Two scientists walk into a bar. One says, "I've got a funny story about a worm." The other replies, "Hold my Nobel Prize."
This isn't just a setup for a punchline - it's actually a key part of a recent groundbreaking discovery that's just earned Victor Ambros from UMass Chan Medical School and Gary Ruvkun from Harvard Medical School the 2024 Nobel Prize in Physiology or Medicine.
In a nutshell, these two have just been crowned the rock stars of RNA research for 2024 for uncovering the secrets of microRNA. It's like they've found the Rosetta Stone of gene regulation, and boy, is it a game-changer.
Now, you might be thinking, "John, haven't we been down this RNA road before?" And you'd be right. Just last year, the Nobel folks were gushing over mRNA vaccines. But this year's prize? It's a whole different ballgame.
For years, we thought we had gene regulation all figured out. Genes make mRNA, mRNA makes proteins, and proteins run the show. Simple, right? Well, Ambros and Ruvkun just blew that notion out of the water.
Their breakthrough came from an unlikely source - a tiny worm called C. elegans. This little nematode might not look like much, but it's been the workhorse of biology for decades.
Ambros and Ruvkun were puzzling over some mutant worms that couldn't get their growth spurts right. One type was growing too big, the other too small.
After years of head-scratching and late nights in the lab, they stumbled upon something extraordinary. They found that a gene called lin-4 wasn't making a protein at all.
Instead, it was cranking out a small piece of RNA that could stick to another gene's mRNA and shut it down. This was microRNA, and it was about to turn the world of molecular biology on its head.
At first, everyone thought this was just some quirky worm thing. But seven years later, Ruvkun's team found another microRNA that showed up not just in worms but in everything from fruit flies to humans.
Suddenly, microRNA wasn't just a biological oddity - it was a universal regulator of genes.
Fast forward to today, and we now know that humans have over 1,000 different microRNAs. These tiny molecules are pulling the strings on virtually every gene in our bodies. It's like discovering a whole new layer of cellular bureaucracy we never knew existed.
Now, you might be wondering, "That's all well and good, but what's it got to do with making money?" Well, let me tell you, this discovery has set off a gold rush in the biotech world.
Companies are scrambling to turn this basic science into cold, hard cash.
Take Regulus Therapeutics (RGLS), for instance. They're working on a treatment for polycystic kidney disease that targets microRNA-21. It's early days, but the potential is enormous.
Then there's Alnylam Pharmaceuticals (ALNY). These folks have already brought RNA-based therapies to market.
Their drug, ONPATTRO, is treating a rare disease called hereditary transthyretin-mediated amyloidosis. It's proof that RNA-targeted treatments aren't just pie in the sky - they're real, and they're here.
Big Pharma is getting in on the action, too. Roche (RHHBY) bought up a company called Santaris Pharma back in 2014, snagging some nifty technology for developing microRNA therapies.
Novartis (NVS) and AstraZeneca (AZN) are also dipping their toes in the microRNA waters. And let's not forget about Qiagen (QGEN). They're not developing therapies, but they're selling the picks and shovels for this gold rush - tools for microRNA research and diagnostics.
Now, I'm not saying you should go all-in on microRNA stocks tomorrow. This is cutting-edge science, and the road from the lab bench to the pharmacy shelf is long and treacherous. But for those of you with an appetite for risk and a long-term view, this could be the next big thing in biotech.
So the next time someone corners you at a party with a story about microscopic organisms, maybe don't rush to the bar just yet. Remember, Ambros and Ruvkun weren't trying to create the next blockbuster drug. They were just curious about some weird-looking worms. Who would have thought their discovery could end up revolutionizing medicine?
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.com2024-10-08 12:35:072024-10-08 12:35:07The Little RNA That Could
Trade Alert - (OXY) – BUY BUY the Occidental Petroleum (OXY) January 2026 $60-$62.50 out-of-the-money vertical Bull Call spread LEAPS at $0.80 or best
Opening Trade
10-8-2024
expiration date: January 16, 2026
Number of Contracts = 1 contract
China certainly brought out a big bazooka with its massive stimulus package last week. If this one proves inadequate, they can bring out many more. China is no longer the poor country I knew 50 years ago. For a start, they own $869 billion worth of US Treasury bonds.
And what is the best leverage China plays out there?
Oil.
It just so happens that energy is virtually the only cheap sector in the stock market and the worst stock market performer of 2024.
Oil consumption in China amounted to 16.6 million barrels per day in 2023, up from 15 million barrels daily in the prior year. That is 17.2% of the 96.4 million barrels in global oil production last year. Between 1990 and 2023, figures increased by more than 14 million barrels per day, up from 1 million barrels a day.
It has been China’s lagging economy that has dragged down the price of West Texas Intermediate Crude by 31%, from $94 a barrel to $65. China has published GDP growth figures this year of 5%, but most who know China well believe the real figure is close to zero. Get China back in business, and we could revisit $94 in no time.
We have just seen a healthy 32% correction in the shares of California-based oil major Occidental Petroleum (OXY), and I am starting to salivate. Finally, I can put to work my 50-year relationship with the company (see research piece below).
If you don’t do options, buy the stock. My target for (OXY) in 2025 is $74, up 37%.
I am therefore buying the Occidental Petroleum (OXY)January 2026 $60-$62.50 out-of-the-money vertical Bull Call spread LEAPS at $0.80 or best.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 5 cents with a second order.
This is a bet that Occidental Petroleum (OXY) will not fall below $62.50 by the January 16, 2026, option expiration in 15 months.
To learn more about the company, please visit their website at https://www.oxy.com
Don’t pay more than $1.20 or you’ll be chasing on a risk/reward basis.
Please note that these options are illiquid, and it may take some work to get in or out. Executing these trades is more an art than a science.
Let’s say the Occidental Petroleum (OXY)January 2026 $60-$62.50 out-of-the-money vertical Bull Call spread LEAPS are showing a bid/offer spread of $0.50-$1.50. Enter an order for one contract at $0.50, another for $0.60, another for $0.70 and so on. Eventually, you will enter a price that gets filled immediately. That is the real price. Then, enter an order for your full position at that real price.
Notice that the day-to-day volatility of LEAPS prices is minuscule, less than 10% since the time value is so great and you have a long position simultaneously offset by a short one.
This means that the day-to-day moves in your P&L will be small. It also means you can buy your position over the course of a month, just entering new orders every day. I know this can be tedious but getting screwed by overpaying for a position is even more tedious.
Look at the math below, and you will see that a 15.74% rise in (OXY) shares will generate a 212% profit with this position, such is the wonder of LEAPS. That gives you an implied leverage of 13.46:1. Across the $60-$62.50 space. LEAPS stands for Long-Term Equity Anticipation Securities.
(OXY) doesn’t even have to get to a new all-time high to make the max profit. It only has to get back to $62.50, where it traded in July.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.
Here are the specific trades you need to execute this position:
Buy 1 January 2026 (OXY) $60 calls at………….…....……$5.25
Sell short 1 January 2026 (OXY) $62.50 calls at…………$4.45
Net Cost:………………………….………..………….…...............$0.80 Potential Profit: $2.50 - $0.80 = $1.70
(1 X 100 X $1.70) = $170 or 212% in 15 months.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Vertical Bull Call Debit Spread”by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep-in-the-money spread trades can be enormous.
Don’t execute the legs individually, or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
Take a Look at Occidental Petroleum (OXY)
There are a lot of belles at the ball, but you can’t dance with all of them.
While a student at UCLA in the early seventies, I took a World Politics course, which required me to pick a country, analyze its economy, and make recommendations for its economic development.
I chose Algeria, a country where I had spent the summer of 1968 caravanning among the Bedouins, crawling out of the desert starved, lice-ridden, and half-dead.
I concluded that the North African country should immediately nationalize the oil industry and raise oil prices from $3/barrel to $10. I knew that Los Angeles-based Occidental Petroleum (OXY) was interested in exploring for oil there, so I sent my paper to the company for review.
They called the next day and invited me to their imposing downtown headquarters, then the tallest building in Los Angeles.
I was ushered into the office of Dr. Armand Hammer, one of the great independent oil moguls of the day, a larger-than-life figure who owned a spectacular impressionist art collection and who confidently displayed a priceless Fabergé egg on his desk. He said he was impressed with my paper and then spent two hours grilling me.
Why should oil prices go up? Who did I know there? What did I see? What was the state of their infrastructure? Roads? Bridges? Rail lines? Did I see any oil derricks? Did I see any Russians? I told him everything I knew, including the two weeks in an Algiers jail for taking pictures in the wrong places.
His parting advice was to never take my eye off the oil industry, as it is the driver of everything else. I have followed that advice ever since.
When I went back to UCLA, I told a CIA friend of mine that I had just spent the afternoon with the eminent doctor (Marsha, call me!). She told me that he had been a close advisor of Vladimir Lenin after the Russian Revolution, had been a double agent for the Soviets ever since, that the FBI had known this all along, and was currently funneling illegal campaign donations to President Richard Nixon.
Shocked, I kicked myself for going into an interview so ill-prepared and had missed a golden opportunity to ask some great questions. I never made that mistake again.
Some 50 years later, while trolling the markets for great buying opportunities set up by the recent China bazooka, I stumbled across (OXY) once more (click here for their site at http://www.oxy.com /). (OXY) has a minimal offshore presence, nothing in deep water, and huge operations in the Middle East and South America.
OXY’s horizontal multistage fracturing technology will enable it to dominate California shale. The company offers a respectable dividend of 1.65% and has a submarket earnings multiple of only 13.7 times. Need I say more?
Oh, and I got an A+ on the paper, and the following year, Algeria raised the price of oil to $12.
You know, back when I was interviewing Japan's Prime Minister Takeo Fukuda in the late '70s, I never imagined I'd be more excited about artificial intelligence than international politics. Yet here we are.
The world of technology has a funny way of shifting our focus, and AI is the latest game-changer that's got my attention.
As it turns out, the Turing test was just the warm-up. We're now in a whole new ballgame, and some of the biggest players are struggling to keep up.
Remember when Google (GOOGL) was the coolest kid on the block? Well, they've been caught with their pants down. It took them a whopping 30 months after GPT-3 hit the scene to roll out their own AI system.
And Apple (AAPL)? They didn't even mention AI at their 2023 developer conference. Talk about missing the boat.
Over the past months, the big boys have finally started waking up and smelling the coffee. But here's the million-dollar question: Is it too little, too late? Can these tech giants simply slap some AI on their existing products and call it a day? Not so fast, my friends.
Let's break it down and see if AI truly fits the bill of a disruptive technology. Spoiler alert: It does, and then some.
First up, we've got cost declines that would make Moore's Law blush. AI is getting cheaper by the minute. We're talking about costs halving every 4 months. That's 4-6 times faster than the semiconductor space.
In other words, what used to take a decade in traditional tech is now happening in less than 2 years with AI.
Just look at the numbers: Back in 2020, training a GPT-4 sized model would've set you back a cool $6 billion.
But at the rate this tech is evolving, the same AI power that would've cost you billions 4 years ago will be running on your smartphone by 2026.
As expected, this rapid cost decline is giving the big tech companies a serious case of whiplash. Even small delays in getting to market are creating performance gaps wider than the Grand Canyon.
In fact, Google's been playing catch-up, and their customers have been paying the price - literally.
Since early 2023, using Google's top model instead of OpenAI's best offering would've cost you 40%+ more for the same performance. Ouch.
But here's where it gets more interesting. AI isn't content staying in its lane. We're seeing AI pop up everywhere from healthcare to finance, and even in industries you wouldn't expect.
Just look at the earnings calls - everyone and their dog is talking about AI these days.
Now, you might think the tech giants have this in the bag. After all, Google's massive search data gives them an unbeatable advantage. Think again.
Those short, repetitive search queries aren't exactly prime material for training natural language systems.
Meanwhile, social media giants like Meta (META) and even X (formerly Twitter) are sitting on goldmines of rich, conversational data.
And let's not forget about the world beyond keyboards and screens. Companies like Tesla (TSLA) are collecting real-world data at a mind-boggling scale.
We're talking about 80 quadrillion tokens of driving data in the last year alone. By the end of the decade, that could balloon to over 300 quadrillion tokens per year.
That's the kind of data that could make language models look like child's play.
That’s not where it ends though. AI isn't content with disrupting existing industries. If anything, this tech has been spawning entirely new ones. It's like a breeding ground for innovation. Actually, venture capitalists have been throwing money at AI startups like there's no tomorrow.
We're seeing about a third of global venture funding - that's over $90 billion - going to AI companies this year alone.
So, what does all this mean for the tech giants? Well, they're in a bit of a pickle.
They can't afford to incorporate AI disruptively without risking their cash cows. That’s like trying to change the engine of a plane while it's still flying.
As a result, they're likely to water down AI's magic, creating opportunities for nimble startups to swoop in and steal the show.
I'm not saying Google and Apple are doomed just yet—they might still have a trick or two up their sleeve.
But let’s face it, these giants would rather take a more cautious, controlled approach. Unfortunately for them, the AI revolution isn’t waiting around. It’s barreling ahead at full speed, and it’s not slowing down for anybody.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Douglas Davenporthttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDouglas Davenport2024-10-07 16:52:212024-10-07 16:52:21THE TURING TEST WAS JUST THE WARM-UP
If trucks drive themselves, what will happen to long-distance drivers?
Self-driving cars and an announcement is here this week.
Musk is set to take center stage in California to host Robotaxi Day. The long-awaited event is meant to offer insight into the electric-vehicle maker's pitch that it is a tech company first and a car company second.
What will become of long-distance drivers?
Actually, self-driving cars should have been part of the street scene for a long time, at least according to X’s CEO Elon Musk's forecasts.
In 2015, the Tesla founder predicted that two years later, fully autonomous cars would be driving around.
Not so fast.
Since then, he has adjusted the forecast year after year. Musk recently said that 2023 will finally be the day, but that came and went.
But it's not just Musk who has butchered it when it comes to self-driving cars. Many car producers have announced autonomous cars every year, and investors are chomping at the bit to find out something meaningful.
Many questions remain unanswered, and I do believe Musk could deliver something underwhelming at robotaxi day. At the end of the day, there is a lot of hype attached to Musk, and every press conference doesn’t deliver.
No wonder because the technical and social challenges involved in getting fully autonomous cars on the road are enormous.
Then there is the legislation of it – can an industry that is tilted towards benefitting Elon Musk really expect any Democratic legislation that is positive?
The consensus is that anything he will try to do will need a Republican president since he has burnt the bridge with the radical left.
What about the technical level?
What happens in unforeseen traffic situations? What if the human has to take the wheel, but his driving skills have long since atrophied? What do autonomous vehicles mean for traffic and urban planning? Who is liable in case of accidents?
Is "platooning" revolutionizing the forwarding business?
In the short term, there are traffic situations that are manageable in their complexity and in which autonomous vehicles could definitely play an important role in the future.
For example, experiments with automated truck convoys have long been carried out on freeways and highways. In this so-called "platooning," several trucks drive behind one another, with only the first vehicle in the column having to be driven by a person.
"Platooning" is intended to save fuel since the vehicles' slipstream can be used more efficiently. But there is also the suspicion that staff could also be saved because fewer long-distance drivers are needed.
In the U.S., the truck driver is the most common occupation in 26 out of 50 US states. There is a 67% chance of it disappearing completely in the next twenty years because artificial intelligent solutions will deliver us a timely way to replace the driver.
The economist John Maynard Keynes predicted in 1930 that by 2030, we would only be working 15 hours a week. In an essay entitled "Economic Possibilities for our Grandchildren, " the Brit didn’t consider that these gains would be pocketed by corporations and not the people.
It’s highly possible that within 10 years, humans won’t be driving groceries or other goods across states, and this function will be replaced by an algorithm. If not that, then products will be platooned to a destination headed by one driver followed by a herd of self-driving trucks behind him or her.
Some of the winners of this A.I. revolution will be public trucking names such as Old Dominion Freight Line (ODFL), Covenant Logistics Group (CVLG), Arcbest (ARCB), Universal Logistics Holdings (ULH), Schneider National (SNDR), Werner Enterprises (WERN).
This week could be a “sell the news” event for Tesla stock.
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.com2024-10-07 14:02:292024-10-07 15:52:33Robotaxi Hype Is Here
11 a.m. New York Fed President John Williams speaks
Earnings:Delta, Tilray
Friday October 11
8:30 a.m. PPI (September)
8:30 a.m. Canada Unemployment Rate
Previous:6.6%
Forecast: 6.6%
10 a.m. University of Michigan consumer sentiment
Earnings:BlackRock, Bank of NY Mellon, JPMorgan Chase, Fastenal, Wells Fargo.
This week will be lighter regarding economic data.Taking centre stage will be the US inflation data on Thursday.While inflation concerns have largely subsided, any unexpected increase would impact the dollar and rattle markets.Current market projections favour a 25-basis point cut in November.
Many major banks are expected to adjust interest rates in the coming months, which is likely to impact currency markets.
The nonfarm payroll number surprised many last Friday.September came in at 254k, the highest since May.The unemployment rate dropped to 4.1% from 4.2%.
Stocks were tentative initially but eventually rallied, bond yields rose as hopes for aggressive rate cuts by the Fed to support weak unemployment quickly faded. Quarter points rate cuts seem to be the favoured move in the months ahead.
PAYMENT APPS
Cashless and contactless interactions saw a dramatic upswing in the last few years, thanks to the COVID-19 pandemic.
Digital transactions are now commonplace.There are several mobile payment apps for Android and iOS.With just a quick tap, you can make payments, transfer money, and manage your finances on the go.
These apps are increasingly used as substitutes for a traditional bank or credit union account.For instance, some app users receive their paychecks via Cash App or PayPal, while others leave their funds sitting on the apps for future payments, treating them effectively like bank accounts.
The Consumer Financial Protection Bureau (CFPB) and other watchdogs indicate it’s often unclear if such money is insured against risky investments or fraud.State laws regulating how payment apps protect stored funds vary, creating a confusing patchwork that’s compounded by customer service challenges.And millions of Americans operate in the dark about how payment apps use or invest those funds.
Like all technology, mobile payment apps come with their own set of pros and cons.
Convenience and Accessibility
We all love the convenience mobile apps offer.You don’t need to carry around wallets or credit cards anymore – you just need your mobile phone.
If you are at a store, you can make a quick and secure transaction.
Enhanced Security Features
Many apps use encryption technology to ensure that your data is transmitted securely.
Additionally, most apps require authentication methods such as fingerprint or facial recognition before completing a transaction.
Integration with Loyalty Programs
Mobile apps can be integrated with loyalty programs offered by various merchants.This integration means that every time you make a purchase using the app at a participating merchant, you can earn loyalty points or rewards.
Should you leave money on your payment app?
Consumer groups have flagged it as a risky move. A digital payment app doesn’t carry the same protections for the funds you leave on it – so if its parent company struggles or fails, that money is vulnerable.
To gain insurance, most funds on Venmo, Cash App, and PayPal must meet specific requirements.Consumers can secure coverage on Venmo if they sign up for direct deposit or use the app to cash checks or buy and sell cryptocurrency; PayPal offers insurance to customers who use direct deposit or crypto or who open an app-sponsored debit or credit card. Cash App’s customers must link their account to an app-sponsored prepaid card.And some digital payment apps, including PayPal, have started to offer FDIC-insured savings accounts.
How do app companies use your money?
Payment apps make most of their money by charging fees from consumers who use a credit card or pay for instant money transfers.Apps that offer credit cards also receive swipe fees charged to businesses and interest charged to cardholders.
And they make money by investing the user funds left on apps.
Unlike the regulations on commercial banks, there is no clear regulation about how app companies can invest your money.In some states, app companies have free rein to invest in speculative ventures. Many apps also have unclear user agreements that don’t specify where users’ funds are stored – or what would happen to them if the payment app were to fail.
For example, Google Pay doesn’t specify where consumer funds are stored.
Digital app companies have certainly got room to improve.In the first instance, user agreements for digital payment apps need to do a better job of clarifying where funds are being held and explaining under what conditions they may be insured and what would happen if the parent company failed.In other words, customers need to have transparent information to make educated decisions.
TIPS FOR USING MOBILE PAYMENT APPLICATIONS SECURELY
1/ Use a dedicated credit card (or another type of financial account) for the mobile payment system that is not used for any other purpose.
2/ Monitor your financial statements online or through an app at least once a week.Double-check the amounts before confirming any transactions.
3/ Do not use an ATM or debit card, and NEVER link a checking account directly to a mobile payment system.
4/ Keep your mobile device secured with storage encryption, screen lock with password/fingerprint/face recognition.
5/ Follow password best practices and enable multifactor authentication whenever possible.
CRITICAL SECURITY ISSUES TO CONSIDER BEFORE CHOOSING A MOBILE PAYMENT SYSTEM
1/ Is the mobile payment app always active once the mobile device boots, or is it only active when its app is launched?
2/ Does the mobile payment app time out or become disabled after an idle timeout period, or does it stay operating in the background after use?
3/ Does the mobile app require a login, PIN, or another mechanism to authorize its launch?
4/ Does the mobile app require a confirmation when a transaction is attempted?
5/ Does the mobile payment app display the amount being charged before the transaction can be processed?
MARKET UPDATE
S&P500
The market is still rallying within a Wave 5 advance with no signs of exhaustion yet.New highs for the year are ahead, with the potential to reach nearly 6000 by year-end.
GOLD
Gold uptrend is still in progress.There is still potential for gold to extend toward the $3000 level over the coming weeks/months.
Next target = $2,720
BITCOIN
Bitcoin has been undergoing a correction.
The sell-off can find support around $57,900/$57,300 and possibly $55,000.
(MARKET OUTLOOK FOR THE WEEK AHEAD, or GOLDILOCKS ON STEROIDS, plus A KERFFUFLE IN PARIS),
(SPY), (FXI), ($COMPQ), (CCJ), (SLB), (OXY), (TSLA),
(TLT), (DHI), (NEM), (GLD), (TSLA)
The 6,000 targets for the S&P 500 are starting to go mainstream.
That was my forecast on January 1, back when everyone said I was nuts. The inflation rate is 2.2%, GDP growth is 3.0%, and interest rates are falling sharply, on their way to 3.0% by next summer.
Goldilocks is back, but this time she’s on steroids.
Also helping is that we are in the midst of a global interest rate decline. The US, Europe, China, and Australia are all cutting interest rates at the same time. Japan is the sole exception, which is on the verge of raising rates from 0.25%. All of this has a compounding effect on the health of the global economy.
Long-term market veterans like myself are amazed, astounded, and astonished that here we are on October 7, and instead of testing new lows for the year, we are punching through to new all-time highs. It’s proof that if you live long enough, you see everything.
Some five seconds after Jay Powell cut interest rates by a shocking 0.50%, everyone in the world suddenly realized they had way too much cash and not enough stocks. This is the kind of market you get from that realization, one that doesn’t breathe, take a break, have a correction, nor let in outsiders.
Further confusing matters is that we are witnessing the most contentious presidential elections in history. One party is proclaiming how great the US economy is, while the other is claiming it is the worst ever.
Those who believed the former description are having a great year. Those who bought the latter are having an awful one, with many owning no stocks at all. Fortunately, election concerns will disappear in four weeks not to return for four years. This is hugely positive for stocks.
But as all steroid users eventually find out, they cause impotence, sterility, and cancer, so enjoy while it lasts. That may be a mid-2025 or 2026 event.
China (FXI) came back with a vengeance. A 25% rise in a stock market in a week is not to be taken lightly, although a lot of this was short covering. Pouring gasoline on the fire is a government promise to buy $1 billion worth of stocks.
The question bedeviling all investors is whether China is a one-hit wonder or is it reborn again. I know that if this stimulus package doesn’t work, they have the resources to follow up with many more. But there is a bigger problem.
Chinese stock markets have not exactly done well since Xi Jinping came into power in 2013. In fact, they are exactly unchanged. During the same period, the (SPY) was up 308%, and the NASDAQ ($COMPQ) was up 525%. Many investors, like my old friend hedge fund legend Paul Tudor Jones, don’t want to touch China until Xi vacates the scene.
In any case, if you want to play China, the best risk-adjusted plays are not there but here in the US. Any US blue chip oil play (OXY) (SLB) would be a great choice, as China is the world’s largest oil consumer. Oil happens to be the cheapest and worst-performing sector in the stock market. And you don’t have to worry about a CEO getting rolled up in a carpet and disappearing for a few years, as has happened in the Middle Kingdom. At least here, you get all the US investor protections.
We closed out September with a blockbuster +10.28% profit. My 2024 year-to-date performance is at +44.97%.The S&P 500 (SPY) is up +19.92%so far in 2024. My trailing one-year return reached a nosebleed +62.77. That brings my 16-year total return to +721.60.My average annualized return has recovered to +52.32%.
With my Mad Hedge Market Timing Index at the 70 handles for the first time in five months, it was a good week to take profits. I sold longs in (CCJ) and (TSLA) and covered a short in (TLT). I stopped out of my long in (TLT) because of the blowout September Nonfarm Payroll Report on Friday.
This is what we’ve got left:
Risk On
(NEM) 10/$47-$50 call spread 10.00%
(TSLA) 10/$200-$210 call spread 10.00%
(DHI) 10/$165-$175 call spread 10.00%
Risk Off
NO POSITIONS 0.00%
Total Net Position 30.00%
Some 63 of my 70 round trips, or 90%, were profitable in 2023. Some 58 of 77 trades have been profitable so far in 2024, and several of those losses were really break evens. Some 16 out of the last 17 trade alerts were profitable. That is a success rate of +75.32%.
Try beating that anywhere.
September was Great, butOctober is Looking Tough, right on the doorstep of the November 5 election and the market waiting for another interest rate cut on November 6. I think I’ll run out the positions I have into the October 18 options expirations, then wait for the market to come to me. I am up too much this year to take on needless risk.
Nonfarm Payroll Report Comes in Hot, as US employers added 254,000 jobs in September, topping economists’ estimates. The payroll gain, the biggest advance since March, was led by leisure and health care. The headline Unemployment Rate fell to a three-month low of 4.1%.
Interactive Brokers Starts US Election Forecast Trading on the heels of a federal court ruling in their favor. The following Forecast Contracts on US election results will be available:
*Will Kamala Harris win the US Presidential Election in 2024?
*Will Donald Trump win the US Presidential Election in 2024?
Plus a dozen other election outcomes. The opening bids were 49% for Harris and 50% for Trump. The port Strike is Settled with a 62% six-year settlement. The bananas were rotting. 54 container ships queued outside ports, risking shortages. The Strike cost the U.S. economy $5 billion/day. Shipping stocks tumble across Asia and Europe. Expect the US to move to full automation, where Europe went 30 years ago. EC Imposes 45% Tariffs on Chinese EVs in a desperate bid to save the local car industry. The Commission, which oversees the bloc's trade policy, has said it would counter what it sees as unfair Chinese subsidies after a year-long anti-subsidy investigation, but it also said on Friday it would continue talks with Beijing. Expect the same to follow in the US.
A possible compromise could be to set minimum sales prices. Hedge Funds Stampede into China on news that government agencies promised to pour $1 billion into local stock markets. Chinese equities saw the largest net buying ever from hedge funds last week, marking the most powerful weekly purchase on record, according to Goldman Sachs prime brokerage data.
Weekly Jobless Claims Climb to 225,000, not straying too far from a four-month low touched in the prior week. That is an increase from an upwardly-revised mark of 219,000 last week, data from the Labor Department showed on Thursday. Economists had anticipated 222,000. Will This Crisis Take Gold to $3,000? Almost certainly, yes, given the way the barbarous relic traded yesterday. Buy all gold (GLD), plays on dips, the metal, ETFs, futures, and miners. Tesla Bombs, with Q3 deliveries down flat, but the shares fell only 5%. Total deliveries came in at 462,890, while total production was 469,796. YOY Tesla is facing increased competitive pressure, especially in China, from companies like BYD and Geely, along with a new generation of automakers, including Li Auto and Nio. US Car Makers Get Slaughtered, with Stellantis stock falling by double digits after the Jeep maker cut its 2024 financial guidance, citing deteriorating industry dynamics and Chinese competition. The warning, amid similarly negative news from other car makers, also dragged down shares of (F) and (GM). Avoid the auto industry except for (TSLA). Nvidia Still has more to Run, so says Samantha McLemore, the founder and Chief Investment Officer of Patient Capital Management. Nvidia has been crushing every quarter for a year. CEOs want to make the decision to invest more [in AI] rather than getting caught behind. She doesn’t see the bull market ending soon. Current operating profit margins are 65%. Buy (NVDA) on dips.
My Ten-Year View
When we come out the other side of the recession, we will be perfectly poised to launch into my new American Golden Age or the next Roaring Twenties. The economy is decarbonizing, and technology hyper accelerating, creating enormous investment opportunities. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old.
Dow 240,000 here we come!
On Monday, October 7 at 8:30 AM EST, Used Car Prices are out On Tuesday, October 8 at 6:00 AM, the NFIB Business Optimism Index is released.
On Wednesday, October 9 at 11:00 PM, the Fed Minutes from the last meetingis printed.
On Thursday, October 10 at 8:30 AM, the Weekly Jobless Claims are announced. We also get the Consumer Price Index.
On Friday, October 11 at 8:30 AM EST, the Producer Price Index and the University of Michigan Consumer Price Index are announced. At 2:00 PM, the Baker Hughes Rig Count is printed.
As for me, dentists find my mouth fascinating as it is like a tour of the world. I have gold inlays from Japan, cheap ceramic fillings from Britain’s National Health, and loads of American silver amalgam, which are now going out of style because of their mercury content.
But my front teeth are the most interesting as they were knocked out in a riot in Paris in 1968.
France was on fire that year. Riots on the city’s South Bank near Sorbonne University were a daily occurrence. A dozen blue police buses packed with riot police were permanently parked in front of the Notre Dame Cathedral, ready for a rapid response across the river. They did not pull their punches.
President Charles de Gaulle was in hiding at a French air base in Germany. Many compared the chaos to the modern-day equivalent of the French Revolution.
So, of course, I had to go.
This was back when there were five French francs to the US dollar, and you could live on a loaf of bread, a hunk of cheese, and a bottle of wine for a dollar a day. I was 16 years old.
The Paris Metro cost one franc. To save money, I camped out every night in the Parc des Buttes Chaumont, which had nice bridges to sleep under. When it rained, I visited the Louvre, taking advantage of my free student access. I got to know every corner. The French are great at castles….and museums.
To wash, I would jump in the Seine River every once in a while. But in those days, not many people in France took baths anyway.
I joined a massive protest one night, which originally began over the right of men to visit the women’s dorms at night. Then the police attacked. Demonstrators came equipped with crowbars and shovels to dig up heavy cobblestones dating to the 17th century to throw at the police, who then threw them back.
I got hit squarely in the mouth with an airborne projectile. My front teeth went flying, and I never found them. I managed to get temporary crowns, which lasted me until I got home. I carry a scar across my mouth to this day.
I visited the Left Bank again just before the pandemic hit in 2019. The streets were all paved with asphalt to make the cobblestones underneath inaccessible. I showed my kids the bridges I used to sleep under, but they were unimpressed.
But when I showed them the Mona Lisa at the Louvre, she was as enigmatic as ever. The kids couldn’t understand what the fuss was all about.
Everyone should have at least one Paris in 1968 in their lifetime. I’ve had many and am richer for it.
Stay Healthy,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
1968 in Paris
2019 in Paris on Top of the Eiffel Tower
https://www.madhedgefundtrader.com/wp-content/uploads/2024/10/John-thomas-in-Paris.png706658april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-10-07 09:02:262024-10-07 10:26:01The Market Outlook for the Week Ahead, or Goldilocks on Steroids
Legal Disclaimer
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
