August 30, 2024
(SUMMARY OF JOHN’S AUGUST 28, 2024, WEBINAR)
August 30, 2024
Hello everyone.
TITLE: Waiting for the Other Shoe to Fall
TRADE ALERT PERFORMANCE
August: +3.56% MTD
Average annualized return: +51.62%
Trailing one Year Return: +52.25%
Since inception: +710.24%
PORTFOLIO REVIEW
Risk Off
(TSLA) 9/$250-$260 put spread 10%
THE METHOD TO MY MADNESS
Markets are going into the worst month of the year overbought and begging for a correction.
September 18 interest rate cut now a sure thing, says John, but how much good news is already priced in?
A lot will depend on NVDA earnings out after the close today.
The next selloff is one you buy into.
US dollar is trash and could stay weak for years.
Technology stocks will recover after a much-needed correction.
Energy gets dumped on recession fears if the Fed acts too slowly.
Buy stocks and bonds on dips, but now it’s ALL sectors.
THE GLOBAL ECONOMY – NEW STIMULUS
Jay Powell says the “time to adjust policy is here.
Where did the 818,000 jobs go? Monthly job gains fell from 250,000 to 175,000. Is the message that the Fed waited too long to cut rates?
Goldman Sachs cuts recession risk to 20%
Consumer sentiment drops, to an eight-month low.
Price Index is a snore, at 0.2% MOM and 2.9% YOY.
US Producer Price Index fades, coming in at a weak 0.1%.
China Loan demand hits 15-year low.
UK grows by 0.6% in Q2, a far cry from the US 2.8% rate.
STOCKS – RECORD RALLY
Stocks mount record rally, up 11%, bringing the Magnificent Seven back to the fore.
Risk is now high, and you can still get 5.01% for 90-day T-bills.
The next dip is one you buy.
However, the bull market is finally broadening out with a big focus on interest sensitives like housing, builders, emerging markets, and small caps.
$6 billion poured into US equity funds last week.
Now it’s volatility that’s crashing, down a record $49 points from $65 to $14 in 9 trading days.
Global EV sales jump 21% YOY, in July thanks to a large rise in China.
Buy on dips: Netflix (NFLX), Caterpillar (CAT), Deere (DE), VISA (V)
BONDS – FROM STRENGTH TO STRENGTH
Market prices in 50-point basis cut for September, holding on to massive rally.
A cut of only 25 basis points on September 18 could give us a $5 sell-off.
The September 6 Nonfarm Payroll report and Unemployment rate will be crucial.
(TLT) could make it to $110 by yearend, keep all LEAPS.
It’s not too late to buy derivative fixed-income plays.
Buy (TLT), (JNK), (NLY), (SLRN), and REITS on dips.
FOREIGN CURRENCIES – DOLLAR IS TRASH
Dollar hits seven-month low, as US interest rate cuts loom. It could be a decade-long move.
The Yen carry trade is back, with hedge funds piling back into positions they baled on only two weeks ago.
It’s just a matter of math, now that the Bank of Japan has given up on raising interest rates anytime soon.
What this means is more leverage, risk, and volatility for global financial markets. I love it!
The prospect of falling interest rates means that the greenback is toast.
Buy (FXA), (FXE), (FXB), (FXC).
ENERGY & COMMODITIES – RECESSION DRAG
Oil collapses to $71 a barrel, taking the rest of the commodity space down with it.
Cut off of 1 million barrels/day of Libyan production gives oil a brief respite.
This is despite the support from multiple Middle Eastern wars.
No one wants to pay for storage during a recession, especially with the current high interest rates. The worst-performing asset class of the year just got worse.
Weak Chinese economic data was the gasoline on the fire.
Replacement by EV’s and the shift out of cars into planes are big factors.
Copper flips from shortage to surplus, as the Chinese economic recovery drags on.
PRECIOUS METALS – NEW HIGHS
Gold pennies new all-time highs as Chinese have no other savings alternative.
Silver takes a break from economic slowdown, and enters a sideways range.
Miners have started to outperform metals for the first time in years, indicating an increase in investor leverage.
A global monetary easing is at hand.
Buy precious metals on the dips because rates are now falling decisively.
Buy (GLD), (AGQ), and (WPM) on dips.
REAL ESTATE – SALES BUMP
Mortgage rates hit the new 2024 low. The average for a 30-year, fixed loan was 6.46%, down from 6.49% last week.
Existing Homes sales jump in July for the first time in five months, up 1.3% to 3.95 million units.
Inventory is up a whopping 20% YOY.
The median home price rose to $442,000, up 4.2% YOY, with some 27% of sales all-cash buyers.
Sales of home over $1 million are up 26% YOY because the supply is up over 30%.
New-home construction dives, in July to the lowest level since the aftermath of the pandemic as builders respond to weak demand that’s keeping inventory levels high.
Total housing starts decreased by 6.8% to a 1.2 million annualized rate last month.
TRADE SHEET
Stocks – buy the next big dip.
Bonds – buy dips
Commodities – stand aside
Currencies – sell dollar rallies, buy currencies
Precious Metals – buy dips
Energy – avoid
Volatility – sell over $30
Real Estate – buy dips
NEXT STRATEGY WEBINAR
12:00 EST Wednesday, September 11 from Lake Tahoe, Nevada
JACQUIE’S POST HOUSEKEEPING
The August Monthly Zoom Meeting will be next Tuesday, September 3rd. I will be sending out the Zoom invitation today.
Cheers
Jacquie