Jacque's Post Archives

July 12, 2024

Jacque's Post

(SUMMARY OF JOHN’S JULY 10, 2024, WEBINAR)

July 12, 2024

Hello everyone.

TOPIC

Back from Alaska

PERFORMANCE

July MTD +0.00%

Average Annualized Return: +51.53% for 16 years.

Trailing one Year Return: +34.63%

PORTFOLIO REVIEW

No Positions

THE METHOD TO MY MADNESS

The cool June Nonfarm Payroll Report was a game changer, and the three–year Unemployment rate high at 4.1% was even more important.

The first interest rate cut in five years in September is now a certainty, according to John. July 30-31 Fed meeting will tell all.

All interest rate sectors catch huge bids.

Technology stocks remain hot as bad news is good and good news is even better.

Gold and Silver catch bids on rate cut prospects.

Energy gets dumped on recession fears if the Fed acts too slowly.

Buy stocks and bonds on dips.

THE GLOBAL ECONOMY – FADING

Nonfarm Payroll Report comes in weak for June at 206,000.

The Headline Unemployment rate rose to a three-year high at 4.1%.

If the Fed doesn’t cut soon, we are going into recession.

Trade War between China and the E.U. heating up. China will investigate European brandy imports after the E.U. slapped tariffs on Chinese-trade electric vehicles.

US Venture Capitalists flood into AI Investments. U.S. venture capital funding surged to $55.6 billion in the second quarter, marking the highest quarterly total in two years.

The core personal consumption expenditures price index increased just a seasonally adjusted 0.1% for the month and was up 2.6% from a year ago.

STOCKS – RATE CUTS

All interest rates plays rocketed as a September interest rate came back on the table.

Bank of America said U.S. large-cap equities – the largest companies in the American market – received their biggest inflow in 16 weeks at $16.6 billion.

Saks Fifth Avenue buys Nieman Marcus for $2.65 billion, as consolidation of retail continues.

Walgreens shares crushed 25% on poor outlook

Micron shares plummet on weak earnings.

Fisker, the next Tesla just went bankrupt. It’s the second EV maker to go under this year, following the ill-fated Lords Town Motors.

BONDS – SIGNS OF LIFE

Cool Nonfarm payroll report sends bonds soaring, confirming earlier rallies based on weak economic data.

Bonds see the biggest cash inflows since 2021, some $19 billion, as investors position for interest rate cuts.

Funds are pouring into Corporate Bonds at four-year highs.

Bonds are becoming respectable again after an extra-long winter.

U.S. Budget Deficit jumps from $1.6 to $1.9 trillion for fiscal 2024, the Congressional Budget Office said on Tuesday, citing increased spending for a 27% increase over its previous forecast.

Do you want a safe 8.48% yield?

BB bank loans will soar in value with even just one quarter-point rate cut. The top ticker symbols are (SLRN), (BRLN), (BKLN), and (FFRHX). Check them out.

Buy (TLT), (JNK), (NLY), and REITS on dips.

FOREIGN CURRENCIES – DOLLAR IS TOAST

Cool hot May Nonfarm Payroll Report gives dollar spikes currencies except yen.

The U.K.’s opposition Labour Party secured a massive parliamentary majority in the country’s general election, demolishing the Conservative Party.

The Bank of Japan debated in June the chance of a near-term interest rate hike.

Inflation has crushed Japanese purchasing power, but the debt levels are so high that institutions fear raising rates could bring on even more problems.

Buy all short dollar, long currency plays on dips.

ENERGY & COMMODITIES – DOWNTREND

Energy has been the worst-performing asset class of 2024.

Energy stocks have been worse, underperforming crude.

Gasoline demand has been in long-term secular demand since 2019.

Replacement by EV’s and a shift out of cars into planes are big factors.

Hurricane seasons bringing a short-term pop in prices which John says you should sell.

Buffet buy Occidental for 9 straight days – betting that global economic recovery takes Texas tea back to $100. It’s the cheapest oil company out there. Buy (OXY) on dips.

A Trump presidential win will cause all energy plays to rocket as environmental regulations are rolled back and subsidies renewed, and federal lands opened to new drilling.

PRECIOUS METALS

The gold rush will continue throughout 2024, as much of Asia is still accumulating the yellow metal.

Asia lacks the stock markets we here in the U.S. enjoy.

A global monetary easing is at hand.

Cool May Nonfarm Payroll Report boosts the gold trade.

Buy precious metals on the dip because rates must fall eventually.

Miners are expanding their operations and ramping up production as prices for the precious metal climb to decade highs.

Buy (GLD), (SLV), and (WPM) on dips.

REAL ESTATE – FOREVER BID

Record prices but scarce sales volume.

U.S. housing is unaffordable but aggregate demand continues to push prices higher.

U.S. home sales fall, down 1.7% month-over-month in May on a seasonally adjusted basis and dropped 2.9% from a year earlier. Median home sale price rose to a record high of $439,716, up 1.6% month-over-month and 5.1% year-over-year.

The median price of an existing home sold in May was $419,300, up 5.8% year-over-year.

Rents are up 27% since 2020.

Bankrupt Forever 21 is asking some landlords for rent concessions as high as 50% as liquidity pressures commercial real estate.

Beachfront Property Prices are Washing out to Sea, with dramatic price drops visible on all three coasts.

Prices are further eroding thanks to the complete disappearance of the home insurance policies, forcing buyers to pay all cash.

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

NEXT STRATEGY WEBINAR

12:00 EST Wednesday, July 24 from Zermatt, Switzerland

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

UPDATE

Data has shown a slowing economy, and as a result rate cuts are well and truly back on the table.

If you look back at a Post I wrote on March 18, 2024, entitled, Slowing Economic Data May Shift the Fed into Reactionary Mode, this appears to be what is certain to happen.

Except, I anticipated rate cuts to happen toward the end of the year. Now, we could get one in September with others to follow before the year's end.

No rate cuts in the U.S. would see the country barrelling toward a deep recession.

A broader market rally should happen in the second half of the year.

Investors jumping out of tech into other sectors, such as Energy, and Healthcare, and REITS does not mean that tech is dead. It just means it’s resting. Please do not sell your big tech holdings. They are a long-term hold. (If you sell now, will you be able to enter at the same price you originally bought?) Timing the markets is a fool’s errand; sit with the market movements as it is the institutions that scoop up the retail investors’ holdings that sell out for short-term gains).

Cheers

Jacquie

July 12, 2024/by april@madhedgefundtrader.com

July 10, 2024

Jacque's Post

(AVOID THESE INVESTING MISTAKES)

July 10, 2024

Hello everyone,

We all make mistakes, right?

But if you can avoid making very painful mistakes, you can save yourselves a lot of time and money.

So, let’s look at the most common ones to avoid.

Buying overlapping ETFs

Many people like to buy a basket of stocks, which are nicely packed into an exchange-traded fund (ETF). That’s all well and good, but what happens is sometimes investors buy several ETFs without checking which stocks are held in each one. The result can often be you are buying overlapping ETFs, which have a higher allocation to a particular region or industry than you originally thought. Your vision for the long term should be a diversified portfolio, not a concentrated focus in one area.

Buying what you don’t understand

Investing in things that are beyond your understanding can be like stepping into a minefield.

If you cannot understand the asset, you will find it difficult to consider the risks, and possible returns, how to mitigate these, and whether they fit into your investing plan.

You will be vulnerable to scams. Sharks are always lurking in the investment world. They have malicious intent and show no empathy for their potential victims. A lack of understanding of any investment will make you easy fodder for dark knights who are marketing their too-good-to-be-true schemes.

Investing decisions should not be ruled by your emotions. Ask yourself - Why are you investing? Are the expected returns reasonable? Am I being rushed to decide? Step back and take time to consider your choices and make sure they are based on a solid understanding.

All we like sheep – don’t be caught up in panic selling. Understand why you are investing, so you won’t be influenced by the crowd.

Not rebalancing your portfolio

Leaving a portfolio to its own devices can be a mistake. Over time you will find there are assets that no longer align with your intended investment strategy, risk tolerance, and financial goals.

It can result in a portfolio overweighted to an industry that is doing well in the short term, but that may not serve you in the longer term.

Rebalancing your portfolio will bring it back on track to your desired target allocation. Typically, this is done by buying and selling assets within the portfolio.

Of course, it must be remembered, that transaction costs (brokerage fees) and CGT (capital gains tax) implications will apply when you rebalance.

Having unrealistic expectations

Unrealistic expectations can come from a lack of understanding, overconfidence, or being influenced by stories from friends, family, or social media.

Expecting high returns in the short term is unrealistic.

An assumption is that there will only be positive returns. Underestimating risk and the possibility of a downturn can see many people unprepared for it.

Overconfidence. Many believe they can time the market and pick the perfect stocks at the perfect time. Even professionals are burnt by this notion.

Investing is for the long term. It’s not a get-rich-quick scheme. People who want to invest in the market must understand the realistic returns and must be able to sit comfortably with the volatility in the market. Your risk tolerance and appetite to stomach volatility will certainly influence your decisions when choosing your allocation of assets.

Not talking about money

Does it really need to be pointed out that the more you discuss money and financial tools, instruments, and investments, the more educated you become? It should be a compulsory subject in school, and financial institutions should do more to educate the public. (It was only after the 1987 crash that stock market investing and the financial industry started to become more transparent. My family was invested in the stock market at this time and didn’t sell despite the panic. I was also invested in a gold fund, which I have held).

Not understanding the tax implications of selling

We are all familiar with the saying “buy low and sell high”. But are we all familiar with the tax implications of selling out at the highs? Although you receive a 50% capital gains discount on shares held longer than 12 months, there is still planning that needs to be done around when you sell and how that will affect your taxes.

Returns earned from selling shares will be included in your taxable income, which may affect the tax bracket you’re in or any subsidy you might be receiving from the government (such as paid parental leave or childcare subsidies). Any profit or losses from options must also be reported in your tax statement.

It can be prudent to look at what structures you have in place. Do you have a retirement account, a superannuation, a trust? All of these can be used to minimize tax.

Not starting to invest because you think it’s too hard and complicated

Every day you are not invested is an opportunity lost. Time is something you cannot get back. Take small steps and stop procrastinating.

QI CORNER

Queensland researchers unlock secrets of aging in massive breakthroughs paving the way to extending the quality of life and to reduce the impacts of serious diseases.

https://apple.news/A4jRS4ZMSRReey47UXWKMag

Implantable LED device uses light to treat deep-seated cancers

https://apple.news/A3p1IvS9_T3eOM0KEbAQB7w

Something to think about…

Cheers,

Jacquie

July 10, 2024/by april@madhedgefundtrader.com

July 8, 2024

Jacque's Post

(INFLATION DATA WILL GUIDE MARKET ACTION THIS WEEK)

July 8, 2024

Hello everyone,

Week ahead calendar

Monday, July 8

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

8:30 p.m. Australia Consumer Confidence change

Previous: 1.7%

Tuesday, July 9

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

9:30 p.m. China Inflation Rate

Previous: 0.3%

Forecast: 0.4%

Wednesday, July 10

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

10:00 a.m. US Fed Powell Speech

Thursday, July 11

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

Previous: 3.3%

Forecast: 3.1%

8:30 a.m. Initial Claims (07/06)

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

Earnings: Delta Airlines, PepsiCo, Conagra.

Friday, July 12

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

10 a.m. Michigan Sentiment preliminary (July)

Earnings: Citigroup, Wells Fargo, JPMorgan Chase, Fastenal, Bank of New York Mellon

This week we see US data releases, such as CPI inflation, alongside a speech from Fed Chair Powell. Following last week’s June employment report – which revealed the highest unemployment rate since 2021 – the US dollar weakened against several major currencies. Will this weakness continue?

If the CPI and PPI due out Thursday and Friday, respectively, continue to show easing pricing pressures, this cooling trend may be the data the central bank locks in to start to ease up on monetary policy.

And that would certainly be a bullish development for investors who are on edge about the stock market rally and its ability to power on. A CPI under 3% would be a real risk-on moment for the markets.

Noise abounds on the airwaves at the present time. With the S&P500 at all-time highs, many are questioning how long the run can last and are constantly speculating on the timing of a giant retracement. Should we take profits? Should we diversify into other sectors? Will the mega-caps stand their ground and steadily move ahead?

What you do going forward all depends on your philosophy towards trading and investing. If you are long-term focused, hold. If you are short to medium-term focused, you can pyramid out of some of your holdings. In other words, take some profits off the top, but let the remaining stock run. By doing so you have your seed capital returned. You can also purchase protection (insurance) against a large downside move by buying puts, although here you must consider the value of the option is quickly wiped away as time marches on.

I trade alongside investing for the long term, so I am always pocketing income, while my portfolio continues to grow. Expect pullbacks in the market. It’s part of being an investor in the market.

PSYCHOLOGY CORNER

How to avoid emotional trading

Understand your emotions and control them.

To achieve this, a trader must:

1/ Have a solid trading plan

Every trader should have a clearly defined plan – which system you will use – fundamental analysis, technical analysis, or a mixture of both, its advantages and disadvantages, how you will identify trades, and how you will manage them.

Keep a trading journal on your desk, where you can write down your observations, identify your weaknesses, and build on your strengths which can help you avoid common trading mistakes and put you on the path to becoming a profitable trader. Constantly shifting from strategy to strategy will not do any good and will eventually lead to emotional trading taking over.

2/ Understand your risk appetite

When you are first starting out, it is wise to be conservative in your trading. Of course, every trader is different, so you need to identify your risk tolerance or risk appetite and plan accordingly.

3/ Know when to take a break

You should not trade if you are feeling stressed and exhausted. If you have had a string of consecutive losing trades, stop and take a break until you have reviewed and understood what happened.

External factors can also have a negative impact on your mental state. When these events occur, it is sometimes better to take a break and work through the situation before you return to your trading.

QI CORNER

Green roofs at car parks in Japan provide crucial habitats for bees and other pollinators, essential for biodiversity…

MARKET UPDATE

S&P500 – there is still no sign of upside exhaustion yet. Support lies around the 5,400’s. From an Elliott Wave perspective, the S&P500 is still interpreted as progressing within a bullish 5^th wave. Target is around the 5,700’s.

Gold- uptrend in progress. Further upside is anticipated. Support lies at around $2,350. Upside targets include $2,530.00. Be conscious of the possibility of a pullback to the $2,270-250 level before gold commits to a firm rally ahead.

Bitcoin- we have seen weakness in Bitcoin which was not unexpected on the back of Mt. Gox beginning to pay creditors. Mt. Gox went into bankruptcy after a hack that saw members’ Bitcoin stolen. Support lies around $50,000. Expect some messy price action before a well-defined bullish move.

Cheers,

Jacquie

July 8, 2024/by april@madhedgefundtrader.com

July 5, 2024

Jacque's Post

(AUSTRALIA DOES DEAL WITH AMAZON TO MOVE TOP-SECRET INTELLIGENCE TO THE CLOUD)

July 5, 2024

Hello everyone,

Hope you all had a great July 4th.

We have the Jobs Report today. Slowing payroll gains are expected.

Data is showing a slowing economy. It takes some time before the high interest rates are felt throughout the economy. Talk of interest rate cuts is now back on the table in the second half of the year. The earliest possible time is probably September.

By the end of this decade, a “top-secret” cloud service will be built for Australia’s intelligence agencies to share information with one another, as part of a $2bn deal with US technology giant Amazon.

The investment is expected to generate about 2,000 jobs and ensure Australia “maintains” pace with the world’s leading defense forces while it increases its interoperability with US agencies.

Three data centers will be built in Australia to house the country’s most secretive and valuable intelligence, the locations of which will remain secret.

The Australian Signals Directorate’s director general, Rachel Noble, said partnering with a private company meant intelligence agencies would have access to “the best staff the private sector has to offer in terms of technology capabilities, services, and tools”.

The developments in artificial technology will be able to help collect and sift through massive amounts of data. The cloud would also support the country’s “Redspice” intelligence program, which aims to counter the growing risk of cyber-attacks.

Noble also argues that “modern defense forces and …modern conflict is more reliant upon information technology, upon computing infrastructure than ever before.”

PORTFOLIO UPDATE

If you own any of the following, I suggest you:

Exit out of:

Ovid Therapeutics (OVID) $0.7517

Biomea Fusion (BMEA) $4.35

Rocket Pharmaceuticals (RCKT) $20.03

Big Pharma is dominating at the present time.

Take some profits on

CrowdStrike (CRWD) $387.18 as at close 07/03/24

I recommended (CRWD) on January 6 this year when the stock was trading at $280.

Long term this is a great stock.

In the short term, you may want to pyramid out a % of your holdings.

Lock in some profits.

You could consider between 5%-20%.

NEWS UPDATES

UK Elections - a landslide victory to the Labour Party. Keir Starmer is the new leader of Britain.

QI CORNER

The UK is expected to lose 9,500 millionaires this year, only second to China with 15,200. This is an interesting and telling reversal in fortune, since historically, the UK has drawn wealth from Europe, Africa, Asia, and the Middle East. If this trend continues over the next two decades, what could be the long-term consequences?

Cheers,

Jacquie

July 5, 2024/by april@madhedgefundtrader.com

July 3, 2024

Jacque's Post

(GENERATIVE AI WILL BE A $100 BILLION DOLLAR + ANNUAL BOOST TO THE AUSTRALIAN ECONOMY BY 2030)

July 3, 2024

Hello everyone,

AI will generate profits in the trillions globally over the coming years. But the sector will need a skilled workforce to see industries transformed.

There are already 33,000 workers in Australia that work directly in AI or use AI as part of their main job, according to CEO Damian Kassabgi, at Tech Council of Australia. Kassabgi believes that number is expected to grow by 200,000 by 2030.

In 2014, there were 800 jobs related to AI.

Overall, Australia needs to train and educate an entire new AI specialist workforce to meet the current and future operational needs of the industry. Schools, universities, technical colleges, and private training providers will all play a role in developing these skills. The training imperative relates to young and old workers at all stages of learning. This will require a mix of strategies catering to the unique needs of individuals.

We are in the early stages of the AI boom. Through innovation, companies will become more productive and more efficient by virtue of AI tools.

The potential growth in the area is so great that analysts and experts believe AI could contribute $115 billion annually to Australia’s economy.

These three areas are where AI investment will be focused in Australia.

The revolutionary AI boom will require lots of power.

Companies that will power this sector are a buy-and-hold.

Eaton Corp. (ETN)

I first recommended Eaton Corp. on April 22, 2024. The price then was $303.02.

Artificial Intelligence requires vast amounts of data processing to function – and data processing requires electricity. The power management company Eaton (ETN) is set to benefit from heightened demand for the setup and upgrade of electrical grids as more data centers are required. Eaton is well-positioned thanks to its scale, size, equipment, and inventory. Shares of the U.S. power management company have been a little rocky over recent days but remain up nearly 30% year-to-date and 54.4% in the last 12 months. Of 25 analysts covering the stock, 17 give it a buy or overweight rating, according to FactSet data. They give it an upside potential of around 11%.

QI CORNER

Something to think about

Cheers,

Jacquie

July 3, 2024/by april@madhedgefundtrader.com

July 1, 2024

Jacque's Post

(WHAT THE MARKET ACTION MIGHT LOOK LIKE IN THE SECOND HALF OF 2024)

July 1, 2024

Hello everyone,

Week ahead calendar

Monday, July 1

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

10 a.m. Construction Spending (May)

10 a.m. ISM Manufacturing (June)

Tuesday, July 2

10 a.m. JOLTS Job Openings (May)

5:00 a.m. Euro Area Inflation Rate

Previous: 2.6%

Forecast: 2.5%

Wednesday, July 3

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

8:30 a.m. Continuing Jobless Claims (6/22)

8:30 a.m. Initial Claims (6/29)

8:30 a.m. Trade Balance (May)

9:45 a.m. PMI Composite final (June)

9:45 a.m. S&P PMI Services final (June)

10 a.m. Durable Orders (May)

10 a.m. Factory Orders (May)

10 a.m. ISM Services PMI (June)

2 p.m. FOMC Minutes

Earnings: Constellation Brands

Thursday, July 4

Independence Day Holiday

UK General Election

Friday, July 5

8:30 a.m. June Jobs Report

Previous: 272k

Forecast: 180k

Friday is the Labor Report, and this will give us some insight into the consumer. The U.S. economy is anticipated to have added 190,000 jobs in June, down from 272,000 in the prior month, according to FactSet consensus estimates. The unemployment rate is expected to hold at 4%.

The pandemic stimulus has contributed to keeping the economy motoring along. However, I would argue that cracks are starting to appear, now that many consumers have exhausted that stimulus cash injection. The jobs report will take on more significance going forward as it will show a pattern of consumer behaviour.

Let’s delve into history for a moment. According to historical data, a strong first half points to more gains in the second half. And remember, it is an election year as well, which also bodes well for the market. Data analyzed by Sam Stovall at CFRA (Centre for Financial Research and Analysis) shows that whenever a positive first half for the S&P500 eventuated between 1945 and 2023, the second half brought an average rise of 5.3%. The broad index was higher in the second half in more than three out of every four years that it ended the first six months in the green.

The picture gets even better when we dig into detail. The research shows that in the years with the S&P500 rallying more than 10% in the first six months, it climbed 7.9% in the typical second half. The index was positive in the latter half in more than four out of every five of these years. And how much did the S&P500 climb in the first half of 2024? Answer = 14.5%.

Presidential election years also typically result in favourable market returns. Research shows that in all election years since World War II the S&P500 added 0.9% and 2.4% in the average third and fourth quarters, respectively. For the entire second half, the S&P500 has climbed 3.5% on average.

If we take all strategist's forecasts and take the median forecast for the end of 2024, we may see a 1% rise from the close last week.

NEWS IN BRIEF

France votes in an election that could see a significant swing to the far-right. If victorious, Le Pen’s party, National Rally Rassemblement National (RN) may disrupt policy towards EU, and Ukraine.

UK Election on Thursday may result in volatility in GBP pairs.

BRIEF MARKET UPDATE

S&P500 - Risk of a retracement is growing. Downside should see support around 5,000. Then after the correction, the market should continue its upside move.

Gold – has been undergoing a complex correction. If it can hold above $2,290, then we should see a sustained rally above $2,360, to see a retest of the $2,400’s. However, a move to a $2,270/$2,250 area is still a possibility, so don’t rule it out.

Bitcoin – a complex retracement is continuing. Possible downside targets include: $55,000 and $50,000. Scale in all the way down to these levels. Bitcoin may not begin a sustained rally for a month or two.

WHAT IS… Painting the Tape?

Painting the tape is a form of securities fraud where traders create a false appearance of trading activity for a security by buying and selling the security among themselves. Painting the Tape (PTT) can attempt to artificially increase or decrease the price of a security through coordinated trading, or merely give the impression of a high volume of trades without any effort to influence the direction of the price.

PTT is illegal, and the Securities and Exchange Commission (SEC) enforces regulations against PTT and similar attempts at market manipulation.

Probably the simplest and most common form of market manipulation that involves PTT is when traders artificially inflate the trading volume of a security. Many day traders are attracted to securities revealing a sudden spike in volume far above the average. This leads to an increase in the price of the security, which then allows market manipulators to dump their holdings at an inflated price.

PSYCHOLOGY CORNER

Cut Out the Noise

I’m sure I don’t need to tell you that there are tons of supplemental resources and education about trading and investment on the Internet. That’s a good thing – right?

Well, that’s debatable. One of the worst things about all this information is that it is full of “noise” and is likely a distraction that will pull you away from your own confidence in your ability in the market.

Everybody comes to the market with a different approach. There is no one right way to trade the market. What works for one expert might not work for you. It’s always best to develop your own philosophy – your own approach to trading the market that suits your personality, and then shut out the loud voices who claim they have found the very best strategies for trading the market

QI CORNER

The monthly return table for major asset classes/assets. (Mohammed El-Erian, President of Queens’ College, Cambridge & chief economic advisor at Allianz.

MY CORNER

My new best friend at my present Airbnb.

Cheers,

Jacquie

July 1, 2024/by april@madhedgefundtrader.com

June 28, 2024

Jacque's Post

(WEBTOON ENTERTAINMENT (WBTN) DEBUTED ON THE NASDAQ ON JUNE 27, 2024)

June 28, 2024

Hello everyone,

A Major Australian Bank in a $4.9 billion takeover of Suncorp

ANZ has received approval from the Federal Treasurer for its $4.9 billion takeover of Suncorp’s banking arm. It will become Australia’s third-biggest bank once the takeover of Suncorp is finalized. The approval was made on the condition that ANZ and Suncorp maintain their regional branch numbers throughout Australia for three years. Furthermore, approval was also given if there were no net job losses because of the takeover for three years. Completion of the acquisition is expected to happen at the end of July.

Multiple rate hikes could be on the cards for Australia

Economists are predicting multiple rate hikes increases will be needed to bring inflation to within the RBA’s range.

Annual inflation came in hotter than expected this week at 4%, which was well above market expectations.

Experts believe rate hikes in quick succession, possibly in August and September, will be pivotal in bringing inflation down.

Korean webcomic platform makes its debut on June 27.

Webtoon Entertainment (WBTN), a webcomic platform, has set its market value at $ 2.67 billion ahead of its US listing.

Its shares are due to start trading on the Nasdaq stock exchange today (June 27) at $21 each, the top end of their marketed range.

South Korean technology giant Naver, based in Los Angeles, has been boosted by the growing online popularity of Korean and Japanese comics.

Webtoon says it has 170 million monthly active users in more than 150 counties around the world.

The company is aiming to sell 15 million shares and raise $315 million in the initial public offering (IPO).

The world’s largest fund manager BlackRock has expressed interest in buying up to $50 million of shares.

Webtoon also owns the Japanese webcomic and manga app Line Manga, the web novel platform Wattpad, and the Korean webcomic offering Naver Webtoon.

It offers thousands of titles covering different genres – including action, romance, horror, and science fiction.

The webtoon industry, which focuses on online-only comics optimized for reading on mobile, first emerged in South Korea two decades ago.

Their popularity exploded globally turning them into a major South Korean cultural phenomenon alongside K-pop and Korean dramas.

Webtoons are cheap to produce – a single artist can create one using a tablet – which can make popular comics very profitable.

The webtoon industry made $4.7 billion in 2021 and is projected to grow to $60.1 billion by 2030, according to Spherical Insights & Consulting.

June 27, Webtoon Entertainment’s first day on the Nasdaq.

(This is an article of interest, not a recommendation to buy the stock currently).

Cheers,

Jacquie

June 28, 2024/by april@madhedgefundtrader.com

June 26, 2024

Jacque's Post

(AI TECHNOLOGY MAY SOON BE ABLE TO DETECT FIRES FROM SPACE)

June 26, 2024

Hello everyone,

In Australia, early detection of wildfires will become increasingly important. In the summer of 2019-2020, more than 12 million hectares, an area the size of England, was impacted.

The University of Sydney carried out an analysis for WWF-Australia, which showed that “about 143 million mammals, 2.46 billion reptiles, 181 million birds, and 51 million frogs occupied areas hit by the fires.” More than 60,000 koalas were killed.

Scientists from the University of South Australia believe they have found a way to use satellites and Artificial Intelligence (AI) to greatly increase the rates at which wildfires are detected.

Stationary satellites located up to 34,000km above the surface of the Earth, or lower, and orbiting satellites can both detect wildfires, but they have several limitations. The key innovation, say scientists, is to put sophisticated AI-enabled software into tiny cube satellites (CubeSats) that weigh just a few kilograms.

Geospatial scientist, Dr Stefan Peters, says that the idea has been modelled, and is soon to go live.

The Kanyini CubeSat (a collaboration between the Government of South Australia, a consortium of universities, and various industry partners) is scheduled to be launched on July 2, and Peters confirms that the onboard fire smoke detection solution will become operational at the end of this year or beginning of next.

Peters believes it should be able to reliably detect wildfires in less than one hour, whereas current satellites can take between 6-8 hours. Using a past fire event in the Coorong of South Australia, the AI approach took less than 14 minutes to detect smoke and relay the data.

Reducing the impact of wildfires has multiple benefits. Obviously, it protects millions of wild animals, as well as human lives and property, but it also stems from the huge release of carbon emissions during these catastrophic events.

WWF- Australia published a report following the 2019-20 wildfire season which said that somewhere between 400-700 million tonnes of carbon dioxide had been released. Let’s put that in perspective now. Australia’s annual emissions during the 12 months to June 2019 were about 500 million tonnes.

The cost of replacing these carbon stocks was estimated at somewhere between AU$1-2.8 billion.

Investing in early detection will surely pay dividends.

What is/are… CFDs?

Contracts for Difference, or CFDs, are a type of financial derivative used in CFD trading. The derivative works as an agreement to exchange the difference in price of an asset from when the position is opened to when it is closed. They can be used to speculate on the future price of a variety of financial markets like shares, forex, commodities, indices, or bonds.

When trading CFDs, the underlying asset is never exchanged between the buyer and the seller, and neither party needs to physically own it to begin with – CFDs are a purely speculative product. And because there is no need to own the underlying asset, CFDs can be used to take advantage of both rising and falling markets – known as ‘going long’ and ‘going short’.

CFDs are traded on leverage, which means that traders can benefit from magnified profits, but could also incur magnified losses.

I have used CFDs to trade Gold and Silver, QQQs, and single stocks.

Cheers,

Jacquie

June 26, 2024/by april@madhedgefundtrader.com

June 24, 2024

Jacque's Post

(THE POP STAR OF TECH FORGED THE GENESIS OF NVIDIA IN A DENNY’S FAST-FOOD RESTAURANT)

June 24, 2024

Hello everyone,

Monday, June 24

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

Tuesday, June 25

8:30 a.m. Chicago Fed National Activity Index (May)

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

9:00 a.m. S&P/Case Shiller comp. 20 Home Price Index (April)

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

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

Earnings: FedEx, Carnival

Wednesday, June 26

8:00 a.m. Building Permits final (May)

10 a.m. New Home Sales (May)

Earnings: Micron Technology, General Mills

Thursday, June 27

8:30 a.m. Durable Orders preliminary (May)

8:30 a.m. GDP final (Q1)

8:30 a.m. Initial Claims (06/22)

8:30 a.m. Wholesale Inventories (May)

10 a.m. Pending Home Sales Index (May)

11:00 a.m. Kansas City Fed Manufacturing Index (June)

Earnings: Nike, Walgreens Boots Alliance, McCormick & Co.

Friday, June 28

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

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

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

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

Personal Consumption Expenditure data will be on the table this week.

We are seeing a trend towards slower inflation at a measured pace, and this quite possibly will keep equities on an upward trajectory in the second half of the year. However, a healthy pullback should not be a surprise in the second half of the year.

Nvidia – A Brief History

Jensen Huang worked at the microchip company AMD before co-founding Nvidia in 1991. Huang dreamt up the idea of Nvidia while at Denny’s, a fast-food restaurant, where he used to wash dishes. A plaque is now situated above the table where he and his co-founders created the idea of Nvidia, which was installed when the company’s market value surpassed $1 trillion.

The company initially focused on video games, developing components that allowed games consoles and personal computers to render three-dimensional graphics by stacking countless microscopic triangles on top of each other. Nvidia went public during the dotcom bubble at a $625 million valuation.

Nvidia held a key place in the gaming industry. But the real turning point in Nvidia’s history can be pinpointed around a decade later when scientists at the University of Toronto, led by the British computer scientist, Geoff Hinton, developed an image recognition program that used Nvidia’s graphics chips, rather than the central processing units that most computers relied on.

The program trounced the competition in an annual machine vision competition and its underlying architecture spawned the deep learning craze. This was something of a happy accident for Huang and he cleverly changed tack to capitalise. So, instead of Nvidia being focused on video games, the company would transform into an AI business. Huang set to work and invested resources to develop chips that could power synthetic intelligence.

Last month it was shown that Nvidia revenues had risen by 262pc in the last quarter, to $262bn. Profits have climbed more than sevenfold, from $2bn to $15bn. The waiting list for the company’s superpowered chips runs into next year.

But let’s not get too carried away with all the Nvidia hype just yet. Nvidia’s profits are less than half of Apple’s and have been built on the large investment in AI infrastructure that has yet to yield tangible profits for many of its customers.

Analysts are divided on what happens next. But some have predicted a valuation of $ 5 trillion within a year, a level that would see Huang’s own net worth overtake Bill Gates’ and see him competing for the title of world’s richest man.

Market Update

S&P 500 – has touched Key chart resistances and recorded a Bearish Outside Reversal Day in the process. From an Elliott Wave perspective, the S&P500 has completed the Wave structure, to signal trend exhaustion. However, any decline ahead is likely to be a Wave 4 correction, finding support around 5,100-5000. A subsequent 5^th wave rally can then extend the bull market toward the inverse head and shoulders target level of 5,730.

Gold – is still correcting. Targets include 2,280 down to a possible target of 2, 200 in the short term. After that correction, gold will rally once again onto new highs.

Bitcoin – is still in correction mode and forming a right shoulder in an inverse head and shoulder pattern. After this pattern formation is completed, perhaps in mid to late July, Bitcoin will rally onto new highs.

US dollar – will rally for the short term. Euro, Pound, Aussie and Kiwi, and Japanese Yen will weaken against the dollar. This is a good time to start positioning yourself if you are interested in playing the currencies - start scaling into currency trades in the FXA, FXE, and FXB.

What is… a Share Buy Back?

A Share Buyback program is when a company buys back shares that were sold during the IPO. By doing this they are reducing the number of shares available to trade and everyone holding shares of the company will see their shares increase in value.

QI Corner

The Great Green Wall of China

Click here.

My Corner

A Beach Volley Ball Competition held on Coolangatta Beach, Queensland in March 2024.

Cheers,

Jacquie

June 24, 2024/by april@madhedgefundtrader.com

June 21, 2024

Jacque's Post

(CHINA AND RUSSIA ARE HUSTLING TO EXERT INFLUENCE GLOBALLY)

June 21, 2024

Hello everyone,

Tensions have been rising in the South China Sea. Clashes between Philippines vessels and Chinese ships have been increasing over recent months. Most recently, several Philippine workers were injured, and one lost his thumb. The Chinese military build-up in the area is increasing as China continues to flex its muscles in the area. These types of incidents are a growing problem for the world.

Second Thomas Shoal is the most dangerous flashpoint today between the U.S. and China. The Shoal is part of the many reefs and shoals in the Spratly Islands which are much closer to the Philippines in the South China Sea.

The skirmishes that keep happening can be interpreted as a crisis waiting to ignite.

China and the Philippines have been in conflict over control of these waters for decades. But in the past years, tensions are close to the highest they have been.

There have been many reports of clashes and water cannoning against Philippine boats.

The waterway encompasses 1.4 million square miles, larger than the Mediterranean. Much of the sea is disputed. China, Vietnam, Malaysia, Brunei, the Philippines, and Taiwan all claim specific land features.

It is a thriving fishing zone yielding some 10% of the global fishing catch and a vast amount of trade transits through. In 2016, that amounted to some $3 trillion, including more than 30% of the global maritime crude oil trade.

It also holds promising oil and gas deposits which each nation in the area would like to get their hands on in the coming years.

China claims the biggest patch of the South China Sea making it difficult for the Philippines to tap into their reserves.

In 2016, a UN-backed court ruled that China’s claim of historic rights was unlawful and the Philippines has the sovereign right to extract resources like fish and oil. The problem is that the Philippines does not have the military capacity to enforce these rights.

It is important to note that these waters are not just about fishing and oil, but rather they hold military and strategic value for all the area’s claimants and crucially, the U.S.

Maintaining freedom of navigation is a global interest for the U.S. and it is important in the South China Sea.

The U.S. also has other interests here. Upholding the international law of protecting the ability of countries to really exercise sovereignty.

China wants to assert its sovereignty and deny US military access to the region.

Over the last decade, China has been building military bases in the area. The establishment of airstrips, of listening posts, of refueling stations have been well documented; this enables China to send its vessels to those islands and be able to better control much of the greater South China Sea. Today, China operates Navy ships, Coast Guard vessels, maritime, and militia 24/7 around virtually every feature that is disputed.

The U.S. and the Philippines have a mutual defense treaty dating back to 1951, and the circumstances that may trigger US involvement have become clearer recently.

Southeast Asian leaders are anxious over the prospect of war between the U.S. and China, whether it be over Taiwan or in the South China Sea.

A Significant Move by Putin

Russia and North Korean leaders have pledged military cooperation as part of a strategic treaty signed in Pyongyang during Putin’s first visit to the nation in 24 years. The treaty, signed this week, could strengthen Russia’s efforts in Ukraine, give North Korea the freedom to bolster its nuclear weapons program, and potentially lead to a war on the Korean peninsula that could dramatically impact world security.

The two countries have been allies since North Korea’s founding after World War II and have drawn even closer since Russia’s invasion of Ukraine.

Malcolm Davis, senior analyst at the Australian Strategic Policy Institute (ASPI) argues that these two countries are coming closer together as part of this axis of authoritarianism that includes China and Iran as well. Davis sees it as a “significant development” and one that has a substantive impact, thereby increasing the risk of a crisis that has the potential of turning into something much larger.

Davis said the military cooperation dimension of the agreement was “really worrying” because it implied that assistance would increase, and Putin may intend to escalate the war in Ukraine. Davis went on to say that it would certainly imply that North Korea is going to step up its production of munitions to supply to Russia and could provide additional ballistic capabilities, and this assistance would go through China.

If Russia grows stronger over time and if Western military support for Ukraine begins to edge off over the course of 2024, particularly if Donald Trump is elected in November, then it places Ukraine in a really bad situation in 2025. Trump has threatened to cut US aid to Ukraine quickly if re-elected.

Davis points out that if Russia provides more advanced military capabilities to North Korea, this increases its threat to South Korea, which could escalate into something much larger that could also threaten Japan and the United States.

Ray Dalio comments on the Changing World Order

Ray Dalio has recently commented on the geopolitical situation in the world and the jostling by countries to engineer authority and power.

I will quote Dalio from a recent article he posted.

Preparing for War: You can see the sides lining up for a fight both domestically (between the hard rights and the hard lefts in most countries) and the allied powers (the United States, the NATO countries, Japan, Australia, and the Philippines) and the axis powers (China, Russia, North Korea, Iran) in a manner that is similar to what happened prior to World Wars I and II.

The great power conflict between these major powers that are in or entering into alliances is intertwined with regional conflicts that are defining other countries (e.g. Israel, Saudi, Jordan, Hezbollah, Turkey, India, Pakistan, etc.) alignments with the great powers and with their neighbor countries in their region. This will likely lead to bigger conflicts (between the hard right and hard left within countries and between allied and axis powers internationally) in the next year or two.

If you want to learn more, read Dalio’s book, Principles for Navigating the Changing World Order

Review of some Stocks

I’m going to review a few stocks here. The stocks include GLD, OXY, CVX, PSX, XOM, and DIS. I have particularly focused on the energy sector as it has underperformed and is now undervalued.

GLD is setting up nicely for another bullish run. If you don’t own the stock start scaling in now.

I am also recommending LEAPS on GLD. You could look at June 2026, 250/260, LEAPS, or go with in-the-money LEAPS.

The SPDR Gold Shares ETF (GLD) tracks the price of gold bullion in the over-the-counter ((OTC) market.

There are a variety of factors that will drive the gold price higher, including rising geopolitical tensions, interest rate cuts, and central bank buying of gold, among other factors. I am expecting the gold price to keep rising for the next few years at least.

XLE Energy Select SPDR Fund - Stock Price: $88.64 as of 06/18

The energy sector has underperformed the broader market this year. All the energy stocks shown here, including the (XLE) energy ETF, are sitting on their 200-day moving average.

Oil giant, Chevron is currently trading at a forward P/E ratio below its 5-year average, indicating potential growth ahead. As I have detailed in a previous post, Chevron is battling against Exxon Mobil over offshore oil assets in Guyana. The company also acquired Hess for $53 billion earlier in 2024. Year to date, Chevron shares are up just 2.8%.

There are three key trends driving the energy sector: decarbonisation, decentralisation, and digitalization. These not only influence the way we generate energy but also how we use and distribute it.

Crude oil prices are being driven by tight supply, increasing geopolitical risk, and strengthening global demand for energy, and are likely to remain elevated in 2024. In addition, continued investment in energy production will support growth in energy stocks.

If you do not have any energy stocks in your portfolio, I suggest you either scale into one of the energy stocks or buy LEAPS. In the money is more conservative whereas out of the money is more aggressive.

Chevron Daily Chart (CVX) - Stock Price: $153.33 as of 06/18

We are still holding the CVX January 17, 2025, $165/$170 out of the money LEAPS if you took this trade, HOLD.

Exxon Mobil (XOM) - Stock Price: $109.38 as of 06/18

On February 7, 2024, I recommended January 17, 2025, 105/110 out of the money LEAPS. The stock price was then $102.20. Continue to HOLD.

Occidental Petroleum (OXY) - Stock Price: $61.26 as of 06/18

Warren Buffett has been scaling into (OXY) all the way down to the recent lows. It’s a great buy here, or you could buy in the money LEAPS.

Phillips 66 Daily Chart (PSX) - Stock Price: $135.85 as of 06/18

Recommended on April 30, 2024 (monthly zoom meeting). Now I am recommending the stock again as a buy or a LEAPS trade.

Walt Disney Daily Chart - Stock Price: $101.52 as of 06/18

Disney is a favourite amongst Wall Street analysts going into the second half of the year. According to the stock’s consensus price target, shares could rally nearly 25% in the next 12 months. Disney parks still show a healthy demand trend, and around three-quarters of analysts covering the stock have a strong buy or buy rating. I am favouring an option over a buy on this stock. That healthy demand trend over the long term can change, so I would prefer to dip my toe in via an option trade.

Suggestion:

June 20, 2025, 105/110 bull call LEAPS, but you could also do an in-the-money LEAPS trade as an alternative.

QI CORNER