“At last the lake burst upon us—a noble sheet of blue water walled in by a rim of snow clad mountain peaks….as it lay there with the shadows of the mountains brilliantly photographed on its surface I thought it surely be the fairest picture the whole earth affords,” said the American writer, Mark Twain, on his first sight of Lake Tahoe in 1861, pictured below.
Come join me for lunch at the Mad Hedge Fund Trader’s Global Strategy Luncheon, which I will be conducting in St. Augustine, Florida on Wednesday, January 22, 2025. The cost of the luncheon will be $257.
An excellent meal will be followed by a wide-ranging discussion and an extended question and answer period.
I’ll be arriving early and leaving late in case anyone wants to have a one-on-one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at a historic St. Augustine hotel. The precise location will be emailed with your purchase confirmation.
I look forward to meeting you and thank you for supporting my research.
To purchase tickets for this luncheon, please click here.
Amazon has published a Kindle eBook of the autobiography A Life Well Lived - Part I: 60 Years of Memories of the Mad Hedge Fund Trader.
The book is offered for sale at a bargain $9.99 and I am told it was a best seller on the recent Alaska cruise of Cunard’s Queen Elizabeth. To buy the book, simply click here.
The book is an autobiography of the life and times of John Thomas as an adventurer, journalist, photographer, combat pilot, investment banker, and top stock trader in the industry.
John Thomas is a 55-year veteran of the financial markets.
Thomas graduated from UCLA with degrees in mathematics and biochemistry. He then went straight to work for the Atomic Energy Commission at the Nuclear Test Site in Nevada.
With the signing of the first SALT Treaty, spending on nuclear research wound down so John went to work as a war correspondent in Southeast Asia for The Economist magazine in London.
When the war ended, the magazine transferred John to Tokyo where he covered all of Asia and their stock markets. Among the notable figures he interviewed were China’s Zhou Enlai, Chang Kai-shek, Deng Hsiao Ping, and the last of the WWII Axis leaders, Emperor Hirohito of Japan.
In 1982, John was transferred to New York where he became a member of the White House Press Corps during the administration of President Ronald Reagan. The following year, he was recruited by Morgan Stanley to establish an international equity trading division. By 1989, John’s department accounted for 80% of equity division profits.
In 1990, John retired to start his own hedge fund. He was immediately drafted as a civilian pilot to fly in Desert Storm.
After reaping a 1,000% profit in ten years, John sold his hedge fund to go into the oil & gas business to try out the new fracking technology.
Seeing the incredible inefficiencies and severe mispricing offered by the popping of multiple bubbles during the Great Crash of 2008, and missing the adrenaline of the marketplace, John sold his gas business and became an investment advisor.
With The Diary of a Mad Hedge Fund Trader, John’s goal is to broaden public understanding of the techniques and strategies employed by the most successful hedge funds so that they may more profitably manage their own retirement funds. About one-third of his clients are active investment advisors and hedge funds.
John publishes 24 newsletters a week covering global macro, technology, biotech & health care, and artificial intelligence. Since 2008, his Mad Hedge Trade Alert Service has racked up an average annualized return of 51.43%. He currently has 30,000 followers in 134 countries.
John’s career has taken him up to 22,000 feet on Mount Everest, to the edge of space at 90,000 feet in the Cockpit of a MIG-25, and to the depths of a sunken Japanese fleet in the Truk Lagoon.
Why they call him "Mad" he will never understand.
John has recently returned from Ukraine where he escorted American doctors, cash, and supplies to beleaguered hospitals and orphanages.
(META), (NVDA)
All aboard the Meta Express! Next stop: a staggering trillion-dollar valuation.
Remember 2023? The year AI took off like a rocket, not seen since those wild early days of the internet. At the time, Nvidia (NVDA), bless their silicon hearts, soared a stratospheric 240% and breezed into the trillion-dollar club - a place so exclusive, you'd think they'd have a secret handshake.
Now, it looks like it might be Meta Platforms’ (META) turn. After a staggering 200% rally in the past year, some might think this tech stock is just catching its breath. But here’s the kicker: Meta, valued at just over $900 billion, is knocking on the trillion-dollar club's door, and I'm betting they're about to burst it wide open in 2024.
So let's rewind a bit to the days when Meta was about as popular as a payphone.
Back in 2022, their stock was down in the dumps at $89. Wall Street was turning up their noses at Meta's big spending with little to show for it. But CEO Mark Zuckerberg, a man not known for taking things lying down, got Meta's house in order. Layoffs, cost-cutting, you name it - he did it.
And what do you know? Cash flow and revenue started climbing faster than a squirrel on an espresso buzz.
What we've seen with Meta's cash flow and stock price is nothing short of a full 360. But this isn't just a comeback story; it's about a tech titan reinventing itself with the secret sauce – AI.
Despite the 200% leap, some folks on Wall Street are still snoozing on Meta. Why? Because they're missing the AI big picture.
Meta is throwing billions into AI like it's going out of style. They're weaving AI into the very fabric of their business. Think Facebook and Instagram ads turbocharged by AI for precision targeting.
And it's not just ads. Meta's got an AI division cooking up some sci-fi stuff, like real-time cross-language chit-chat (hello, Llama 2) and funky augmented reality gadgets for their Quest brand.
Now, let's get to the nitty gritty. Meta's financials and AI mojo are getting the analysts all hot and bothered. The word on the street is a cool 20% annual earnings growth. And despite being the belle of the ball with a 200% gain, Meta's trading at a forward P/E ratio of 25 based on 2023 earnings.
For a tech heavyweight growing at 20%, that's not just reasonable; it's like finding a designer suit at a thrift store price.
On top of that, Meta’s story is only getting juicier. The user base is growing, AI's about to hit warp speed, and the top brass at Meta has shown they can dodge a curveball and hit it out of the park. There’s more sizzle here than what's baked into the stock price.
The narrative that’s emerging is one of a tech giant not just recovering, but aggressively pivoting into new, uncharted territories. This AI infusion surpasses any tech upgrade. It's a paradigm shift, blending cutting-edge technology with Meta's already massive social media empire.
So, what’s the bottom line? Meta is not just knocking on the door of the trillion-dollar club; they're about to throw it off its hinges.
Looking at their recent moves, it’s clear that Meta's foray into AI isn't just about keeping up with the Joneses. It’s a bold statement of intent, a signal that they’re not content with playing second fiddle in the tech symphony.
With AI as their new best friend, don’t be shocked if Meta struts past that trillion-dollar mark like it’s the red carpet. For the eagle-eyed investors, this is your front-row ticket to the show. Meta in 2024? That's not just an investment story; it's a Hollywood blockbuster in the making. And I, for one, can’t wait to see how this film ends.
Mad Hedge Technology Letter
January 12, 2024
Fiat Lux
Featured Trade:
(FINANCE TURNS TO AI)
(C), (AI)
Tech is at it again and I mean artificial intelligence doing the dirty jobs for senior executives.
Citigroup (C) CEO Jane Fraser is doing the extreme by slashing a big portion of the staff and a reason to feel very comfortable about this is the upcoming implementation of generative AI into the company.
The New York bank said that it expects to eliminate 20,000 positions by 2026, which will save it $2.5 billion. It also intends to shed another 40,000 when it lists its Mexican consumer unit Banamex in an initial public offering.
Each year moving forward, investment banks need less humans, because software is replacing the need.
Gone are the moments when finance degrees were the hottest commodity, now it is all about generative AI.
That would leave Citigroup with 180,000 workers, which would likely make it the smallest of the big four banks in the US and reduce the overall size of its workforce by 25%. It ended in 2023 with 240,000.
Eventually, generative artificial intelligence (AI) could replace the equivalent of 300 million full-time jobs, a report by investment bank Goldman Sachs says.
It could replace a quarter of work tasks in the US and Europe but may also mean new jobs and a productivity boom.
And it could eventually increase the total annual value of goods and services produced globally by 7%.
Generative AI, able to create content indistinguishable from human work, is "a major advancement", the report says.
Silicon Valley is keen to promote investment in AI in not only the United States but in a way that will ultimately drive productivity gains across the global economy.
AI will complement the way bankers work, not disrupting it - making finance jobs better, rather than taking them away.
The report notes AI's impact will vary across different sectors - 46% of tasks in administrative and 44% in legal professions could be automated but only 6% in construction and 4% in maintenance, it says.
The first layoffs began in November 2023, affecting senior managers. Those cuts amounted to roughly 10% of senior manager roles or approximately 300 managers
The disclosure came on a day when Citigroup reported a net loss of $1.8 billion in the fourth quarter resulting from an FDIC assessment of $1.7 billion and other charges and reserves it previously disclosed.
Senior managers are mostly all bark and no bite these days as their work tasks have become irrelevant.
I believe the entire front office staff will be reduced to a pittance soon and by that, I mean single-digit staff.
According to research cited by the report, 60% of workers are in occupations that did not exist in 1940.
However, other research suggests technological change since the 1980s has displaced workers faster than it has created jobs.
The job cuts are part of an internal restructuring that Fraser has called the "most consequential" change to how Citigroup operates in nearly two decades.
Lower wage expense and higher output is a perfect recipe for higher share prices and that is exactly what we will get from Citigroup.
It’s not a surprise that C is investing aggressively in technology and IT.
The playbook is out there and employing a bare-bones staff is the new Silicon Valley and banks are applying the same model too.
Investment banks are the new tech company as every company is forced to become a tech company.
“Technology is a word that describes something that doesn’t work yet.” – Said British Author Douglas Adams
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
(SUMMARY OF JOHN’S JANUARY 10, 2024, WEBINAR)
January 12, 2024
Hello everyone.
Title: Exhaustion
Performance:
January 2024 - +3.43% MTD
2024 YTD - +3.43%
Since inception - +680.03%
Average annualized return - +52.08% for 15 years
Positions:
NVDA 2/$450-$460 call spread
NVDA 2/$460-$470 call spread
MSFT 2/$330 - $340 call spread
BA 2/$190 - $200 call spread
AMZN 2/$130 - $135 call spread
DAL 2/$35-$38 call spread
Each trade is 10%.
Total Net Position: 60%
The Method to My Madness
Markets need to digest the massive moves of the fall before they can move forward, which could take months.
Both stocks and bonds delivered the biggest moves in history.
All economic data is globally slowing, but modestly.
Oil prices and commodities are now trading as one, selling off on a slowing economy.
The tech bull market is back and will continue for years.
Buy stocks and bonds but only after substantial dips.
Commodities and industrials are a second-half play.
John says oil and commodities are discounting a recession, while tech stocks are discounting a boom.
The Global Economy – Slowing Down
Non-farm payroll was hot at 216,000 and better than expected.
The headline unemployment rate maintained a near 50-year low at 3.7%
JOLTS falls in December, nudging lower to 8.79 million.
Weekly jobless claims drop to 202,000, a two-month low.
US Bankruptcies rose by 18% in 2023 and are expected to rise again.
The Auto Business is booming, at 15.6 million units delivered in 2023, a four-year high.
Private Payrolls rise by 164,000, in December, far above estimates and a big jump from 101,000 in November.
Stocks – Indigestion
Was October 2023 a 2009-type Bottom?
If so, we could be looking at rising stocks for another 13 years, making my own Dow 120,000 forecast look conservative.
Certainly, the fundamentals are there, as long as we don’t get another pandemic, or 100 other things that could go wrong.
Santa delivered big time with a monster December rally.
70% of corporate profits went into stock buybacks in 2023.
Nippon Steel pays a huge premium for US Steel (X), retiring our LEAPS at maximum profit.
According to John, we could have another bottom in the S&P500 in two to three months. From there we could see a 10-15% move, at least. Additionally, John comments that individual stocks will continue to rally this year.
We could get three to six rate cuts this year.
No recession or high unemployment in election years.
Bonds – Taking a Break
Bonds could be the Big Trade of 2024.
After the sharpest 19-point two-month rise in market history, markets are taking a break.
The Federal Reserve will cut interest rates sharply in 2024.
Markets are discounting six times, but three are more likely.
Swap contracts are pricing in almost six quarter-point cuts and see a more than 70% chance of a quarter-point policy-rate decrease in March.
Junk bond ETF’s (JNK) and (HYG) are holding up extremely well with a 6.50% yield and 18-month high.
John is looking for an $18-$28 point gain in 2024 with interest.
Buy (TLT) on dips.
John believes we could see the TLT rise to between 110 – 120 by the end of the year. Look for an 18-28% return on Bonds.
Foreign Currencies
Falling interest rates guarantee a falling dollar for 2024.
Bank of Japan eases grip on bond yields, ending its unlimited buying operation to keep interest rates down.
Japan is the last country to allow rates to rise.
Expect the Japanese yen to take off like a rocket.
(FXA) will rally with the coming bull market in commodities.
Buy (FXY) on dips.
Energy and Commodities – No friends
US gasoline prices hit a three-year low on recession fears and replacement concerns by EVs.
Copper to rise 75% in 2024, according to industry analysts.
There is a BUY setting up here in energy when the global economy reaccelerates on a lower interest rates world. Watch (XOM) and (OXY).
New export terminals create a boom in natural gas (UNG) up 45% in three weeks.
Buy (FCX) on dips.
Buy (CCJ) on dips.
Precious Metals – A new 10-year bull market
Gold to hit a new high in 2024.
With fundamentals of a dovish pivot in the U.S. interest rates, continued geopolitical risk and central bank buying are expected to support the market after a volatile 2023.
Spot gold posted a 13% annual rise in 2023, its best year since 2020, trading around $2,060 per ounce.
Investors are picking up gold as a hedge for 2024 volatility.
Gold is headed for $3000 by 2025.
Silver is also a great buy and will also make new highs in 2024 and 2025.
Russia and China are also stockpiling gold to sidestep international sanctions.
Wheaton Precious Metals (WPM) Buy LEAPS and make 400%.
Most gold and silver stocks could double this year.
Real Estate – Coming Back
Pending Home Sales were unchanged in November.
Real Estate is far stronger than people realize.
Mortgage rates are now solidly in the mid-6% range, but the supply of homes for sale is still very low.
REMAX CEO Nick Baily says the market is short 4.5 to 5 million homes which will take a decade to build.
Home prices hit new all-time highs, with nine consecutive months of gains.
Refi demand rockets, as interest rates plunge to four-month lows.
Tight supply and still-strong demand have kept pressure on home prices, which continue to hit new highs.
(CCI) – Buy call spreads.
Trade Sheet
Stocks – buy any dips.
Bonds – buy dips.
Commodities – buy dips.
Currencies – sell dollar rallies, buy currencies.
Precious metal – buy dips.
Energy – buy dips.
Volatility – buy $12.
Real estate – buy dips.
Jacquie’s Post luncheon in Melbourne, Australia, January 10, 2024.
Cheers
Jacquie
Global Market Comments
January 12, 2024
Fiat Lux
Featured Trade:
(JANUARY 10 BIWEEKLY STRATEGY WEBINAR Q&A)
(SPY), (UNG), (NVDA), (UUP), (FXA), (GOOG), (GOOGL), (GLD), (GOLD), (WPM), (BYDDY), (F), (GM), (TSLA)