December 1, 2023
(SUMMARY OF JOHN’S NOVEMBER 29, 2023, WEBINAR)
December 1, 2023
Hello everyone,
Welcome to December and the start of a new season – winter or summer, depending on where you live in the world.
Let’s get into the summary of John’s most recent webinar.
Title: Approaching the Finish Line
December 5-7 Mad Hedge Traders & Investors Summit – 9:00 to 5:00 p.m. EST
Attendance is free. $100,000 in prizes. A wide choice of trading strategies is offered.
Performance:
November 2023- +17.15
Average Annualized Return: +48.57
2023 year to date: +83.32%
Since inception: 680.51%
Positions:
90% Long, 10% short.
Risk On
(MSFT) 12 /$320-$330 call spread
(NLY) 12/$15-$16 call spread.
(BRK/B) 12/$320-$330 call spread
(CCJ) 12/$35-$38 call spread
(CRM) 12/$185 - $195 call spread
(GOOGL) 12/ $110-$120 call spread
(SNOW) 12/$135-$140 call spread
(CAT) 12/ $220- $230 call spread
(XOM) 12/ $97-$100 call spread
Risk Off
(TLT) 12/$95-$98 call spread
Expiration Value: +86.17%
The Method to My Madness:
This is not the time to be buying stocks. It appears the Fed is done raising rates and markets are now discounting the first rate cut in March.
Bonds, REITs, precious metals, and financials have all responded.
We will probably continue this rally until the end of the year, but what happens in January?
The government shutdown is delayed until February – and markets have responded well to this.
Oil prices and commodities are now trading as one – selling off on a slowing economy.
After a rest, the tech market is marching higher again, which will probably continue for many years.
Go long stocks and bonds on any pullbacks in the market.
Commodities and industrials are a second-half play.
Stocks – Best in 18 months:
Just saw the fastest 10% rise in history.
Big tech leads, with financials catching up and energy suddenly cheap.
Company buybacks are about to increase, as companies race to pick up their stocks before the yearend deadline.
Apple is the top buyback stock followed by Alphabet (GOOGL) and Microsoft (MSFT)
Money is pouring into Defence ETFs, like (PPA) and (ITA), with $600 million entering the sector.
Fisker dives 18% after a disastrous earnings report. Companies trying to challenge TSLA are coming off second-best.
Short seller, Jim Chanos shuts down after a large short in TSLA shares blew up. His capital diving from $6 billion to $200 million.
2024 favorite sector is cyber security. Look at PANW, SNOW, and the ETF HACK. Governments are big targets for cybercriminals.
Safest Stock: Microsoft (MSFT) – ramping up efforts in AI. The future will see cancer cures with AI.
The government shutdown was delayed until February.
Bonds – Prices Taking a Break:
Government bond auctions suddenly improve, taking prices to two-month highs.
The Fed will cut interest rates as early as March – the futures market gives this a 40% probability.
Investors poured $5 billion into Bond ETFs in October.
10-year Treasury yields hit a new 16-year high, at 5.08%, then retreated to 4.33%
The whole falling interest rate and rising bond prices have been delayed for three months – hotter than expected economic growth at 4.9% for Q3 and more Fed rate rises.
Junk Bond ETFs (JNK) and (HYG) are holding up extremely well with an 8.74% yield and an 18-month high.
Buy (TLT) on the dip.
Foreign Currencies:
Sizeable pay hikes will lead to a strong Japanese Yen.
Whiskey Maker, Suntory offering 7% pay hikes.
The expectation of falling US interest rates is adding fuel to the fire.
Buy (FXY) on dips.
Bank of Japan eases grip on Bond Yields, ending its unlimited buying operation to keep interest rates down.
Japan is the last country to allow rates to rise.
Expect the Japanese yen to rise.
The 2024 story will be the US$ short.
Energy and Commodities:
Oil dropped from $96 down to $72 in less than two months as fears of an economic slowdown continued.
US Gasoline prices hit three three-year- lows, on recession fears and replacement concerns by EVs.
Energy stocks are lower and pulling down all other commodities.
There is a BUY setting up here when the global economy reaccelerates on a lower interest rates world. Watch (XOM) and (OXY).
China’s oil imports have fallen for six consecutive months, the world’s largest importer.
Biden provided a floor bid from the Strategic Petroleum Reserve at $79.
Warm weather is capping rallies in Natural Gas (UNG)
(XOM) is moving into Lithium.
(OXY) Buffett is an owner – 45% of the company.
(FCX) in buy territory – LEAPS territory soon.
Precious Metals:
The sharp drop in interest is very positive for Gold.
Goldman Sachs goes bullish on Gold: The investment bank expects the S&P GSCI, a commodities market index, to deliver a 21% return over the next 12 months.
Investors are picking up gold as a hedge for 2024 volatility.
Gold is headed for $3000 by 2025.
Falling interest rates are the accelerator.
Silver is the better play with a higher beta.
Russia and China are also stockpiling gold to sidestep international sanctions.
(GOLD) $50 is the 2024 target.
Real Estate- Hopes Abound
Pending Home Sales Plunge to 13 year-low, down 4.1% in October, on a signed contracts basis.
Sales were down 14.6% year over year.
The median price of an existing home sold in October was $391,800, an increase of 3.4% from October 2022.
These are the last poor sales numbers before the collapse in interest rates.
At the end of October, there were 1.15 million homes for sale, down 5.7% from a year earlier.
This is about half as many homes as were available for sale pre-Covid.
At the current sales pace, that represents a 3–6-month supply.
Six-month supply is considered a balanced market between buyer and seller.
Homebuilder sentiment drops, down six points to 34 in November.
Trade Sheet:
Stocks: buy the big dips at the bottom of the range.
Sell big rallies to hedge holdings.
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.
Next Webinar: December 13, 2023
Cheers,
Jacquie
