Mad Hedge Technology Letter
October 11, 2024
Fiat Lux
Featured Trade:
(DISASTER MANAGEMENT SOFTWARE GOES BALLISTIC)
(PLTR)
In a world where natural disasters and global war has never been more common, there is one tech company whose fortunes are directly correlated in this types of chaos.
The tech firm and stock is Palantir (PLTR).
They specialize in disaster management software and even can sign contracts to prevent disaster management.
They apply unique software to deliver the best solutions for those they service, whether it is the U.S. military, a Fortune 500 company, or a state government looking at how to best allocate scarce resources during a torrid hurricane.
PLTR knows what to do, when to do it, and in what doses, and in 2024, that is a potent cocktail that has seen the company sign contract after contract.
It was only just a few months ago when PLTR was green lighted for a $99.8 million contract to extend access to the Maven Smart System to all military branches, including the U.S. Army, Air Force, Navy, Space Force, and Marine Corps.
The pact is a five-year firm-fixed price contract from the Army Combat Capabilities Development Command Army Research Laboratory aims to streamline access to current Maven Smart System capabilities, which utilize advanced artificial intelligence and machine learning.
Work is expected to enhance coordination between strategic and tactical operations, allowing the military to make informed decisions and fast actions.
Terms of the contract include support for AI-enabled battlespace awareness, global integration, force management, contested logistics, joint fires, and targeting workflows.
Combat vehicles from every military department will be outfitted by Maven to help them make the best decisions on the ground in real time.
The U.S. military and PLTR are also a common operational piece as part of its response efforts to aid in Hurricane Helene relief.
Maven specializes to facilitate battle space awareness, global integration, contested logistics, joint fires, and targeting workflows, but is being deployed to aid in the hurricane relief efforts.
While common operational tools and data systems have been used for disaster relief in the past, this marks the first time the Maven capability has been used for a hurricane.
The military is working to feed the data it is gathering directly to FEMA and other first responders. That includes general mapping data and data from various sensors that provide insights into things like road closures, communications, force movements, and which areas have yet to be serviced.
The system can also help with logistics by bringing in that data so that in real-time, based on the point of need and survey data from FEMA, food, water, medical supplies, or other goods can be reallocated to the best locations to serve citizens.
I’m not the one to wish ill on the populace, but it is almost a fact that the percentages of calamities that include natural disasters and kinetic wards have increased a great deal during the past 4 years.
There is not a company better positioned to take advantage of this through their best of breed software.
One thing I must note, management often dilutes shares by giving themselves vested shares, the stock tends to sell off big when these executives sell shares.
Wait for a big dip to jump in and ride the volatility higher.
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
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 OCTOBER 9, 2024, WEBINAR)
October 11, 2024
Hello everyone
TOPIC
Goldilocks on Steroids
TRADE ALERT PERFORMANCE
+720.99% since inception
+51.62% average annualized return for 16 years
+62.77% Trailing One-Year Return
PORTFOLIO
Risk On
(NEM) 10/$47-$50 call spread 10%
(TSLA) 10/$200-$210 call spread 10%
(DHI) 10/$165-$175 call spread 10%
Risk Off
No Positions
Total Aggregate Position = 30.00%
THE METHOD TO MY MADNESS
Hot September Nonfarm Payroll influences all trades.
All interest rate plays get hit – bonds, foreign currencies, gold, silver, home builders down.
Use this dip to load the boat in all these sectors.
We are unlikely to see a more than 5% drop in indexes for the rest of 2024.
Technology stocks regain the lead.
Energy spikes on Mideast and China recovery.
Buy stocks and bonds on dips, but now in ALL sectors.
THE GLOBAL ECONOMY – CHINA SURPRISE
Nonfarm Payroll reports come in hot, as US employers added 254,000 jobs in September.
Unemployment Rate fell to a three-month low of 4.1%.
US GDP revised up to 5.5% growth since the second quarter of 2020.
The port strike is settled with a 62% six-year settlement. The Strike cost the U.S. economy $5 billion/day, and it will take a month to restart.
EC imposes 45% Tariffs on Chinese EV’s.
ISM Services PMI rose to 54.9 in September from 51.5 in August.
Europe to cut interest rates by 25 basis points in October.
Blockbuster China Stimulus sets stocks on fire.
STOCKS – FROM STRENGTH TO STRENGTH
Stocks race to new all-time highs despite rising rates and Middle Eastern War.
Interactive Brokers starts US Election Forecast Trading. The opening bids were 49% for Harris and 50% for Trump.
Vistra Energy (VST) tops Nvidia as the top S&P 500 stock this year.
Spirit Airlines (SAVE) may file for bankruptcy.
Hedge Funds stampede into China on news that government agencies promised to pour $1 billion into local stock markets.
Super Micro (SMCI) splits, joining a growing list of semiconductor companies that have split their stocks.
US Car Makers get slaughtered. Avoid (GM) and (F)
Caterpillar (CAT) rallies on China stimulus and housing recovery.
Electrification is the latest hot investment theme.
BONDS – DEMOLISHED
Hot September Nonfarm Payroll demolishes bonds.
Every interest rate play gets hit hard.
Bonds will return to the long-term uptrend when we start to discount the November Fed interest rate cut.
The Yield Curve has De-Inverted, meaning that short-term interest rates have fallen below long-term ones.
Buy (TLT), (JNK), (NLY), (SLRN), and REITS on dips.
FOREIGN CURRENCIES – DOLLAR REBOUND
Dollar gets a sudden new lease on life, as hot September Nonfarm Payroll causes interest rate spike.
Higher interest rates make the US $ much more attractive to traders and investors.
This is a short-term rally only and may be the last chance to sell short the US$.
The long-term downtrend in the dollar is still intact.
There is no way the dollar can stand up to cuts down to 3.0% by summer.
Buy (FXA), (FXE), (FXB), and (FXY).
ENERGY & COMMODITIES – OIL SPIKE
Middle East war plus Biden comments on possible Israeli bombing of Iran oil facilities give oil best week in years.
Iran produces 3 million barrels a day, 90% of which goes to China.
Its sudden loss would take oil to $95 overnight.
Saudi Arabia has 3 million barrels/day in reserve production, but it would take months to bring online.
That’s why Israel won’t attack Iran’s oil supplies, so its weapon suppliers don’t see energy supplies disrupted.
Nuclear facilities and missile factories are much more likely targets.
John’s Cameco (CCJ) trade alert rallied strongly, up 25% in two weeks.
The nuclear trade is still on, with all plays hitting new highs.
PRECIOUS METALS – NEW HIGHS
Gold hits a new high at $2,668 an ounce as hedge funds pour in.
Seasonals for the barbarous relic are now the most positive of the year.
Gold holding up in the face of big interest rate rises shows it only wants to go up.
Escalation of Middle East war is very pro-gold.
Will This Crisis Take Gold to $3000? Almost certainly, yes.
The next problem? What to do when gold hits $3000?
Most likely, it keeps going up to $4,500, as the Chinese have nowhere else to save.
Buy (GLD), (SLV), (AGQ), and (WPM) on dips.
REAL ESTATE – GUT PUNCH
US Home Sales Plunge, down 4.7% in August.
Mortgage Interest rates made it down to 6.07%, then popped to 6.50%.
Buyers are clearly remaining patient amid steadily declining mortgage rates.
New single-family home sales decreased last month to an annualized rate of 716,000 after rising at the fastest pace since early 2022.
The median sales price, meantime, decreased 4.6% from a year earlier to $420,000.
That marked the seventh straight month of annual price declines, extending what was already the longest streak since 2009.
Real estate should pick up once lower interest rates feed through again.
TRADE SHEET
Stocks – buy the next big dip
Bonds – buy dips
Commodities – buy dips
Currencies – sell dollar rallies, buy currencies
Precious Metals – buy dips
Energy – buy dips
Volatility – sell over $30
Real Estate – buy dips
NEXT STRATEGY WEBINAR
12:00 EST Wednesday, October 23, from Lake Tahoe, Nevada.
RECORDING OF JACQUIE’S POST OCTOBER 6, 2024, ZOOM MONTHLY MEETING.
https://www.madhedgefundtrader.com/jacquie-munro-meeting-replay-september-2024/
Cheers
Jacquie
Global Market Comments
October 11, 2024
Fiat Lux
Featured Trade:
(THE MAD HEDGE SEPTEMBER 17-19 SUMMIT REPLAYS ARE UP),
(OCTOBER 9 BIWEEKLY STRATEGY WEBINAR Q&A),
(TLT), (IWM), ($VIX), (DUK), (NEE), (GLD), (FCX), (BHP), (USO)
Listen to all 22 speakers opine on the best strategies, tactics, and instruments to use in these volatile markets. It is a true smorgasbord of investment strategies. Find the best one to suit your own goals.
The product discounts offered last week are still valid. Start, stop, and pause the videos at your leisure. Best of all, access to the videos is FREE. Access them all by clicking here.
We look forward to working with you and the next summit is scheduled for December.
Below please find subscribers’ Q&A for the October 9 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Lake Tahoe, Nevada.
Q: Is the iShares 20+ Year Treasury Bond ETF (TLT) a buy here?
A: I think we are testing the 200-day moving average, which is at 92.75. Let’s see if that holds, and if it does, we want to do at-the-money LEAPS one year out because the Fed has basically said it’s going to keep lowering interest rates until June, and bonds can’t lose on that. That would also be a nine-point pullback from the recent high.
Q: I found a YouTube video about your Uncle Mitchell Paige, who won the first Medal of Honor in WWII.
A: Yes, there’s a ton of stuff on the internet about Uncle Mitch, even though he passed away 22 years ago. There’s even a Mattel G.I Joe version of Uncle Mitch that you can buy, which he gave me. I also inherited his samurai swords.
Q: When will small caps turn around?
A: That’s the iShares Russell 2000 (IWM). Small caps are joined at the hips with interest rates, so when interest rates go up, and bond prices go down, small caps also go down. That is because small caps are much more dependent on borrowed money than any other section of the market, 60% lose money, 40% are regional banks, and they have much weaker credit ratings. They are a leverage play on everything going great—when interest rates are rising, they aren’t great. I would hold off on the (IWM). Even when interest rates start going back down again, which I expect they will do going into the next Fed meeting, (IWM) will be about number ten on the list of interesting things to do.
Q: The hiring numbers were great with the nonfarm payroll on Friday, so will the recession be pushed back to 2026?
A: I don’t think we’re going to have a recession. I think we have a growth scare, a growth slowdown, and then we reaccelerate again as more companies start booking AI profits to their bottom lines. Also, the recovery of China would be nice, recovery of Europe would be nice—so there are many other factors at play here. The fact is the United States has the world’s strongest economy, and we are going from strength to strength. That’s why everybody in the world is sending their money over here.
Q: Do you expect heightened volatility going into the year-end?
A: I expect heightened volatility going into the election; after that, it may collapse. Right now, the Volatility Index ($VIX) is in the low $20s, which is the high end of the recent range. I expect that to fall, and then we get a ballistic market after the election once all the uncertainty is gone.
Q: Should I buy utilities and industrials now?
A: Yes, these are two of the most interest-sensitive sectors in the market—especially utilities, which are very heavy borrowers. They’ve already had tremendous runs—things like Duke Energy (DUK) and NextEra (NEE). However, I think I’m going up more if we’re going to get interest rates down to 3%. Even if we get them down to 3.5 or 4%, the rallies in all the interest-sensitive sectors will continue.
Q: If the global economy recovers, would that lead to increased inflation and an increase in interest rates?
A: In an old-fashioned economy—one driven by, for instance, the car industry—yes, that would be happening. Back then, wage settlements with the United Auto Workers had the biggest impact on your portfolio. In the modern economy, technology is dropping prices so fast that even during periods of high growth, prices are still falling. The example I give is: the cheapest PC you could get in 1990 cost $5,000, which was a Compact. Now you could get the same computer for $300. You can bet going forward that eliminating all port workers will also be highly disinflationary; we won’t have to pay those $200,000 salaries for port workers, so that goes to zero. You can cite literally hundreds of examples in the economy where technology is collapsing prices.
Q: Should I go with a safe strategy now or increase my risk?
A: I think if we don’t sell off in the next two weeks, you have to buy the hell out of the market because we have had every excuse to sell off, and the market just won’t do it. Middle Eastern war, uncertainty in the election, gigantic hurricanes which will definitely shrink economic growth this year, the port strike and the Boeing strike, which will take a month out of GDP growth on the coast—and it still won’t go down. So, if you throw bad news on a market and it still won’t go down, you buy the heck out of it. The last chance for this to go down is literally this month. After that, the seasonals turn strongly positive. What’s the opposite of “sell in May, and go away”? It’s “buy in October and ring the cash register.”
Q: Will gold (GLD) go to 3,000/oz soon?
A: Yes. That’ll happen on the next Fed interest rate cuts as we go into the end of the year. We'll probably get two more cuts of 25 basis point cuts. Gold loves that. And guess what? Chinese have nowhere else to save their money except gold. So, yes, I'm looking for $3,000 and then $4,500 after that. You definitely want to own gold.
Q: Should I dump Chinese (FXI) stocks after this short-term spike?
A: Yes, for the short term, but not for the long term. Some kind of recovery will come, because if this Chinese stimulus package fails, they'll bring another one, and you'll get another one of those monster rallies. So, if you're a long-term holder, then I would stay in. The blue-chip stocks are incredibly cheap. But I still believe the best China plays are in the US, in oil (USO), copper (FCX), iron ore (BHP), and gold (GLD).
Q: Is oil headed down after the Israel and Lebanon war?
A: That really isn’t the main factor in the oil market. These people have been fighting for a century, literally, and any geopolitical influence has not had any sustainable impact on the price of oil. Really, the sole driver for oil prices now is China. You get China back in the game, oil goes back to $95 a barrel. If China remains in recession, then oil stays low and goes back to the $60s. It’s purely a China play. The US economy will continue to grow, but most of our oil consumption is domestic now—we are the world’s largest oil producer at 13.5 million barrels a day. We do not need any Middle Eastern oil anymore, really, we’re just running out our existing contracts.
Q: Do you think cryptocurrencies will have a bull market with the stock market?
A: No, I don’t. Cryptocurrencies did well when we had a liquidity surplus and an asset shortage. Now, we have the opposite; we have a liquidity shortage and an asset surplus, and the theft problem is still rampant with the cryptocurrencies keeping most institutional and individual investors out of that market.
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 click on WEBINARS, and all the webinars from the last 12 years are there in all their glory
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
"Everything is expensive now. Worries about the future can cause safe assets to become highly-priced. I call it the 'Titanic Effect.' When the Titanic was going down, people would pay a fortune for anything that floats. We may be in a Titanic situation now," said my buddy, Nobel Prize winner Robert Shiller.
Mad Hedge Biotech and Healthcare Letter
October 10, 2024
Fiat Lux
Featured Trade:
(BUYING TIME)
(MRK), (JNJ)
