Mad Hedge Technology Letter
June 13, 2025
Fiat Lux
Featured Trade:
(CYBER DEFENSE STOCKS BECOME POPULAR)
(PANW), (DDOG), (NET)
I don’t want to state the obvious because the obvious is staring us straight in the face, but the likelihood of global conflict escalating in the short-term is surging.
Explosive global turmoil is great for cybersecurity software stocks, and that is why I started piling into these gems of tech companies today.
I first added some Palo Alto Networks, Inc. (PANW), then helped myself to a serving of Datadog, Inc. (DDOG), then another bit of Cloudflare, Inc. (NET).
Most of you have heard of the first company PANW, because it has been around for quite a while.
However, what about the latter NET? Let’s look into why this is a good investment.
NET boasts leadership in the cloud services and cybersecurity markets.
First, Cloudflare’s innovative business model positions it at the forefront of the digital transformation wave.
The company provides a global content delivery network (CDN) and cloud-based security solutions that enhance website performance and protect against cyber threats. With data centers in over 300 cities worldwide, Cloudflare ensures low-latency access for nearly 95% of the global internet population within 50 milliseconds.
This edge computing capability is increasingly critical as businesses shift to cloud-based infrastructure, making Cloudflare an essential partner for enterprises seeking speed, reliability, and security.
Its freemium model, offering free services to attract users and upselling premium features, has successfully grown its customer base to over 3.2 million properties, including 151,000 paying customers.
Second, Cloudflare operates in a massive and expanding total addressable market (TAM), estimated at $135 billion by 2024, up from $32 billion in 2018.
This growth reflects the company’s expansion beyond traditional CDN and security services into network services, zero-trust security, and developer tools like Workers AI.
The rising demand for cybersecurity, driven by a reported 76 billion cyberattacks daily mitigated by Cloudflare’s network, and the emergence of edge AI applications, further bolster its TAM.
The company’s recent deployment of NVIDIA GPUs at the edge highlights its strategic move into AI inference workloads, positioning it to capitalize on the AI boom.
The company’s net retention rate, a key metric of customer expansion, improved to 111%, indicating that existing clients are increasing their spending.
Large customers, defined as those spending over $100,000 annually, now account for 69% of revenue, up from 66% last year, reflecting strong enterprise adoption.
NET’s competitive moat and strategic partnerships enhance its long-term prospects. Its global network, built on commodity hardware and smart software, is difficult to replicate, giving it an edge over competitors like Amazon CloudFront, Microsoft Azure, and Google Cloud.
Partnerships with companies like Shopify, which relies on Cloudflare for e-commerce scalability, and JD.com in the Asia-Pacific region, where revenue growth has accelerated to 43%.
NET is still growing revenue by about 30%, and that is hard to find in today’s world.
It’s no surprise that this 30% is still quite common in the subsector of cybersecurity software.
Software is integral to business in today’s cutthroat world, and getting the strongest protective software is important for a corporation otherwise, hackers will take you for a ride to the bank.
Don’t go to a gunfight with a knife.
I expect cybersecurity companies to become a bigger player in the tech world moving forward.
“Innovation distinguishes between a leader and a follower.” – Said Steve Jobs
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
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 JUNE 11, 2025, WEBINAR)
June 13, 2025
Hello everyone
TITLE –The Blind Man’s Market
PERFORMANCE
June = +9.94%
2025 YTD = +39.61%
Since inception = +738.17%
Trailing One Year Return = +90.96%
Average Annualized Return = +50.85%
PORTFOLIO
Risk On
(MSTR) 6/$330-$340 call spread
(TSLA) 6/$190-$200 call spread
Risk Off
(QQQ) 6/ $540-$550 put spread
(WPM) 6/$75-$80 call spread
THE METHOD TO MY MADNESS
Stocks are now at very high-risk levels due to an increasingly unstable world.
They could go higher, but not by much. Risk/reward – not great.
US Bond auction failure could be the stick that breaks the camel’s back, and a $22 billion one is due on Thursday.
As the National Debt accelerates, it is going to present an increasingly difficult ceiling for stock prices.
As US credit quality declines, interest rates will rise.
The top technology stocks will lead all rallies – AI will be the fuel.
Safety assets like gold, silver, and T-bills will remain in demand.
Oil is still dead-on recession fears and OPEC production increase.
US dollar hits new two-year lows.
THE GLOBAL ECONOMY – SLOWING
Non-farm payroll report came in weak at 139,000 last month after a combined 95,000 in downward revision to the prior two months.
The unemployment rate held at 4.2%
US Trade Deficit shrinks at the fastest rate in history, as imports collapse.
Mass Government firings are clouding the economic data.
U.S. Economic output will fall as a result of new tariffs on foreign goods, according to the nonpartisan Congressional Budget Office.
ADP hits two-year low, as new hiring grinds to a halt.
US Factory Orders Dive.
ISM Manufacturing Index down for a fourth month.
The U.S. Economy contracted at an annualized rate of 0.2% in Q1 2025.
STOCKS: A BUYBACK GAME
A house bill that brings $664 billion in corporate tax cuts and therefore stock buybacks is powering the bull market.
That is on top of $1.2 trillion in existing buybacks budgeted for 2025.
U.S. Factories are shutting down on Rare Earth shortages.
Sports Betting stocks tank because of a 25% betting tax.
Meta to buy nuclear power plant from Constellation.
Money is fleeing Equity Funds.
Best Buy cuts earnings outlook due to Chinese tariffs.
The 60/40 Portfolio is dead for now, with both stocks and bonds going down at the same time.
U.S. Steel (X) takeover goes through at $55 a share with Nippon Steel investing $14 billion of investment over the next 14 months to modernize antiquated technology.
John says John Deere (DE) is the best play in the commodity sector.
How to invest in oil: (USO) ETF, Occidental Petroleum (OXY), and Exxon Mobil (XOM)
BONDS
Bonds are trapped at a low range on the “Sell America” trade.
June 12 brings the next huge $2 billion bond auctions for 20-year bonds.
A $16 billion Treasury sale of 20-year bonds bombed three weeks ago.
A foreign boycott was a major issue.
Japanese interest rates are soaring, part of a worldwide trend, with ultra-long 40-year bond yields hitting 3.675%.
A breakout in ten-year US Treasury yields to 5.0% is coming.
A $3 trillion rise in the National Debt proposed by the House – scaring away long-term bond investors
The Bond Vigilantes are back and are not to be taken lightly.
Avoid (TLT), (JNK), (NLY), (SLRN), and REITS
FOREIGN CURRENCIES – DOLLAR DIVE
US dollar hits two-year low, as the “Sell America” trade continues.
It’s almost unprecedented for a currency to fall when its interest rates are rising.
Debt, default, and trade wars are now the larger concern.
Next dollar weakness will come with evidence of a recession in days.
Buy (FXA), (FXE), (FXB), (FXC), and (FXY)
ENERGY & COMMODITIES
OPEC – ramping up production.
The worlds’ largest group of oil producers, OPEC+ stuck to its guns at a Saturday meeting with another big increase of 411,000 barrels per day for July as it looks to wrestle back market share and punish over-producers.
Having spent years curbing production – more than 5 million barrels a day or 5% of world demand- eight OPEC countries made a modest output increase in April before tripling it in May, June, and now July.
The Shale Oil Boom is Over, due to tax-subsidized US over-production, weak Chinese consumption, and recession fears.
As a result, oil companies are scaling back capital investment.
Texas, Oklahoma, and Louisiana will get hit the hardest.
PRECIOUS METALS – Profit Taking
Silver hits 13 year-high, at $35 an ounce, and is catching up with gold quickly. (SLV) target is $50.
Known both as a safe-haven asset and a vital industrial metal, silver has surged 24% so far in 2025.
Industrial uses account for more than half of global silver demand, according to the Silver Institute industry association, so the recession may be a drag.
$50 here we come.
Gold is coiling for another move up as soon as stocks fall.
Credit downgrades and eventual default have been the dream of gold bugs for the last 50 years.
John’s target is still $5,000.
REAL ESTATE – Deader than Dead
Apartment rents are slowing, up only 0.4% in May and down 0.5% YOY, usually a strong period.
The effect on property REITS has been pronounced.
The national median monthly rent is now $1,398 a month. Vacancies are at 7%, the highest since 2017.
Housing stocks plunge to one-year lows, on spike in long bond and mortgage rates.
Construction spending collapsed in April, down 0.9%, for both single and multifamily homes. Another red flag for the economy.
More Office space is disappearing than being built for the first time in 25 years.
Pending Home Sales hit three- year low.
TRADE SHEET
Stocks – sell rallies
Bonds – sell rallies
Commodities – stand aside
Currencies – buy dips
Precious Metals – buy dips
Energy – stand aside
Volatility – sell over $50
Real Estate – stand aside
NEXT STRATEGY WEBINAR
12:00 EST Wednesday, June 25, 2025, from Incline Village, NV.
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
June 13, 2025
Fiat Lux
Featured Trade:
(JUNE 11 BIWEEKLY STRATEGY WEBINAR Q&A),
(SPX), (TLT), (DE), (SOYB), (USO), (OXY), (XOM), (FXA), (FXE), (FXY), (FXB), (QQQ), (NFLX), (CYB)
