Mad Hedge Technology Letter
February 12, 2025
Fiat Lux
Featured Trade:
(WHEN THE RUBBER MEETS THE ROAD)
(PHD), (FED), (AI), (MAG 7)
It’s funny that the Fed ever thought they could initiate an interest rate cut cycle with gold bullion at $3,000 per ounce and bitcoin at $100,000 per coin.
Whatever they are smoking – please pass some of it over here.
These indicators show that there is too much paper out there following too few good and services.
This is why eggs are about to become 4 bucks per dozen.
The Federal Reserve employs 100,000 PhDs to botch the only job they have (decide what to do with interest rates) by refusing to deploy common sense.
Apparently, PhDs don’t deliver much these days either, which is why nobody goes to college anymore.
The consequence is that the bond market has dictated to the Fed what to do, and we have seen that over the past few years.
The US 10-year interest rate lurching closer to 5% means that tech stocks will have a tough grind and small tech companies get disproportionally penalized in this whipsaw environment.
On cue, Magnificent 7 are going strong because it put to use a strong balance sheet that many other tech firms don’t have.
It is funny to think about that once upon a time, these Mag 7 tech companies were the scrappy upstarts.
They have turned into total corporate monoliths like a titanic unable to steer.
New inflation data out Wednesday showed headline consumer prices rose more than forecast in January as core prices reversed last month's easing with the Federal Reserve's path forward in focus.
Seasonal factors contribute to higher inflation, like higher fuel costs and continued stickiness in food inflation, which kept the headline figures elevated. Notably, the index for eggs increased 15.2%, the largest increase since June 2015. It accounted for about two-thirds of the total monthly food at home increase.
Core inflation has remained stubbornly elevated due to sticky costs for shelter and services like insurance and medical care. Shelter did, however, show some signs of easing last month, rising 4.4% on an annual basis, the smallest 12-month increase in three years.
On Monday, President Trump announced global 25% tariffs on steel and aluminum imports, which will take effect on March 12. 25% tariffs on Mexico and Canada are set to come next month, while 10% duties on China have already been implemented.
The unpredictable volatility of interest rates will mean a choppy trading environment for tech stocks.
The Deepseek AI fiasco for OpenAI will also mean that tech companies will need to show investors soon if AI will profit or not.
This sets the stage for a polarizing short-term trading environment.
I will issue tech trade alert on big dips and ride them for defined time frames.
This is the best way to go about tech equities.
Readers need to understand that the time of just sitting and holding tech stocks to infinity is over.
This is when the rubber meets the road, and big drawdowns are susceptible when prices are this high and the system is creaky with institutions of centuries destined to bite dust.
At the very best, institutions like the Fed are ineffective.
Tech stocks will need to prove their worth in 2025 or else expect discounts across the board.
“Organizations are no longer going to receive vast amounts of taxpayer money for nothing. The people deserve good value for money.” – Said Elon Musk
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
(CBA DELIVERED A GREAT FIRST HALF PROFIT, BUT THE CEO WARNS OF STORMS ON THE HORIZON)
February 12, 2025
Hello everyone
The numbers are in for Commonwealth Bank of Australia (CBA), and they are excellent.
The bank announced better than expected first-half profits, as the bank continues to cash in on Australia’s robust housing market.
CBA’s cash net profit after tax was $5.13bn for the six months ended December 31, compared with $5.02bn a year earlier, beating market expectations of $5.06bn.
The bank has consistently illustrated disciplined operational and strategic execution, which has underpinned their performance. Good customer relationships have seen the bank diligently respond to the needs and risks of the bank’s customer base, which has facilitated the delivery of an above-average digital experience for the customer.
Every day, the bank lends to more than 200 businesses, helps almost 400 households buy a home, and processes more than 20 million payments.
The bank controls a quarter of the country’s mortgage market. Despite the cost-of-living concerns, the bank indicates customers are ahead on repayments.
CBA notes that any interest rate cut “should provide some relief to many households and improve business confidence.”
Home loans grew by 3 percent and business loans by 8 percent, driving operating income up 3.3 percent to $14.1bn for the six months to December 31.
CBA announced an interim dividend of $2.25 a share for its shareholders, which is five per cent higher than the interim payout last year and represents 73 per cent of cash profit.
Great profits, but the bank is cautious about the future economic landscape.
Matt Comyn, CBA’s CEO, warns that economic conditions “remain fragile”. He notes that “private sector growth is weak, immigration is starting to slow and geopolitical uncertainties remain.”
After a conversation between Australia’s prime minister, Anthony Albanese, and Donald Trump a couple of days ago, it became clear that the two leaders agreed “on wording” in relation to US tariffs on steel and aluminium. In other words, Donald Trump had agreed to “consider” an exemption for Australia from US tariffs on steel and aluminium. But, in the world we live in today, words don’t seem to mean a lot, so let’s see if Mr Trump does indeed truly “consider” an exemption for Australia.
PORTFOLIO UPDATE
SELL THESE STOCKS
1/ Turning Point Brands (TPB)
Purchase Price: $56.45
Sale Price: $67.70
Purchase Date: 01/23/25
Profit/Loss = $ 11.25 or 19.92%
2/ Powell Industries (POWL)
Purchase Price: $290.80
Sale Price: $210.25
Purchase Date: 01/27/25
Profit/Loss = -$80.55 or -27.69%
3/ Palantir (PLTR) (last week, I did mention that it would be wise to take some profits)
Purchase Price: $23.00
Sale Price: $112.62
Purchase Date: 03/20/24
Profit/loss = $89.62 or 389.65%
4/ Tesla (TSLA)
Purchase Price: $260.00
Sale Price: $328.50
Purchase Date: 09/27/24
Profit/Loss = $68.50 or 26.34%
5/ Core Scientific (CORS)
Purchase Price: $9.71
Sale Price: $12.26
Purchase Date: 08/07/24
Profit/Loss= $2.55 or 26.26%
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
QI CORNER
Cheers
Jacquie
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Global Market Comments
February 12, 2025
Fiat Lux
Featured Trade:
(THE ABC’s OF THE VIX),
(VIX), (VXX), (SVXY)
“It’s easier to get out of Cuba than to get out of Facebook,” said a market analyst.
Mad Hedge Biotech and Healthcare Letter
February 11, 2025
Fiat Lux
Featured Trade:
(SPLICING THROUGH SKEPTICISM)
(CSRP), (VRTX), (AMZN), (TSLA)
When I pioneered fracking technology in Texas years ago, skeptics said we were crazy. Today's skeptics are saying the same thing about CRISPR Therapeutics (CRSP), and they're just as wrong.
Here's a company sitting on a $1.9 billion cash fortress, burning through a mere $100 million per quarter – giving them enough runway to circle the Earth 19 times – and yet the stock has drifted down to $40, shedding 15% since my last analysis when it was perched at $48.
Talk about the market missing the forest for the trees.
Remember when everyone thought Amazon (AMZN) was just a bookstore? Well, CRISPR Therapeutics isn't just another biotech company – it's the Tesla (TSLA) of gene editing, with Vertex Pharmaceuticals (VRTX) riding shotgun.
And just like Tesla wasn't just about making electric cars, CRISPR isn't just about Casgevy, their FDA-approved treatment for Sickle Cell Disease (SCD) and Transfusion-Dependent Beta Thalassemia (TDT).
Speaking of Casgevy, let's tackle the elephant in the room. Yes, patient enrollment has been slower than a government committee deciding on lunch options. They've collected cells from over 50 patients by year-end, up from 20 in mid-October.
Not exactly setting speed records, but here's what the market is missing: the Centers for Medicare and Medicaid Services just inked a deal with Vertex/CRISPR that could be a game-changer.
Why? Because 50-60% of SCD patients are on Medicaid.
But wait, there's more happening behind the scenes. The company has been quietly building an empire across 5 clinical programs and 10 preclinical programs.
Let's break down what's cooking in their kitchen.
The Casgevy rollout has expanded from 35 treatment centers in October to over 50 by year-end.
Eight jurisdictions have given them the green light, including Saudi Arabia – a market where SCD is about as common as sand.
The UK just signed on for reimbursement, first for TDT in August 2024, and now for SCD.
Their CAR-T program isn't just targeting blood cancers anymore. They've expanded into autoimmune diseases like Systemic sclerosis (SSc) and Idiopathic inflammatory myopathy (IIM).
We're talking about potential treatments for 2.5 million SSc patients globally (125,000 in the US) and 1 million IIM patients (50,000 in the US).
That's not just a market – it's an ocean.
They're even taking shots at liver cancer and cardiovascular diseases. Their latest trial for Heterozygous familial hypercholesterolemia could be a lifeline for patients with this genetic cholesterol disorder.
And speaking of cash runways, their $1.9 billion war chest means they can keep this scientific symphony playing for 19 quarters without passing around the collection plate.
In biotech terms, that's like having enough food to last through three winters.
Institutions are noticing, too. Cathie Wood just backed up the truck, dropping $10 million more into CRISPR, making it her 9th largest holding at $350 million. Her ARK funds now own over 9% of the company.
When smart money moves like this, I pay attention.
Here's the kicker: While most analysts raise their ratings as speculative stocks climb (a strategy that makes as much sense as buying umbrella futures during a drought), I'm doing the opposite.
After all, the fundamentals are stronger than ever, but the price is lower.
Looking ahead to 2025, we've got more potential catalysts than a chemistry textbook. Phase 1/2 trial data for CTX 112 is coming in Q2/Q3, CTX 131 in Q3/Q4, and updates on their Type 1 Diabetes program in the second half of the year.
Remember, this is the same company that has Vertex Pharmaceuticals – the biotech equivalent of having Warren Buffett as your investment advisor – as a partner.
They're not just getting financial support; they're getting a masterclass in how to commercialize breakthrough treatments.
The verdict? Load up on shares while the market gives us this gift wrapped in fear and uncertainty.
Twenty years ago, they called us crazy for thinking we could extract oil from solid rock. Today, they're just as skeptical about editing genes.
History has a funny way of repeating itself.
