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Hot Tips

  • May 7, 2021

    1. April Nonfarm Payroll Report is a Huge Disappointment,

      at 266,000 when up to one million was expected. April’s hiring boom goes bust. March was revised down massively, from 916,000 to 770,000. The headline Unemployment Rate rose to 6.1%. It was one of the most confusing reports in recent memory. Bonds rocketed, interest rates crashed, and tech stocks took off like a scalded chimp. Inflation expectations have been shattered. Leisure & Hospitality kicked in at 331,000. But Professional & Business Services collapsed by 111,000. The two million businesses that went under last year aren’t hiring. Much of the return to work has been by people who already have jobs.

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    2. Weekly Jobless Claims Plunge,

      to 488,000, one of the sharpest drops on record at 100,000. Go down any Main Street today and instead of a sea of plywood, it is plastered with “Help Wanted” signs. Productivity is soaring, while average labor costs are actually falling.

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    3. US Chips Shortage Gets Worse.

      The US accounts for 50% of global chip demand but produces only 12%. The rest of our production was offshored to China or other low-wage countries. It takes two years to build a new chip factory at $2 billion each. Buy (NVDA), (AMAT), and (MU) on dips.

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    4. Biden Puts a 25% Corporate Tax Rate on the Table.

      It all part of a grand negotiation that will last for months. It has stalled the bond market, which has given new life for stocks. Loss of downside momentum in bonds has triggered short-covering by hedge funds to close positions. Use the rally to strap on the trade of the century two-year LEAPS on the United States Treasury Bond Fund (TLT).

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    5. IBM Brings Out the 2-Nanometer Chip,

      taking semiconductor technology to the next evolutionary level. Any smaller and electrons will be too big to squeeze through the gates. The current battle is over 7 nm technology. It promises to bring much faster computing at a lower price and will act as a temporary bridge to lightening quantum computing.

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  • May 5, 2021

    1. Hedge Fund Selling Has Been Extreme,

      according to a Bank of America (BAC) survey. They’re unloading everything they have to go 100% cash. That means dumping technology stocks and covering bond shorts. They’re buying back at the end of the summer to catch the yearend rally. Did somebody say something about “Selling in May and going away?

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    2. Throwing the Fat on the Fire,

      US Treasury Secretary Janet Yellen hinted that the Fed may have to raise rates modestly sooner than later to avoid a superheated economy. The market is in a totally “glass half empty’ mood right now, so the markets translated “may” and “modestly” to “certainly” and “tomorrow.” Interest rates went up on the comment, but tech stocks were slaughtered. Let’s face it, the easy money has been made.

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    3. Space X Starlink WIFI Takes 500,000 Orders.

      The next global market Elon Musk plans to disrupt is for WIFI, which will open up 500 MB/sec service for everyone in the world at a reasonable price. In February, it started accepted accepting $99 a month fully refundable pre-orders. That’s on top of a $499 one-time installation charge. It needs 20,000 satellites to work, but that’s easy when you own a rocket company. This could be the next hot super-premium IPO, something Elon is good at. Maybe that’s why he is hosting Saturday Night Live on Saturday.

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    4. Is Your Net Worth More than $266,400?

      Then you own more than 65–74-year-olds in the US. To make the average, you have to work a little harder to make $1,217,700. If you only have the median, you won’t have enough to retire in one-third of American states. The US Bureau of Labor Statistics recommends $513,280 before you collect your gold watch. Less than that and you better become a damn good stock trader.

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    5. US Factory Orders Gain,

      up 1.1% in March, providing more evidence that stimulus is working. Most economists are expecting double-digit growth in Q2. Driving up to Lake Tahoe, the number of trucks on the road has doubled in the last month.

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  • May 4, 2021

    1. Mad Hedge Tops a 60% Profit in 2021,

      taking our 11-year average annualized return over 42%. The barbell portfolio paid off in spades, with half my portfolio in domestic cyclicals and the rest in big tech. A triple weighting in short bond positions was also worth its weight in gold. With seven months to go, this could be the first 100% year for the Mad Hedge Fund Trader. The harder I work, the luckier I get.

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    2. Europe’s Q1 GDP Falls By 0.6%.

      That’s better than expected, but disastrous when compared to America’s spectacular 6.4% print. Blame the bumbled slow-motion vaccine rollout. European governments wasted time negotiating on price like it was just another government program, while the US poured billions into vaccine makers, no questions asked. European vaccines, like Astra Zeneca’s, were flawed. It’s amazing that a big government continent can’t perform a big government task, even when millions of lives depend on it.

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    3. Wonder Why You Can’t Get a Rental Car?

      Rental companies unable to buy new cars from (GM) and (F) because of the extreme chip shortage. My neighbor had to wait an incredible ten months. Good thing he didn’t try to buy a Tesla (TSLA) Powerwall where the wait is a year. So, rental companies like Hertz and Avis are buying up all the used cars they can find to making up the shortfall. I wondered by car rentals showed the biggest price increase of the 150 consumer items that the Fed tracks.

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    4. Why Buffet’s Inflation is Not Your Inflation,

      and more importantly, the Fed’s inflation. The fact is that only 63% of Americans own houses and they only buy them once in four years. The new homes where Buffet has a major exposure are seeing price rises are only 10% of the total home market. So, the Fed is only seeing 10% X 25% X 63% of these price hikes, or 1.57% of the total. There are loads of other anomalies like this in the Fed’s inflation calculation. Labor is 70% of the number, but most gains have been at the minimum wage, which also has a minimal impact on costs.

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    5. US Trade Deficit Hits Record High,

      to $74.4 billion, the most since 1992. It’s another sign of a booming US economy. The imbalance with China soared by 22% YOY to $36.9 billion. We are buying more than foreigners are, supercharged by $1,400 stimulus checks. Retail sales are on fire everywhere. Everyone is tired of living in their pajamas. 

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  • May 3, 2021

    1. Personal Income Explodes,

      up 21.1% in March, the most since 1945 according to the Bureau of Economic Analysis. What the heck happened in 1945? $1,400 stimulus checks are clearly burning holes in the pockets of consumers. Expect all numbers to hit lifetime highs in coming months. The sun, moon, and stars are all lining up and the standard of living is soaring.

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    2. Chicago PMI Rockets to a 40 Year High,

      up to 72.1 versus an expected 65. It seems everyone is already trying to buy what I am trying to buy. My bet is that the stock market is wildly underestimating the coming onslaught of economic numbers and will go to new highs once it figures out the game.

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    3. Lumber Prices are Becoming a Big Deal

      soaring 70% in two months and a staggering 340% in a year, igniting inflation fears. It’s only a tiny fraction of our tiny spending but is adding $36,000 to the cost of a new home. Some one in four homes sold today are newly built, the highest ratio ever. Punitive Trump lumber tariffs against Canada years ago shut down a lot of production and now that we need it, it isn’t there.

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    4. ESG Investing Approaches $2 Trillion,

      up 19% in Q1. Some 191 new environment funds we launched during the period. Performance is a magnet, with ESG one of the top-performing sectors of the past year. These funds are roughly five times more popular in Europe than in the US, where the environment is of far greater interest.

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    5. Berkshire Hathaway Comes in Big.

      Operating profits were up $7.02 billion, or 20% YOY. Warren Buffet bought back an impressive $.6 billion in Berkshire shares following a record $24.7 billion in 2020. Cash levels have ballooned to an incredible $145.4 billion, a huge war chest for the next selloff. SPACS have spoiled Buffet’s chances to buy great companies at a discount by overpaying for every kind of asset, diluting his advantage. Buy (BRKB) on dips as the best old-line industrial play out there.

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  • April 30, 2021

    1. Q1 GDP Exploded by 6.4%,

      and upward revisions are to come. That explains the 25% gain in the stock market during the first three months of the Biden administration, the best in 75 years. Coming quarters will show even stronger growth as the economy shakes off the pandemic and massive government spending kicks in. We will recover 2019 GDP peaks in the next quarter. Virtually all economic data points will set records for the rest of 2021. Buy everything on dips.

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    2. Weekly Jobless Claims Dive Again,

      to 553,000, a new post-pandemic low. One of a never-ending series of perfect data. It augurs well for next week’s April Nonfarm Payroll Report.

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    3. Pending Home Sales Fell 1.9%,

      far below expectations, but are still up 23% YOY. Higher prices and record low supply are the problem. The Midwest leads.

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    4. Case Shiller Blows it Away,

      with the National Home Price Index up an eye-popping 12% in February, despite a 50-basis point rise in mortgage interest rates. Phoenix rose by 17.4%, Seattle 17.0%, and San Diego 15.4%. With technology booming, it’s no surprise that the west is leading the charge on prices.

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    5. Amazon Sales Soar by 44% in Q1,

      producing some of the best earnings in American corporate history. Jeff is expecting sales to reach a staggering $110-$116 billion in Q2. That’s why he hired 500,000 last year, the most of any company since WWII. Prime subscribers have grown to 200 million, including me. Ad revenues jumped an eye-popping 77%. The shares of the huge pandemic winner leaped $140 on the news. It’s all another step toward my $5,000 target.

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