start yielding more than long-term bonds, it’s called a yield curve inversion.
Traders still expect the front end of the curve to drop which will result in the Fed cutting rates to save the day.
Until then, there is no reason to borrow at 30-year durations when investors aren’t rewarded and capital projects are harder to finance when 30-year rates are artificially expensive.
The US Federal Reserve has hiked rates by more than 5% in just 18 months, but it hasn’t had the desired effect because fiscal spending is out of control.
The economy is built on a foundation of cheap money. It’s not just the economy; it’s every facet of it.
The government, the deficits, and the government budget are built on cheap money. And it’s not just the federal government that’s been gorging on this cheap money.
Tech stocks have every reason to want a soft landing to happen or an orderly, short, and shallow recession.
Panic and chaotic unwinding can result in scaring away the dip buyers and after that, it’s free fall.
As volatility creeps up, tech investors need to be on red alert to observe whether fear and panic manifest inside the price action of tech stocks.
If Apple (AAPL) could pull itself out of the short-term doldrums, that would go a long way to delaying the 2024 recession since it comprises a big chunk of tech indices.
Right now, I believe the consensus is a short recession at the end of 2024 and what occurs in the next 2 months will tell investors whether that is moved up or moved back.
If a hard landing rears its ugly head, smaller tech stocks will get hammered.
I have no doubt that these smaller balance sheets won’t be able to endure the roughness of market mayhem.
It could all lead to smaller tech firms selling themselves at fire sale prices to tech behemoths for pennies on the dollar making big tech even bigger.
In the short term, sell any rip in small tech like Zoom Technologies (ZM) and buy and buy large dips in big tech.
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Global Market Comments
October 4, 2023
Fiat Lux
Featured Trade:
(TUESDAY, OCTOBER 31 MIAMI, FLORIDA STRATEGY LUNCHEON),
(DON’T GET SCAMMED BY THE MUTUAL FUNDS),
(THE FALLING MARKET FOR KIDS)
"I wouldn't rush to come back from the beach this summer," said my buddy, Steve Weiss of Short Hills Capital Partners.
