April 5, 2024
(SUMMARY OF JOHN’S APRIL 3, 2024 WEBINAR)
April 5, 2024
Hello everyone.
TITLE
The Three Margarita Webinar
PERFORMANCE
April – 2.00% MTD
Average annualized return: +51.40 for 16 years.
Trailing one-year return: +46.58%
PORTFOLIO
Risk On
(FCX) 4/$37-$40 call spread 10%.
(XOM) 4/$100-$105 call spread 10%.
(OXY) 4/$59-$62 call spread 10%.
(WPM) 4/$39-$42 call spread 10%.
(TSLA) 4/$140-$150 call spread 10%.
(GLD) 4/$194-$197 call spread 10%.
Risk Off
No positions.
THE METHOD TO MY MADNESS
We are now moving out of big tech into commodities, precious metals and energy.
Technology will have a “time correction”.
Bonds and other falling interest plays are being blindsided by a heating economy.
All economic data is globally slowing, except for the US, with the only good economy in the world.
US $ approaches multiyear high on rising rates.
Buy stocks and bonds but only after substantial dips.
WHY ARE COMMODITIES SO HOT
Traders are not chasing big tech. Instead, they are rotating into laggard sectors.
Commodities, precious metals, and energy have not moved for a year.
Traders are betting on the falling interest rate narrative.
These sectors are also great plays on a recovering global economy, and a falling dollar, pressured by rising US debt, now at $35 trillion.
THE GLOBAL ECONOMY – A ONE-HIT WONDER
ADP show 184,000 private sector job gains in March.
Fed Chair Jay Powell promises three interest rate cuts this year – 25 basis points each.
PCE comes in hot at 0.3% for February, and 2.8% YOY.
ISM Manufacturing PMI soars, reaching an 18-month high.
The final read of the Q2 US GDP is revised up, to a 3.4% annual rate.
Leading economic indicators rise for the first time in two years according to the Conference Board.
Fed to dial back quantitative tightening, or QT from the current $120 billion a month.
STOCKS – COMMODITIES LOVEFEST
It’s been four years since the COVID low, and stocks have averaged a 25% a year return since then.
China bans AMD and Intel processors, for government use in retaliation for the ban on high-performing NVIDIA chips.
Boeing CEO resigns. David Calhoun learned the hard way that you can’t cost-cut your way to prosperity.
Chipotle announces a 50:1 stock split, prompting a 3.5% rally in the stock.
Shell is moving into the charging business, which has much higher margins than selling gasoline.
Reddit deal blows out, in the first big IPO of 2024 – up 35% at the opening.
BONDS – SLAP IN THE FACE
Rising inflation and heating economy cut bond support off at the knees.
Higher for longer seems to be the new Fed mantra.
However, Jay Powell still promising three rate cuts this year, but they will be closer to year-end.
So, bonds will remain weak but may only have $2 of downside left.
US National Debt is rising by $1 trillion every 100 days.
FOREIGN CURRENCIES – US DOLLAR POWERS ON
Japanese yen hits a new 34-year low at 151.97 to the US$ with the Bank of Japan suggesting that interest rates will stay lower for longer.
Last week the central bank raised rates for the first time in 17 years. Japanese stocks applauded.
Chinese Yuan crashes, suffering worst day in two months.
Declining exports, collapsing foreign investment, minimal population growth, it all adds up to a weaker Chinese currency.
It’s the bitter fruit of 40 years of one child-only policy. Avoid (FXI).
Eventual falling interest rates guarantee a falling dollar for 2024.
ENERGY & COMMODITIES – NEW HIGHS FOR THE YEAR
A global commodity rally has dragged oil up.
US continues to dominate markets with 13 million barrels/day production.
In the meantime, coal has plunged from 50% to 19% of US electricity output in 20 years.
Electrification of the US economy will continue to be a driving theme.
The Uranium shortage is getting extreme, with yellow cake up 112% in a year. Owners of abandoned mines are restarting operations to capitalize on the rising demand for nuclear fuel.
AI is finding New Copper Deposits.
PRECIOUS METALS – NEW ALL-TIME HIGHS
Precious metals have a great week on flight to safety.
Gold looking forward to falling interest rates later in 2024.
Miners are playing catch-up.
Investors are picking up gold as a hedge for 2024 volatility.
Gold headed for $3,000 by 2025.
Silver will also rally.
Russia and China are also stockpiling gold to sidestep international sanctions.
REAL ESTATE- HOTTEST SPRING IN YEARS
Existing home sales soar 9.7% in February to 4.38 million units.
A still low 2.9-month supply at the current sales pace.
Median prices are up 5.7% from the year before to $384,500.
US Construction spending falls 0.3% in February according to the Commerce Department.
Construction spending increased 10.7% year-on-year in February.
New Home Sales drop 0.3% in February in a surprising decline at a 662,000 annual rate on a signed contract basis.
A spike in mortgage rates to 7.0% gets the blame.
There was a 7.5% drop in the prices of new homes sold to $405,000.
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.
RECORDING OF JACQUIE’S POST-MARCH MONTHLY ZOOM MEETING
Apologies for any errors. I was still jet lagged when I held this meeting.
https://www.madhedgefundtrader.com/jp-meeting-replay-march-2024/
Cheers,
Jacquie
