Domestic plays have come back to life; is a sector rotation at hand?
It’s been a great week for falling interest rate plays, including bonds, precious metals, energy, and even uranium.
The economic data is showing a global slowdown, except for the U.S. which is in good shape for now.
Buy stocks and bonds but only on substantial dip.
Commodities & industrials are a second half play.
The Global Economy – Heating Up
The soft landing is in the pipeline, according to the G-20 finance ministers in Sao Paulo.
Upside risks include faster-than-expected disinflation.
Core PCE comes in cool, at 2.8%, as expected.
University of Michigan Consumer Sentiment dips, from 79.6 to 76.9 in February.
The Fed may drag out the end of quantitative tightening.
Weekly Jobless claims up 13,000 to 215,000.
Q4 GDP is revised down from 3.3% to 3.2%.
The Conference Board bails on Recession Call.
Stocks – Is the Rotation at Hand?
US stocks now account for 70% of Global Stock Market capitalization, thanks to the ballistic move in big tech.
In his annual letter to Shareholders, Warren Buffett says there is Nothing to Buy.
Analysts are raising their year-end targets. John’s target is now at (SPX) 6000.
Big tech continues to dominate, with NVDA earnings at $22 billion YOY, up 225%.
Regional Bank – New York Community Bancorp, is in trouble.
European companies are flocking to the US to List.
Bonds – A Great Week
The bottom may be in for Bonds.
90-day T-bills at 5.25% still offer an attractive alternative.
Markets are discounting three rate cuts starting around mid-year.
Junk Bond ETFs (JNK) and (HYG) are holding up extremely well with a 6.37% yield.
John is seeing an $18-$28 point gain in (TLT) during 2024.
Buy (TLT) on dips.
Foreign Currencies – On Top Again
US$ holds three-month highs.
Falling interest rates guarantee a falling dollar for 2024.
Buy currencies now to position yourself for a US$ fall.
Energy & Commodities – Range Bound
A global commodity rally has dragged oil up.
Slow Chinese growth still drags on the global oil market.
Natural gas rallies 10% on the week.
US continues to dominate markets with 13 million barrels/day production.
Electrification of the US economy will continue to be a driving theme.
There is a “BUY” setting up here in energy when the global economy reaccelerates on a lower interest rate world. Watch (XOM) and (OXY).
Precious Metals – Signs of Life
Precious metals have a great week on slightly falling rates.
Investors are picking up gold as a hedge for 2024 volatility.
Gold is headed for $3000 by 2025.
Silver is the better play with a higher beta.
Russian and China are also stockpiling gold to sidestep international sanctions.
Real Estate – Getting Ready for the Spring
Existing home sales jump 3% YOY.
Construction spending dives in January in a shocking data release, the worst since October 2022. A jump in mortgage rates from 6.40% back up to a restrictive 7.0% is probably the cause.
New Home Sales weaken.
But demand for new construction remains underpinned by a persistent shortage of previously owned homes.
Toll Brothers rocks, taking the shares up 6% with extremely strong demand for new homes on the horizon. The gale force demographic tailwind continues.
Trade Sheet
Stocks – buy any dips.
Bonds – buy dips.
Commodities – buy dips.
Currencies – sell dollar rallies, buy currencies.
Precious Metals – buy dips.
Energy – buy dips.
Volatility – buy $12.
Real Estate – buy dips.
Next Webinar
12:00 PM EST Wednesday March 20 from Silicon Valley
Cheers,
Jacquie
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2024-03-08 20:14:522024-03-08 20:14:52March 8, 2024
Remember the talk about a new breed of AI that's been keeping tech forums and Wall Street chats abuzz for the past year?
Well, this new generation is said to be a leap forward, empowering systems to draft documents, summarize extensive data, tweak computer code, and even whip up presentations from scratch. It's like having a digital Da Vinci at your fingertips, only this artist is also a scribe, a coder, and an analyst.
Now, Bill Gates, a name that needs no introduction in tech circles, dropped some pearls of wisdom recently. He predicts that AI is about to flip the tech world on its head, especially how we interact with computers.
The father of Microsoft (MSFT) believes that in the next five years, AI "agents" might be handling tasks that would've seemed like a pipe dream a decade ago. In fact, Gates' crystal ball predictions put the economic jackpot of generative AI at a cool $1 trillion. And that's just for starters.
This is where Palantir Technologies (PLTR), the “godfather” of AI, comes in.
With roots planted by Peter Thiel of PayPal (PYPL) fame in the shadow of 9/11, Palantir initially set out to make sense of the data chaos for United States intelligence and law enforcement, spotting the baddies before they could act.
At the time, the CIA's venture capital segment, In-Q-Tel, emerged as one of the first investors in Palantir. The company’s AI systems later attracted more investors, expanding their reach to many government agencies in the US, including the FBI and the Department of Defense.
Fast forward, and Palantir's AI tools have grown up, now flexing their muscles not only across various government agencies but also into the corporate world.
Since it’s a pioneer in the AI movement, it came as no surprise that Palantir also became one of the first to explore generative AI. With its ability to offer productivity leaps that can save businesses big bucks, it's no wonder everyone from startups to conglomerates is paying attention to this technology.
Estimates are all over the place, but let's just say the potential market could hit $1.3 trillion by 2032, with some even whispering about a $13 trillion impact.
In short, it's a big deal, and Palantir is smack in the middle of it. Let’s take a closer look.
Ever since Palantir wowed us with a knock-your-socks-off fourth-quarter earnings report back last February, its stock has been on a bit of a joyride, leaping nearly 50%.
Why, you ask? Well, these folks saw their revenue balloon by a cool 20% year over year, hitting $608.4 million, with a hefty slice of that growth coming from a 32% spike in their commercial business revenue. It seems like everyone wants a piece of what Palantir's cooking.
Now, don't get me wrong, their government contracts are still bringing home the bacon, up 11% year over year to a tidy $324 million.
But here's the thing: even though Uncle Sam currently pads out 53% of Palantir's revenue pie, it looks like the scales are tipping in favor of commercial clients. And why wouldn't they? This side of the business has room to play with pricing and doesn't get tangled up in as much red tape.
So, what's fueling the fire? You guessed it – generative AI.
Palantir has been enjoying a skyrocketing surge in new sign-ups and growing bonds with the old guard, all thanks to their shiny new toy, the AIP (Artificial Intelligence Platform). It's like they've unleashed a secret weapon, and boy, is it making waves.
AIP isn't your garden-variety software; it's a powerhouse suite juiced up on generative AI. Imagine it as the ultimate data whisperer, pulling in bits and bobs from everywhere – those endless video calls, rapid-fire Slack chats, dense PDFs, snapshots, you name it.
Then, with a sprinkle of AI magic, it sifts through this maze of unstructured data, pulling out nuggets of insight that were hiding in plain sight.
This isn't just handy; it's a game-changer, pushing decision-making into overdrive by weaving new, operationally relevant info into the fabric of enterprise strategies.
The cherry on top? AIP's charm offensive has been nothing short of spectacular, helping Palantir seal the deal on 103 contracts, each ringing in at over a million bucks in annual recurring revenue during the fourth quarter alone.
Talk about expanding the battlefield – AIP's stretching Palantir's reach into markets it probably didn't even dream of tapping into before.
However, Palantir's secret sauce isn't just AIP. Their Bootcamp approach to marketing is like a masterclass in wooing customers. By rolling up their sleeves and showing off AIP's bells and whistles in these hands-on sessions, they've managed to shrink sales cycles down to a blink and turned prospects into paying customers faster than you can say "AI."
It's like watching a magician at work, turning curiosity into contracts with a snap of their fingers.
So, if you're sitting on the fence about diving into Palantir's stock, here's the scoop: with solid financials, a knack for pulling in commercial clients at breakneck speed, and AIP setting the stage for a whole new level of growth, this is a bandwagon you might want to jump on. For the long-haul investors out there, Palantir's shaping up to be the kind of ride that could make the wait worthwhile, offering a front-row seat to the AI revolution.
Management at Apple including CEO Tim Cook need to get with the times or else they risk being left behind.
Large existential risks aren’t only felt by Apple, most of the tech sector risk being left behind by the AI bandwagon.
If there was any inkling that I might be wrong about this then explain the latest data point about Apple’s lackluster sales in Asia.
Sales of Apple’s iPhone plunged in China by 24% year over year as Apple faced stiff competition from local smartphone firms like Huawei, Oppo, Vivo and Xiaomi.
Apple came under particular pressure from Chinese tech giant Huawei, whose consumer business is experiencing a resurgence in China after the launch of its Mate 60 smartphone.
Several rival Chinese smartphone companies also logged drops in their unit sales in the six-week period, but the declines were less pronounced than that of Apple.
The best-performing smartphone brands for the first six weeks were Huawei and its spinoff Honor, which branched out of the tech giant in 2020 as a result of U.S. sanctions.
Huawei smartphone unit shipments rose 64% year over year in the first six weeks of 2024.
Apple is facing a backbreaking environment in its cash cow China.
Local Chinese smartphone makers have caught up and make a pretty nice version of a smartphone comparable to the iPhone including a reinvigorated Huawei.
Customers flocked to iPhones, once Huawei’s phones lost their competitiveness due to the lack of 5G and no cutting-edge semiconductors.
Losing the China market is a big blow to Apple’s management as deglobalization picks up speed.
Even more worrying is why isn’t Apple hopping on the AI bandwagon?
They risk being left behind as the “iPhone company.”
It’s not emerging as one of the largest risk to Apple’s strategic future.
They did well with last generation’s technology, but they look gradually misplaced for the next round of technological modernizations.
I haven’t heard much of what they are doing in AI, and they had to fire their team that worked on the Apple car.
No doubt that Apple shareholders are starting to question what management has up its sleeves and before it was ok to return to the well with iPhone sales growing.
However, we have clearly entered a paradigm shift where the iPhone well has run dry and shareholders are expecting more.
If Tim Cook can’t figure it out then large investors like Warren Buffett could start to unload shares in batches which could demoralize the stock in the short-term.
For now, I do believe Apple is worth a trade to the upside because it’s so beaten down.
It shocking that we have gotten to this point with Apple, but tech companies are all at risk of extinction unless they evolve with the times.
For the first time in a long time, it’s right to question whether to hold Apple shares for the long haul.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-03-08 14:02:572024-03-08 15:48:14Apple Needs To Up Its Game
“Technology is nothing. What's important is that you have a faith in people, that they're basically good and smart, and if you give them tools, they'll do wonderful things with them.” – Said Steve Jobs
https://www.madhedgefundtrader.com/wp-content/uploads/2023/09/steve-jobs.png722572april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-03-08 14:00:352024-03-08 15:47:53March 8, 2024 - Quote of the Day
Below please find subscribers’ Q&A for the March 6 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Silicon Valley, CA.
Q: With your projections of the Dow going to $240,000 in 10 years, would it be wise to invest in the Dow?
A: The Dow is just an indicator that everybody understands and is familiar with what the media uses. What I tell people to do is if you are not an aggressive person, put half your money in the S&P 500 (SPX), which is getting most of the gains, and half in the technology (QQQ), which is getting all of the gains. If you're an aggressive person, say in your twenties, thirties, or forties, then you put all of your money in the Invesco QQQ NASDAQ Trust (QQQ) because you'll live long enough to survive the inevitable downturns.
Q: What should we do now with Palo Alto Networks (PANW)?
A: Keep it. It’s a fantastic long-term company. This is a rare opportunity to get in on the long side, as this is a company that I think could double over the next 3 to 5 years. Hacking is never going out of style and now they have AI. The selloff was caused by a major platform upgrade which may cause profits to dip for a quarter. That’s now in the price.
Q: With the successful launch of Bitcoin, should we allocate 5% or 10% of our portfolio to Bitcoin?
A: Only if you can handle a 90% decline at any time without warning because that's exactly what it did in 2021. Calling it a store of value is a fantasy. You also still have big theft issues with Bitcoin. You don't have theft issues if you have all your money at Morgan Stanley, Goldman Sachs, Merrill Lynch, and so on, so there is a security issue (with Bitcoin). The only way to bypass the security issues is to have a hot wallet, and the only way to have a hot wallet is to be a computer programmer yourself or have a degree in computer science—so it's not for most people. If you can navigate all of that, then maybe; but again, nobody knows when the next 90% decline is going to come. By the way, if I can find stocks with Mad Hedge Fund Trader that go up faster than Bitcoin, I'd much rather own the stocks, because at least I know what they make.
Q: Is Snowflake (SNOW) a buy here at $155?
A: Absolutely. Another great cybersecurity database company. But if we drop to $155, we're going to stop out of the front month call spread and try to buy it back lower down.
Q: Do you think it's wise to sell the semiconductor stocks now and buy them back lower down, and pay the taxes?
A: Probably not. They are really the most volatile sector in the market. If you sell now, it's unlikely you'll be able to pick up the next bottom and get back in, and you have to pay the taxes. So it's probably better just to keep a core long-term position in the semis, especially Nvidia (NVDA); and if it drops 200 points, just buy more. That's what I'm doing. I'm keeping all of my Nvidia LEAPS. All my call spreads and short put positions are about to expire at max profit, and I even have a little bit of stock that I'm keeping. So I think Nvidia goes to $1,000 at one point and now, the forecast of $1,400 is out there. So as Nvidia goes, so goes the entire rest of the semiconductor industry.
Q: You're only 30% invested. Are you looking for a pullback, or are you just waiting for new opportunities to appear?
A: Yes and Yes. I'm waiting for a fantastic company to come up with conservative guidance, which these days means an immediate 20 to 25% sell-off. That is your entry point for these good companies. That's how we got into Palo Alto Networks (PANW), and that's how we got into Snowflake (SNOW). In an extremely overbought market, those are your only opportunities until the market generally sells off or until the domestic plays finally start to take off, and we got the first hints of that last week.
Q: What is your view on junior gold mining stocks?
A: They are a buy here, absolutely, but you get enough volatility in the majors that you don't need to bother with the minors—that's always been my view. Because minors go out of business, they close mines, they don't find gold. A lot of minors have stocks go up on the possibility of gold being found, whereas the majors like Barrick Gold (GOLD) and Newmont Mining (NEM) actually have the gold, and it's just an industrial process of mining it. You know the minors, the juniors, are extremely speculative and high-risk, and that's why most of them are listed in Canada. They can't get a US listing. So that's enough of a tell for me to stay away.
Q: I just realized I have the wrong expiration date on my Amazon (AMZN) spread. Should I exit immediately?
A: What I would do is exit what you have and then wait for another down day on Amazon, and then put it back on. That's the way to deal with that one. The answer to all mistakes is to exit immediately. That's an automatic rule at Morgan Stanley; if you don't do that, you get fired. Or come up with a new set of logic as to why you own this position, which has been done by more than a few traders, I imagine.
Q: Would you be willing to be a Boeing 737 Max passenger right now or ever?
A: Yes! If you don't fly Boeings (BA), your life is suddenly very narrow and limited because you’re stuck on the ground. Boeing is the biggest-selling airplane in the world, and most fleets are made of Boeings. However, I'm a pilot, so if anything goes wrong I can run up front and take control, or at least tell the pilot what to do. I also have 25 parachute jumps, if they're handing those out in first class. So remember, every airplane without engines is a glider and I can land a glider anywhere. The company has major problems to sort out until it becomes a “BUY”.
Q: I cannot get into the (TLT) trade to save my life. Is the (TLT) April $89-$92 vertical bull call debit spread pushing the risk limits?
A: Yes. I would walk away from the trade and wait for a better entry point rather than chase.The whole fixed-income space has flipped from the bid side to the offered side, meaning we've gone from net sellers to net buyers. All asset classes have done that; you're seeing that in gold, silver, and even uranium. All the REITs are having a fantastic week. All interest rate plays are now being bid, and it's hard to buy stuff when things are being bid.
Q: What's it like being 6’4” and living in Japan?
A: Well, I did knock myself out a couple of times, banging myself on the door. You get used to bowing a lot, but bowing is a part of the culture in Japan. If you're watching the new Hulu miniseries, Shogun, you would know that. Once I was working for Sony and I was late for work, so I was running up the stairs, and they had a steel lintel to their door, and I just ran bang into that and knocked myself out. The Sony people thought, “Oh my gosh, we just killed a foreigner!” So yes, it was hard. The only clothes I could buy in Japan for ten years were belts and ties. I had to fly to Hong Kong and had everything else custom-made in those days.
Q: What's your opinion of Masters of the Air?
A: I absolutely love it. It's heartbreaking to watch. I knew a lot of guys who were there, and I was one of the last people trained on how to fly a Boeing B-17 Flying Fortress. Anybody who watched Masters of the Air with me gets to watch it with someone who is one of the last living people who rated on a B-17 as a pilot.
Q: Are we in a liquidity bubble right now?
A: Yes, we are, and boy, I love every minute of it. But we're not in the year 2000 in a liquidity bubble, we're in 1995 just getting started. And the profits from AI are just getting started which is what's creating this endless liquidity that people are seeing now.
Q: What should I buy the dip in Tesla (TSLA)?
A: There's no downside target for Tesla right now. We just have to wait for the meltdown in demand to finish, and who knows where that is. But with BYD entering the market, Tesla is definitely going to get more competition in emerging markets—that's where BYD is selling the cars now. I also understand they're selling them in Australia.
Q: How much longer can tech stocks keep rising?
A: 5 to 10 more years, but we are way overdue for some kind of pullback.
Q: What are your thoughts on Apple's (APPL) weakness?
A: Apple has become that great backward-looking company. It could drop to $160 or even $140, then we’ll be taking a serious look at some call spreads and LEAPS. You just wait. In four months when they announce their next batch of new products suddenly, they’ll become an AI company and recover the $200 level in no time.
Q: Should I dive into Coinbase (COIN)?
A: Absolutely not on pain of death! It's made its move. You're better off buying Nvidia (NVDA) at that kind of inclination because at least you know what they make.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), then WEBINARS, and all the webinars from the last 12 years are there in all their glory.
Good Luck and Stay Healthy,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
“What we really have to do is get back to fundamentals, and for most Americans that means working for a living and not investing for a living.” said Tom Barrack, CEO of Colony Capital, and a former principal of the Bass Group.
https://www.madhedgefundtrader.com/wp-content/uploads/2012/04/stock-traders.jpg280400DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2024-03-08 09:00:402024-03-08 09:54:59March 8, 2024 - Quote of the Day
The biotech sector just flipped its rally cap inside out. After a brutal losing streak, it's clawing its way back. The SPDR S&P Biotech (XBI) exchange-traded fund, a barometer for the sector, started to show signs of life when it soared by 5.7% last month, cresting over $100 a share for the first time in two whole years.
While champagne might be premature, this comeback is heating up, and whispers of a full-fledged rally are echoing through Wall Street.
After a rough patch that kicked off in early 2021, seeing the fund take a nosedive of over 60% by late October 2023, the tide began to turn last fall. Initially, whispers of lower interest rates in 2024 sparked interest across small-cap indexes, including our biotech heroes.
Yet, lately, the buzz is all about biotech's own merits — think breakthrough medical trials and the juicy prospect of big pharma playing Pac-Man with smaller but promising biotech firms to beef up their drug pipelines.
And let me tell you, if the current rally's got legs, we might just be witnessing the most thrilling biotech comeback in over half a decade. Especially if the merger and acquisition scene stays hot, we could see biotech stocks climbing even higher.
Take everything that happened in the sector in February as an example. Viking Therapeutics (VKTX) threw down the gauntlet with promising data on its weight loss drug, VK2735, making investors sit up and take notice.
Actually, this candidate is shaping up to be a formidable rival to obesity treatments from Eli Lilly (LLY) and Novo Nordisk (NVO), sending Viking's shares skyward by a jaw-dropping 121% in a single day.
And it's not just Viking stealing the spotlight. Another biotech named Akero Therapeutics (AKRO) also bounced back with some impressive data of its own, challenging the doom and gloom that settled over biotech firms following Eli Lilly's bombshell MASH trial results.
Akero's mid-stage study showed that their drug, efruxifermin, could significantly roll back liver fibrosis in MASH patients — putting a whopping 75% of high-dose recipients on the mend, a stark contrast to the 24% placebo group.
This revelation was a game-changer, especially after Lilly's tirzepatide threw the sector for a loop, hinting at a potential endgame for MASH-specific treatments. But while Lilly's announcement left many details to the imagination, Akero's clear-cut results have reignited excitement over what might be the best MASH treatment yet seen.
As expected, in the midst of this resurgence, the likes of Viking and Akero are catching eyes not just for their groundbreaking treatments but also as tantalizing acquisition targets. Heavyweights like Gilead Sciences (GILD), Bristol Myers Squibb (BMY), Amgen (AMGN), and Pfizer (PFE) are said to be circling, each eyeing a slice of the biotech pie.
As for the biotech investment landscape in general, it's buzzing with renewed vigor. The early months of 2024 have welcomed a smattering of biotech IPOs, a refreshing change after a long drought. CG Oncology's late January debut practically set the market ablaze, doubling in value on its first trading day.
Moreover, public biotechs have found a lifeline in PIPE deals, sidestepping the regulatory hoops of secondary offerings. For instance, Denali Therapeutics' (DNLI) recent PIPE deal, expected to rake in $500 million, is proof of the sector's warming investment climate.
So, dust off those rally caps because the biotech sector isn't just back in the game – it's swinging for the fences.
Breakthrough treatments, a sizzling M&A market, and investors throwing their support behind innovation — this rally has all the ingredients to paint a bright future for the industry.While there will be bumps along the road, one thing's for sure: the biotech sector is poised for a season no one wants to miss.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-03-07 12:00:102024-03-07 11:25:35Rally Caps On
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