Jacque's Post Archives

September 11, 2024

(ROBLOX (RBLX) DELIVERS REAL MONEY TO DEVELOPERS IN A NEW INITIATIVE)

September 11, 2024

Hello everyone.

Palantir Technologies & Dell Technologies join the S&P500.

In a couple of weeks, Palantir Technologies Inc. and Dell Technologies Inc. are set to join the S&P500 index. Shares of Palantir and Dell rallied in the extended session Friday after the news, gaining nearly 8% and 7% respectively. This movement is part of a scheduled index rebalancing, which is to take place on September 23. Also joining the S&P500 is the insurance company Erie Indemnity Co. (ERIE)

The three companies will replace American Airlines Group Inc. (AAL), Etsy Inc. ETSY and Bio-Rad Laboratories Inc. BIO in the S&P500.

American Airlines and Bio-Rad will migrate to the S&P MidCap 400 (MID) while Etsy will move to the S&P Small Cap 600 (SML)

Real Money earned by developers on Roblox in a new initiative.

Roblox, a gaming platform that generates billions of dollars a year in the virtual world is getting real.

Last Friday, the company stated that some game developers on the platform will be able to charge users real money rather than relying on payments through Roblox’s digital currency called Robux. The change applies to those games that cost money to play.

Game creators can now more easily sell to users without dealing with an intermediary virtual currency. This conversion to real money is part of the company’s plants to facilitate 10% of all global gaming content sales through the Roblox platform and reach 300 million daily active users.

Chief product officer, Manuel Bronstein, states that the goal is to increase the appeal of the platform to existing developers, who want options to create and make money from their games.

For a game that costs $50, the creator will pocket 70% of the earnings. Those that cost $30 and $10 will lead to payouts of 60% and 50%, respectively. Roblox users will be able to pay with their local currencies later this year from their computers, and the company plans to expand payments to other devices in the future.

The company hopes the pricing plan incentivises developers and small gaming studios who want to do something on a grander scale on the platform and earn bigger payouts.

Roblox derives the bulk of its revenue from sales of Robux, which people typically use to buy virtual goods. Roblox takes a 30% cut from those sales, with the developer getting the rest.

In August, Roblox’s second quarter sales jumped 31% year-over-year to $893.5 million, while its net loss narrowed to $207.2 million from $282.8 million during the previous year.

Roblox will also partner with Shopify, which will see developers able to sell some physical merchandise to U.S. users over age 13. Shopify said it plans for a “larger launch” early next year.

Roblox shares closed slightly lower last Friday at $43.64. They are now down almost 5% for the year, while the Nasdaq is up 11% in 2024.

The stock has dropped close to 40% since its first day of trading in 2021, when Roblox’s business was booming as kids flocked to the app during the pandemic.

ROBLOX CHART

Note: The Roblox article is an item of interest and not a recommendation to buy at this time.

QI CORNER

Cheers

Jacquie

September 9, 2024

Jacque's Post

(AUGUST INFLATION DATA WILL STEAL THE LIMELIGHT THIS WEEK)

September 9, 2024

Hello everyone.

WEEK AHEAD CALENDAR

Monday, Sept. 9

10:00 a.m. Wholesale Inventories final (July)

3:00 p.m. Consumer Credit (July)

11:00 p.m. China Trade Balance

Previous: $84.7b

Forecast: $83.9b

Earnings: Oracle

Apple’s “It’s Glow Time” event

Tuesday, Sept 10

6:00 a.m. NFIB Small Business Index (August)

2:00 a.m. UK Unemployment Rate

Previous: 4.2%

Forecast: 4.2%

Goldman Sachs’ Communacopia and Tech Conference

U.S. presidential debate

Wednesday, Sept 11

8:30 a.m. Consumer Price Index (August)

8:30 a.m. Hourly Earnings final (August)

8:30 a.m. Average Workweek final (August)

Thursday, Sept 12

8:30 a.m. Continuing Jobless Claims (08/31)

8:30 a.m. Initial Claims (09/07)

8:30 a.m. Producer Price Index (August)

2:00 p.m. Treasury Budget (August)

8:15 a.m. Euro Area Rate Decision

Precious: 4.25%

Forecast: 4.0%

Earnings: Adobe, Kroger

Friday, Sept 13

8:30 a.m. Export Price Index (August)

8:30 a.m. Import Price Index (August)

10:00 a.m. Michigan Sentiment preliminary (September)

Last Friday, the highly anticipated US jobs data came in slightly lower than expected, with only 142,000 jobs added in August. The US$ shrugged its shoulders at the number but was still weaker on the week.

This week brings the euro into focus with an interest rate decision from the ECB on Thursday. Rates are expected to be lowered by 25bps. US CPI data arrives on Wednesday, with inflation expected to tick lower towards the Fed’s 2% target.

This week will also bring the first presidential debate between Vice President Kamala Harris and former President Donald Trump, an event traders will closely watch as the candidates outline their economic policies.

MARKET UPDATE

S&P500

Corrective sell-off in progress. The question on everybody’s lips: Is this a new bear market or a corrective move? At the moment I view the action in the market as a correction, and support around 5,100 should hold. A sustained break below the aforementioned level would question my thesis and risk a move toward the mid 4,000’s.

GOLD

Gold uptrend persists. Resistance = $2,530. Once this level is cleared the uptrend can extend onto the late $2,500s.

As a caution, any sustained break below $2,470, risks a move to around $$2,400.

BITCOIN

Complex Correction in progress. Resistance = $56,250/$58,500. With downside pressure dominant at the moment, we could see the $50,000 level tested and even test the mid $44k.

WHAT IS…?

Beta is a statistical measure of a security’s risk or volatility as compared with the market as a whole.

The market has a Beta of 1.0, and individual stocks are ranked according to how much they deviate from the macro market. If stock (XXX) has a beta of 1.5, then we would expect stock (XXX) to move 50% more than the market. So, if the S&P500 moves up/down 1.0%, we would expect (XXX) to move up/down 1.5%.

A higher beta implies greater risk with the potential for higher returns, whereas a lower beta implies lower risk, but also the potential for lower returns.

How do we calculate Beta?

AUSTRALIAN CORNER

Morningstar says the following companies are stocks that investors could hold for life.

Note: this list does not cater to those who want stocks for dividend income and doesn’t consider valuation. In other words, investors need to look at different stocks for income and should wait for a retracement before scaling into any of the stocks listed here.

The filter that was used included:

Part of the ASX 300 (well established firms with some history of success, which excludes most small caps).
Long runway of growth opportunities (leaning toward companies that have global operations, and/or large markets to operate in).
Economic moats (sustainable competitive advantage: network effects, intangible assets, cost advantages, switching costs, or efficient scale).
Goods return on capital
Sound balance sheet (Not a big reliance on too much debt to generate returns).
Don’t rely on exceptional managers to succeed. (The business needs to stand on its merits).
Unlikely to be disrupted (you are betting on things that won’t change).

James Hardie (ASX: JHX)

Since it pioneered the development of fiber-cement technology in the 1980s, it has dominated the fiber-cement siding category for houses in the US and Australia. It has a long runway of growth and an economic moat based on brand and scale that should keep competitors at bay, resulting in above-average returns for decades to come.

REA Group (ASX: REA)

Owns realestate.com.au – the premier online listing platform for Australian residential real estate. Even during the downturn in listings in 2022, it was able to substantially lift pricing – which demonstrated its immense pricing power and moat.

QI CORNER

Last week…

SOMETHING TO THINK ABOUT

Cheers

Jacquie

September 6, 2024

Jacque's Post

(INVESTORS ARE PAYING ATTENTION TO CHINA’S EV INDUSTRY)

September 6, 2024

Hello everyone

Xpeng (XPEV) to launch new models later this year.

Chinese EV maker, Xpeng could see a significant move by the end of the year as two new key EV models are being unveiled in the fourth quarter of this year.

JP Morgan has upgraded the China-based electric vehicle maker from overweight to neutral. It also increased its price target for U.S.-listed shares to $11.50 from $8 per share. From Wednesday’s close that implies a 36% upside.

The demand for EV’s globally has cooled in 2024. Consumers have obviously rebelled against the EV adoption marketing slogans & EV technology and have instead dug in their heels…sticking closely to their traditional gas-guzzling machines.

Demand in China for EV’s has been much higher compared to the U.S. The rollout of its Mona M03 and P7 plus sedans could nearly double the company’s overall vehicle delivery from the third to the fourth quarter.

At a starting price of $US16,812.00, the Mon M03 is directed at the lower to middle-income earner.

Looking into 2025, the current estimate is that sales volume can top 300k units thanks to more new models, which is a big jump from 180k in 2024.

Shares could see growth on the heels of the new vehicles. When Xpeng launched its G6 sports utility vehicle in 2023, the stock advanced roughly 30%.

Weekly (XPEV) chart

The Mona M03

I recommended (XPEV) on March 15 this year when it was $10.05. If you bought some shares at that time and are still holding – well done for showing patience.

For those that don’t own the shares, you can either watch the action in the shares from the sidelines or buy a small parcel of the stock over the next month.

You can see from the chart above that the stock has moved sideways since the beginning of year, which could be a precursor to a breakout rally.

China appears to enjoy a solid position in the EV industry. The country is now the world’s largest exporter of cars, having surpassed Germany and is even now outpacing Japan. By destination, the EU holds the majority share, accounting for 47% of China’s EV exports in value last year; exports to Thailand, the Philippines, and India have also proved strong. In a strong contrast, exports to the U.S. fell 32% year over year in January – October, curbed by high taxes and U.S. restrictions. China’s automakers pay a 27.5% import duty to send vehicles to the U.S. compared with just 10% on cars sent to the EU.

SOMETHING TO THINK ABOUT

Have a wonderful weekend.

Cheers

Jacquie

September 4, 2024

Jacque's Post

(HEDGE AGAINST MARKET RISKS WITH GOLD & SILVER)

September 4, 2024

Hello everyone.

Let’s get real. August, September & October are usually very tricky months for the stock market. Or to put it another way, the market is usually awful and moody during these months. So, expect quite a bit of turbulence during this time.

The market could pull back 7-10% during this time. The U.S. election is coming up and the Fed meets in mid-September to deliver rate cuts or not. The environment makes people nervous. And people become cautious at this time.

The release of the non-farm payrolls data this Friday could cause a lot of volatility. If the August data comes in hotter than expected, September rate cut expectations might be quickly marked down.

Still, markets are pricing in a 67% likelihood that the Federal Reserve will cut by a quarter percentage point in September, according to the CME FedWatch Tool.

Stock up on Gold as a hedge against geopolitical and financial risks.

Going into year-end and well into 2025, we should see gold rally toward $3,000, particularly with the near 100% certainty (depending on data) that the Fed will cut rates in September, and possibly again later in the year.

Investment bank analysts at Goldman Sachs point out that emerging market countries are continuing to buy gold – with purchases tripling since the middle of 2022 amid fears of U.S. financial sanctions and a mountain of sovereign debt.

China is weighing on crude oil and copper prices. Its weak real estate sector provides only limited upside for steel, which presents challenges for iron ore prices. But this “winter season” cannot last forever. According to BHP’s CEO, we could start to see a turnaround in China’s real estate sector within the next 12 months.

Analysts at Goldman expect copper to average about $10,100 per metric ton in 2025, well above this year’s average of $9,231.

Goldman’s view long term is that metals important for the energy transition away from fossil fuels, such as copper, will ultimately reach scarcity pricing as demand grows, investment declines, and inventories fall.

Recommendation: Scale into gold and silver stocks on down days over the next eight weeks, particularly if you have no holdings in this sector.

You should be looking at (GLD), (GDX), (WPM), (SLV), (GOLD), & (NEM).

================================================

If you have good profits from any LEAPS recommended earlier this year or last year, consider taking profits.

QI CORNER

Cheers

Jacquie

September 2, 2024

Jacque's Post

(THIS WEEK THE JOBS NUMBER WILL BE THE HEADLINE EVENT)

September 2, 2024

Hello everyone.

Week ahead calendar

Monday, Sept. 2

Labor Day Public Holiday (U.S.) Markets closed.

4:00 a.m. Euro Area Manuf. PMI

Previous: 45.8

Forecast: 45.6

Tuesday, Sept. 3

9:45 a.m. S&P PMI Manufacturing final (August)

10:00 a.m. Construction spending (July)

10 :00 a.m. ISM Manufacturing (August)

9:30 p.m. Australia GDP Growth

Previous: 0.1%

Forecast: 0.3%

Wednesday, Sept 4

10:00 a.m. Durable Orders final (July)

10:00 a.m. Factory Orders (July)

10:00 a.m. JOLTS Job Openings (July)

2:00 p.m. Fed Beige Book

9:45 a.m. Canada Rate Decision

Previous: 4.5%

Forecast: 4.25%

Earnings: Hewlett Packard Enterprise, Hormel Foods, Dollar Tree.

Thursday, Sept. 5

8:15 a.m. ADP Employment Survey (August)

8:30 a.m. Continuing Jobless Claims (08/24)

8:30 a.m. Initial Claims (08/31)

8:30 a.m. Unit Labor Costs final (Q2)

10:00 a.m. US Services PMI

Previous: 51.4

Forecast: 51.5

Earnings: Broadcom

Friday, Sept. 6

8:30 a.m. US Nonfarm Payrolls

Previous: 114k

Forecast: 163k

Happy Labor Day!

Welcome to September, which is seasonally the weakest month on the calendar. There are plenty of events this month, which will keep investors pacing the floor. To kick off all the action, we have the job numbers this Friday.

This week’s US employment data will be critical for the September FOMC meeting (September 17-18). A significant miss in jobs data could prompt the Fed to cut rates by 50bps in September instead of 25.

Other events include a rate decision from the Bank of Canada on Wednesday. The BoC was the first to cut rates, and other central banks are now following suit. The Canadian dollar has been making significant gains in recent weeks, particularly against the dollar and the euro, but its strength may not hold if the BoC continues its rate cuts.

Rotation out of tech stocks and into this year’s market laggards should continue. But maintain exposure to Big Tech, which could rally closer to year-end.

A few years ago, China cracked down on gaming. Now, it has a global hit on its hands. In its first attempt at a video game, China has smashed records setting alight the industry’s global ambitions. Black Myth: Wukong is an action game set in mythological China, and it has sold 10 million units three days after its launch on August 20. The rich cultural elements give them a global appeal and set them apart from games developed in other regions. China could be on its way to a mega industry with many other stories that have been passed down over the last millennia, yet to be transformed into video games.

QI CORNER

MARKET UPDATE

S&P 5000

The market is still rallying within its final 5^th wave advance to complete its bullish trend sequence from the 3,492 bottom of October 2022.

Support = around 5570

Resistance = 5,735/5765

GOLD

There is potential for more upside here.

Support = $2,470

If we see a strong break of the $2,470 area, a deeper corrective move could see gold correct back to the $2420/$2400 area.

BITCOIN

There has been a lot of choppiness in Bitcoin lately. There is a risk that we could see bitcoin correct towards the $44,000 area before a firm rally takes place. And we might not see this bullish rally take place until late September/October. Be patient.

HISTORY CORNER

PSYCHOLOGY CORNER

SOMETHING TO THINK ABOUT

Cheers

Jacquie

August 30, 2024

Jacque's Post

(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 3^rd. I will be sending out the Zoom invitation today.

Cheers

Jacquie

August 28, 2024

Jacque's Post

(THERE MAY BE LIGHT AT THE END OF THE TUNNEL AFTER A LONG “WINTER” FOR MINERS IN AUSTRALIA)

August 28, 2024

Hello everyone,

Some good news from BHP

BHP has achieved a multi-billion-dollar profit, and it was all about China.

BHP shipped most of its iron ore off to China, but a hefty amount also went to Japan.

China’s insatiable demand for iron ore (and coal) drives prices, and BHP’s profits – last year, this year, and out into the 2030s.

Because of this trade, Canberra receives a sizeable tax from BHP as do the states from royalties. In the 2023-24 year, a not too shabby $US11bn ($16bn) changed hands.

The future of BHP, and indeed, Australia, remains all about China.

Despite China’s structural problems, BHP does not see Chinese demand for iron ore slipping, or even dramatically plunging, in the future.

And to counter all the negative narratives about BHP’s health in relationship to its main trading partner, BHP is actually planning to increase its production out of the Pilbara, from 260 million tonnes a year to 305 million tonnes; and has longer-term plans to go to 330m tonnes.

BHP is also increasingly about copper; and that is also mostly about China.

Worthy of note is the fact that 50% of copper produced in the world is consumed by China, as was pointed out on Tuesday by BHP’s CFO, Vandita Pant.

Copper contributed just under $US9bn, or nearly one-third of the group’s gross profit.

Interestingly, BHP’s CEO has stated that he expects a turnaround in China’s property sector in the year ahead.

BHP WEEKLY CHART

QI CORNER

SOMETHING TO THINK ABOUT

Identity Theft is on the Rise

To protect your data, experts say freezing your credit should be a priority.

“Freezing your credit is the single most important thing you can do when you get a data breach notice,” James E. Lee, chief operating officer at the Identity Theft Resource Centre, a nonprofit working to minimize the risk of identity theft.

Freezing your credit is free and takes just minutes.

A credit freeze will limit access to your credit report and prevent the opening of new accounts in your name, either by you or other parties.

A credit freeze will last until you remove it.

To freeze your credit, you need to complete the process at all three major credit reporting agencies – Equifax, Experian, and TransUnion. Set up free online accounts with each agency. You can request a freeze by phone, mail, or online.

Monitor your free credit report to check the latest activity.

Other tips to keep your personal data secure.

Use complex and unique passwords for each website.

Use two-factor authentication or encryption.

Remove personal information on social media that can be used by identity thieves.

Set up alerts on accounts which will keep you up to date on the latest activity.

Cheers,

Jacquie

August 26, 2024

Jacque's Post

(WILL NVIDIA’S EARNINGS JUICE THE MARKET, PUT IT TO SLEEP OR TANK IT?)

August 26, 2024

Hello everyone

Week ahead calendar

Monday Aug. 26

8:30 a.m. Durable Orders (July)

Previous: -6.6%

Forecast: 4%

10:30 a.m. Dallas Fed Index (August)

Tuesday Aug. 27

9:00 a.m. FHFA Home Price Index (June)

9:00 a.m. S&P500 /Case Shiller Home Price Indices (June)

10:00 a.m. Consumer Confidence (August)

10:00 a.m. Richmond Fed Index (August)

9:30 p.m. Australia CPI Indicator

Previous: 3.8%

Forecast: 3.4%

Wednesday Aug. 28

No notable economic data.

Earnings: Nvidia, Bath & Body Works, J.M. Smucker, Salesforce, CrowdStrike, NetApp, HP

Thursday Aug. 29

8:30 a.m. Continuing Jobless Claims (08/17)

8:30 a.m. GDP second preliminary (Q2)

8:30 a.m. Initial Claims (08/24)

8:30 a.m. Wholesale Inventories preliminary (July)

10:00 a.m. Pending Home Sales Index (July)

Earnings: Campbell Soup, Best Buy, Dollar General, Autodesk, Ulta Beauty, Lululemon Athletica

Friday Aug. 30

8:30 a.m. PCE Deflator (July)

8:30 a.m. Personal Consumption Expenditure (July)

Previous: 2.6%

Forecast: 2.6%

8:30 a.m. Personal Income (July)

9:45 a.m. Chicago PMI (August)

10:00 a.m. Michigan Sentiment final (August)

This week is dominated by Nvidia earnings which are out Wednesday.

They will be closely watched as a guide to the direction of the whole sector, and the market as a whole.

On Aug. 5 we saw Nvidia shares fall as low as $90.69 per share amid a broader market sell-off, as well as reports of delays on its Blackwell chips. (Here, I told everyone to add weight). Now, they’ve surged more than 40%, to about $125 per share currently, as traders rushed to buy the dip.

CEO, Jensen Huang has revealed that the newest generation of its chips cost around $10 billion in research and development. Now, that is a huge barrier to entry for any competitor.

There are high expectations ahead of these results, so there is a possibility that the stock and the market could either act benignly to Nvidia’s numbers or dive.

Also noteworthy of attention this week is the July personal consumption expenditures price index (PCE). The numbers here could show that the Federal Reserve is well on its way to its 2% inflation objective, as the central bank prepares to cut rates in September – an action that Chair Jerome Powell last Friday indicated in his Jackson Hole speech.

“The time has come for policy to adjust…the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

A softer inflation print implies investors can turn their attention to the labour market – next month’s job’s report, which could determine whether the Fed lowers rates by a quarter or half-percentage point in September.

Markets are currently pricing in the likelihood the key overnight lending rate will fall one percentage point by the end of the year to a range 4.25% - 4.5%.

Wall Street is bullish. But the journey from now until the end of the year may be fraught with turbulence, and high drama. Don’t forget we are in a seasonally weak period for stocks, and we are also heading into the U.S. presidential election. Add to that the ongoing geopolitical risks around the globe.

By and large, Wall Street is still shrugging its shoulders at world events and mapping out its own path.

But black swans are always lurking: what if the Fed back peddles on a 50pt rate cut, and what if the conflicts around the world escalate? And what if we are blindsided by something that is totally out of left field?

As I highlighted in an earlier post from a piece entitled – think backwards: think what can go wrong and then take steps to shore up your world against sudden shocks. Even more importantly, check your behaviour, and know what action to take after a shock takes place.

MARKET UPDATE

S&P500

We are still in an uptrend, but exhaustion is approaching. In the short term, the market’s strong rally from its 5,119 corrective Wave 4 low of October 5 is nearing completion and could well peak in the short term.

Then we are at a juncture. Either the market will correct to a Wave ii of Wave 5, enabling this final fifth wave advance to subdivide and extend considerably further over coming weeks/months before the bull market is exhausted, or it will mark the completion of Wave 5 itself, ushering in a bear market.

I am inclined to favour the former and am looking for the market to reach our H & S target of 5,735 or even rally towards 6,000 before exhaustion.

GOLD

The yellow metal continues in an uptrend after it showed a sustained break through the $2,500 level.

Support = $2,470/$2,500

Targets = mid $2,500’s and then on to $2,670.

BITCOIN

It’s possible to interpret a completed corrective structure here, which should enable the resumption of the coin’s uptrend.

Support= around $62,700/$61,500

Next Resistance = around $69,300

QI CORNER

PSYCHOLOGY CORNER

If It Fits, Take It

Take every setup that fits your system when it crosses your path. No amount of over-analysis will tell whether it really will work or not, but as long as it fits your setup, it’s good to take. When we over-scrutinize well-fitting setups, we create tension and anxiety. Take every opportunity that fits and allows you to trade in harmony with the market and put your faith in your setup, not your overly critical mind.

Know When to Cash Out

Regardless of whether you have a great analysis of what you think the market is going to do, you must develop a clear plan for exiting a trade a winner. Without a clear trigger, many traders will hold on, expecting (and hoping) the market will move in the direction their analysis indicated. The problem is the market doesn’t always go in the way well-thought-out analysis said it would. Have a trigger in place to take your profits rather than let the market deliver a clear exit sign.

HISTORY CORNER

A period of Great Inflation lasted from 1965-1982.

Over the nearly two decades it lasted, the global monetary system established during World War II was abandoned, there were four economic recessions, two severe energy shortages, and the unprecedented peacetime implementation of wage and price controls. Siegel saw it as “the greatest failure of American macroeconomic policy in the postwar period.”

But out of failure can also come change, and that became evident in macroeconomic theory, and the rules that today guide the monetary policies of the Federal Reserve and other central banks around the world. If the Great Inflation was a consequence of a great failure of American macroeconomic policy, its conquest should be counted as a triumph.

SOMETHING TO THINK ABOUT

“He who buys what he does not need steals from himself.” – Swedish Proverb

Cheers

Jacquie

August 23, 2024

Jacque's Post

(‘THE LUCKY COUNTRY’ IS UNDER PRESSURE)

August 23, 2024

Hello everyone

AUSTRALIAN CORNER

The consequence of a slowing Australian economy

According to a new report, some 100,000 people could lose their jobs in Australia over the next 12 months.

The unemployment rate, currently at 4.2% could peak at 4.5%, according to the report.

This is slightly higher than the 4.4% peak in unemployment tipped by the Reserve Bank of Australia (RBA) by June 2025.

It attributes the stagnation of jobs and economic growth to the RBA’s interest rate hikes aimed at cutting inflation back to a rate of 2-3%.

David Rumbens, Deloitte Access Economics partner explained to SBS News that the labour market has continued to generate jobs so far in 2024, but not at a high enough rate to absorb all the additional job seekers that have come onto the labour market.

He further highlighted the probability that the slowdown would mean about 100,000 more people would be unemployed.

He explained that “high interest rates are taking money out of the economy that’s affecting consumer spending.”

Even though business investment is low, and business insolvencies are going up, Rumbens argued that the economic dip was not at recessionary levels, even though a lot of sectors would see it as a recession.

Consumer-facing sectors such as construction, retail, and hospitality are usually the hardest hit by an economic slowdown.

However, the focus on homebuilding and infrastructure should keep construction workers in high demand. Deloitte is forecasting a 2% expansion in the blue-collar workforce – 74,300 workers – this financial year.

In the same period, the group forecasts a dip in white-collar jobs of 0.4% or 23,599, as businesses “look to kickstart activity without increasing headcount.”

Australians are being squeezed…

According to the Australian Bureau of Statistics, almost a million people are now working two jobs or more to keep up with the cost of living.

Money.com.au warned the average Aussie needs to earn $107,730 a year to weather the cost-of-living crisis, with the figure even worse for homeowners at $120,294 a year to absorb rising interest rates too.

Mortgage repayment costs have jumped by $12,564 a year for a loan that averaged $555,600 in mid-2021, according to money.com.au expert Sean Collery, with average owner occupier home loan rates rising from 2.84 per cent to 6.03 per cent in the past few years.

Research shows that teachers and accountants, are among other professionals working two or more jobs to keep up with expenses.

Queensland teacher, Sebastian Kath, says the “cost of housing in Queensland is astronomical.” He is considering looking overseas “for better value for my money.”

Gold Coast, Queensland, Australia.

QI CORNER

SOMETHING TO THINK ABOUT

Cheers

Jacquie

August 21, 2024

Jacque's Post

(THE PLUNGE IN IRON ORE PRICES IS BAD NEWS FOR AUSTRALIA, BUT GOOD NEWS FOR THE REST OF THE WORLD)

August 21, 2024

Hello everyone,

Iron ore prices have halved since their peak in January. Share prices have had a 20% haircut consequently. That’s bad news for BHP and Rio Tinto and their shareholders.

“Twiggy” Forrest’s Fortescue Metals (FMG) is down an eye-watering 43%, as it is particularly sensitive to the rise and fall of the China-driven iron ore price.

And to top it all off for “Twiggy”, Fortescue’s iron ore is apparently below par in quality when compared with BHP and Rio’s (and Brazil’s Vale).

Obviously, when China is booming and iron ore is in demand, all is good in Fortescue’s world, as the price that this company gets starts to approach the BHP/Rio price.

When the opposite happens, however, its price falls further and faster, and the drop in price comes straight off Fortescue’s profit.

Right now, BHP and Rio are also feeling the pain.

It’s unfortunate for Australia that our entire economic prosperity appears to be built on China.

China drives both the prices of and the volumes of coal and gas that Australia sells into the global market, regardless of whether it buys or doesn’t buy directly from us. It’s a similar story with iron ore.

So, what we need to understand is that if their prices really plunged, and stayed down for any extended period, the Aussie dollar would most likely collapse and Australia’s economy would become a junk heap.

For the rest of the world, that price collapse would be good news. Lower iron ore and energy prices would feed into lower prices for everything across the world.

The new narrative landscape would arguably include near-zero inflation, much lower interest rates, and booming economies.

BHP is now trying to backpedal, to some extent. After going long iron ore and China, by selling out of fossil fuels, BHP is endeavoring to diversify into other commodities.

Rio has invested heavily in Africa, for its iron ore exposure.

The giant Simandou iron ore project in Guinea, set to be the world’s largest and highest-grade new iron ore mine, will commence production by the end of 2025 and will add annual output of around 120 million metric tons of high-quality iron ore after it reaches full capacity.

So, when might we see the bottom in iron ore prices?

Morgan Stanley expects a “rebound in one to two months due to an efficient supply response from marginal units.”

News flow and sentiment influence iron ore prices, so it is not surprising to see that remarks from some of China’s top steel makers have put the market on edge. As cited in the Financial Times, Hu Wangming, chair of China Baowu Steel Group argued that the steel industry “winter” was likely to be “longer, colder and more difficult than we expected.” Furthermore, he warned that current steel market conditions may be more severe than the downturns experienced in 2008 and 2015.

Adding to the angst is recent Chinese economic data, which shows:

New construction fell 20% year-on-year in July, only a slight improvement from June’s 22% fall.

Property investment in China fell 10% in the first seven months of the year.

China’s steel exports fell 10% month-on-month in July, marking a slowing in the annualized run-rate to 88 million tonnes, down from 110 million tonnes earlier this year.

July crude steel output is down 9.5% month-on-month and 9% year-on-year.

China’s portside iron ore inventory is sitting around a one-and-a-half-year high.

Worst case scenario?

A more severe economic slowdown in China was exacerbated by decelerating growth in other regions.

As we approach the December quarter we should be watching the monthly World Steel production data and the 10-day CISA (China Iron & Steel Association) steel output series.

QI CORNER

EMPOWERING PRODUCTIVITY

Proving that everything does not have to be about numbers; letters can be very useful too.

SOMETHING TO THINK ABOUT

Cheers,

Jacquie