(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%.
(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.
(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).
(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.
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 5th 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.
(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.
The summer season is upon us.Analysts are divided on how the market will behave over the next few months.Some see a 20% to 30% correction. Others see a sideways move and then more upside.The market taking a breath is not a bad thing.I am not ruling out DOW 38,000 or even an extension to 37,000.
The Reserve Bank of Australia and the Bank of England are scheduled to set their interest rates this week.All eyes will be on the Bank of England this week to see if it follows the lead of the European Central Bank in lowering its rates.Some analysts are predicting that the Bank of England will cut as many as three times this year.
The Diplomatic Play of the Panda Loan
China’s pandas can be seen as ambassadors with a significant role to play in global politics.
Adelaide Zoo will receive a pair of pandas soon to replace Wang Wang and Fu Ni, who have been in Australia for 15 years.They will be returned to China.
The Chinese premier, Li Qiang is in Australia now.It’s the first trip to Australia by a Chinese premier in seven years. The Chinese government's loan to Australia of two new pandas conveys a message regarding Australia-China relations.
Loaning pandas is seen as promoting mutual partnerships between China and the recipient countries while withdrawing pandas, as China did with the US in 2023, was widely viewed as souring relations.
The panda loan can be interpreted as a ‘seal’ agreed to once China turns a corner with a country, be it in diplomatic, trade, or security matters.
Australia has given various marsupials, platypuses, and crocodiles to friends and allies over the last two decades, while Sri Lanka and Vietnam have gifted elephants to many countries.
Animal diplomacy dates back centuries.During the 1950s, Chairman Mao Zedong was known to send pandas as gifts to the country’s communist allies, which included North Korea and the Soviet Union.
US First Lady, Pat Nixon, commented during a state function in China about her love for animals, and in a period when the two countries were normalizing relations, the Chinese government gifted them.
By the 1980s, panda diplomacy changed, and pandas were loaned for 10 years with the option to extend.
This shift to panda lending allowed China to keep promoting its image abroad and build “guanxi”, a Mandarin term for trust. Loaning pandas was seen as promoting mutual partnerships between China and the recipient countries.
In turn, host countries would pay an annual fee of about $1 million per bear.
Two pandas were sent to Scotland in 2011 after the two countries signed an oil deal.
The list of panda recipients includes Denmark, Germany, South Korea, Russia, and Qatar.
From left, Penny Wong, Australia’s foreign minister, South Australian Premier, Peter Malinauskas, and China’s Premier, Li Qiang pictured visiting Adelaide Zoo in Australia on Sunday, June 16, 2024.
Australia hits the No.2 spot of the most unaffordable cities to live in in the world.The cost-of-living crisis is forcing many people to leave Sydney and Melbourne for the State of Queensland.Brisbane is cheaper, but the gap is quickly narrowing between house prices in Brisbane and Sydney and Melbourne.Regional areas such as the Gold Coast, Sunshine Coast, Toowoomba, and Brisbane outskirts have seen strong growth.With rate cuts not forecast in Australia until 2025, the migration north is only set to gather pace.
Portfolio Update
If you own any of these stocks exit out of them completely.There are opportunities setting up where our funds would be better placed.
Stock Purchase Price & DatePrice Friday (06/14)
Delta Airlines (DAL) $40.54 (01/08/24) $48.72
Solaris Resources (SLSR) $3.33 (04/24/24 $3.08
Arizona Metals Corp $2.21 (04/24/24) $1.59
Global X Silver Miners $23.00 (02/15/24) $31.58
ETF (SIL)
Note:Re: (SIL) By selling out of (SIL) I am not saying the bull market in the metals is over.I want to take the profit and put it into another metal play that is setting up nicely.
Liberty All State
Equity Fund (USA) $6.66 (02/02/24) $6.78
Market Update
US$ - expecting the dollar to rally a little more before topping out.Euro, Pound Sterling, Aussie and Kiwi, and Japanese Yen should weaken in the short term.Those downside moves will provide a great opportunity to enter long positions.Look at FXA, FXE, and FXB.
S&P 500 – market could pull back to 5,140 before the upside continues.
Gold – correction in progress – looking for support around 2250 – 2270, but correction to 2220 cannot be ruled out.
Bitcoin – correction in progress - possible targets are 60,000, 55,000, and maybe even as low as 52,000. Scale in as the crypto falls to these price zones.
The next focus is on the first interest rate cut in five years, no matter how long it takes.
The general downside is limited to 5%-8% with $8 trillion in cash on the sidelines and a further $26.8 trillion in short-term US treasury bills.
Technology stocks won’t crash, just have a sideways “time” correction.
All economic data is globally slowing.The May Nonfarm Payroll report was an anomaly.
Interest rates are higher for longer, but September is back on the plate in view of recent date releases.
Interest rates are higher for longer, but September is back on the plate in view of recent date releases.
Buy stocks and bonds on dips.
THE GLOBAL ECONOMY – FLIP-FLOPPING
May Nonfarm Payroll report comes in hot at 272,000, double expectations.
The headline unemployment rate reached 4.0%, a 21/2 year high.
Job gains were concentrated in health care, government, and leisure and hospitality, consistent with recent trends.
The Fed’s favourite inflation gauge cooled by 0.2% in April, with the PCE, or the Personal Consumer Inflation Expectations Price Index.
ADP Private Payrolls drop to only 152,000, a sharp drop from last month’s 188,000
JOLTS Job Openings Report dive in April, down 296,000 to 8.059 million, a three-year low.
Europe cuts Interest Rates, for the first time in five years.
Money supply rises for the first time in more than a year.
STOCKS – THE BULL LIVES
Goldman Sachs sees “Wall of Money” flooding the stock market this summer.
Since 1928, the first 15 days of July have been the best two-week trading period of the year for equities, and they tend to fade after July 17.
Cruise lines are suddenly offering great deals because more vessels are flooding into the popular Caribbean and Alaskan destinations as they reroute ships away from Red Sea destinations due to the ongoing conflict between Israel and Hamas.
AMD launches new AI chips and details its plan to develop AI chips over the next two years in a bid to challenge industry leader Nvidia.
Roaring Kitty is back, after publicizing a $289 million long position in GameStop (GME).Avoid (GME).
American Airlines gets slaughtered, down 15% yesterday, and will slash its capacity growth in the second half of the year.
AMZN Trade Suggestion: Jan 2025, 195/200, LEAPS.
AMD and PANW are other LEAPS candidates.
CAT – go long at 200-day MA
FCX – buy now.Target is $100.
TLT – LEAPS candidate.
BONDS – CUT OFF AT THE KNEES
Hot Nonfarm Payroll reports slam bonds.Earlier rallies were based on weak economic data.
Funds are pouring into corporate bonds at four-year highs.
Global investors hoovered up $3.6 billion into investment-grade corporate bond funds in the week to Wednesday in the 31st straight week of inflows, the longest streak since 2019.
Bonds are becoming respectable again after a long winter.Buy (TLT) on dips.
FOREIGN CURRENCIES – DOLLAR CATCHES A BID
Red hot May Nonfarm Payroll Report gives dollar a new bid.
Right-wing wins in European elections deliver currencies a second punch on economic destabilization fears.
Japanese yen still looking for a bottom at Y160.
Bank of Japan intervened with a $62 billion yen buy, dollar sell. Avoid (FXY)
Chinese Yuan remains weak.International trade is collapsing
Higher for longer rates mean higher for the longer greenback.
Rates falling = a falling dollar for 2024.
ENERGY & COMMODITIES – OUT OF FAVOUR
AI creating a nuclear power demand surge, with its voracious demand for power
OPEC maintains production caps into 2025, with US production hitting a 2024 high at 19.9 million barrels/day.
AT&T’s copper is worth more than the company, and with plans to convert half its copper network to fiber by 2025 could free up billions of tons of the red metal to sell on the market.
Copper prices have doubled over the past two years, and they could double again by next year.
Conoco Phillips buys Marathon Oil for $22.5 billion, in a further consolidation of the oil industry.
Porsche goes for a hybrid, bringing out a new model for $164,900, the last to do so.Look for a 20-year death spiral for oil prices.
PRECIOUS METALS – REALITY CHECK
Red hot May Nonfarm Payroll Report kills gold trade.
When the Chinese enter a trade, the volatility increases, and this is a perfect example.
Higher for longer interest rates mean lower for longer gold and silver.
Buy precious metals on the dip because rates have to 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 – TRENDING UP
US Construction spending falls, off 0.1% after slipping 0.2% in March.
Pending Home Sales dive, down 7.7% in April, the worst since the COVID market three years ago.
AI is soaking up San Francisco Office Space faster than you think.
S&P Case Shiller jumps to a new all-time high, with its national Home Price Index.
The index rose by 6.5% YOY, the fastest growth since April 2023.All 20 major metro cities were up.
Home Equity hits an all-time high at $17 trillion according to CoreLogic.
Total home equity for U.S. homeowners with and without a mortgage is $34 trillion.There is a lot of cash that could potentially end up in the stock market.
The Worldwide Developers Conference on Monday saw Apple debut its long-awaited artificial intelligence vision.Shares rose as much as 6.4% on Tuesday to a record high, one day after announcing the company’s AI ideas.Apple’s plan is to integrate generative artificial intelligence into every aspect of its ecosystem with the launch of Apple Intelligence.
The event brought positive reviews from many analysts.The company has been thorough in addressing the privacy issue with on-device capabilities. Analysts see Apple’s emphasis on protecting users’ personal data as a “game changer” as it adds to the users’ confidence. As we all know it is not just about the experience of using AI tools that operate in the open market, but it’s also about tools that understand and protect your personal preferences and data. Michael Ng from Goldman Sachs was “encouraged by the financial implications” of the announcements, noting that new product features should help fuel an iPhone upgrade cycle.The updates also create an opportunity for additional AI monetization down the road.
Bernstein’s Toni Sacconaghi expects Apple’s new features to not only power a stronger device upgrade cycle but also push the company to $8 in earnings per share and potentially convince investors to pay close to the stock’s peak valuation.
However, some analysts expressed doubts about Apple’s AI prospects. Barclay’s analyst Tim Long was skeptical about the AI announcements, describing the features as more of an evolution and not very meaningful.Furthermore, Long viewed the event as not significant from a stock standpoint.UBS analyst, David Vogt does not see the Apple AI strategy leading to a significant iPhone upgrade and described the announcement as underwhelming.
Apple Intelligence will be free for users and will be available in beta (trial) version as part of the iOS 18, iPadOS 18 and macOS in September or October in the English language.
The latest operating system also aims to give users more control with tools to manage who can see their apps, how contacts are shared, and how their iPhone connects to accessories.
Users can now lock an app and for additional privacy can hide it too, moving it to a locked, hidden folder.When the app is locked or hidden, content such as messages or emails within the app is hidden from search, notifications, and elsewhere across the system.
The new software will also introduce new accessibility updates including eye tracking, a built-in option for navigating iPhones with only the eyes.
Apple set to launch AI powered Safari 18
This is not a recommendation to buy Apple right now.
(THE IMPACT OF RECENT ELECTIONS IN INDIA AND MEXICO ON EMERGING MARKETS)
June 10, 2024
Hello everyone,
Last week the Bank of Canada and the European Central Bank cut their rates for the first time in many years.Contrarily, The Fed and the Bank of Japan are expected to maintain current rates at their meetings this week. Perhaps more significant than the rate decision itself is the Fed’s updated projections on interest rates, and the timing of cuts.The dialogue here may well drive the markets for the next few weeks.The release of May’s CPI inflation data on the day of the June FOMC meeting could result in market volatility, particularly if it deviates from expectations.
Week ahead calendar
Monday, June 10
1 p.m. 3-year Treasury note auction.
9:30 p.m. ET Australian Business Confidence
Previous: 1
Tuesday, June 11
6 a.m. NFIB Small Business Index (MAY)
1 p.m. 10-year Treasury note auction
2:00 a.m. ET UK Unemployment Rate
Previous: 4.3%
Earnings:Casey’s General Stores
Wednesday, June 12
7 a.m. Weekly mortgage applications (week ended June 7)
8:30 a.m. Weekly jobless claims (week ended June 8)
8:30 a.m. Producer price index (May)
Previous: 0.5%
1 p.m. 30-year Treasury bond auction
Previous: 0.5%
Earnings:Adobe, Signet Jewellers, John Wiley
Friday, June 14
8:30 a.m. Import/export prices (May)
10 a.m. University of Michigan consumer sentiment index (preliminary, June)
12:00 a.m. ET JP Interest Rate Decision
Previous: 0.1%
Recent election results in India and Mexico surprised many emerging market investors.The stock markets in both countries saw big swings in the aftermath of the initial election results.
As the election results are finalized and the changes take place, the countries could have a large impact on emerging markets exchange-traded funds, which have had a solid start to 2024.
India’s Prime Minister Narendra Modi has declared victory in his re-election campaign.Despite this, his party had a weaker showing at the polls and lost seats in parliament.
Indian stocks have been a global outperformer under Modi; however, the election result disturbed some traders.The iShares MSCI India ETF (INDA) fell 6% on Tuesday as the results became clearer.The rupee dropped 0.5% against the dollar which, although not groundbreaking, was its biggest fall in 16 months.
Analysts do not believe economic growth will be impacted by Modi’s lacklustre party performance at the polls.Coalition governments have been stable in the past, but one main negative may be achieving consensus on major reforms.Indian stocks have rebounded after initially selling off.From a technical standpoint, the rally appears to be largely intact, according to analysts.
At brokerage Emkay Global, analysts said that difficult but potentially beneficial changes to land and labor policies, along with privatization of some of India’s big state-run firms, were now “off the table”.
In Mexico, the favored candidate won, but the margin was a surprise.Claudia Sheinbaum won the presidency, and her party’s performance is arguably strong enough to put it close to a large enough majority in the legislature to pass constitutional changes.
The initial market reaction was negative.The iShares MSCI Mexico ETF (EWW) fell 10% last Monday after the initial election results, and the peso dropped sharply against several major currencies. It was the worst day for Mexican stocks since the Covid-19 shock in 2020.
Just how many seats the ruling party ends up controlling may take some time to ascertain.Of some concern is the idea that the Morena party’s strong mandate may lead to market-unfriendly policies, including constitutional reforms that could negatively impact the business environment.The adverse market reaction to the results also represents fears by investors regarding increased state control over critical sectors, and expanded social welfare programs that could strain the budget.(the party is guaranteeing all workers receive 100% of their final salary as a pension, despite lacking a clear financing mechanism, and has included social programs which include universal pensions for seniors and scholarships for students).
Maintaining a stable and predictable business environment is essential if Sheinbaum’s administration wants to forge ties with foreign investors and grow the domestic economy.Mexico has benefited from nearshoring opportunities since the COVID-19 pandemic; the country became an attractive destination for U.S. companies relocating their supply chains closer to home. Any policy change that disrupts the nearshoring trend affects foreign investment in Mexico and will impact the currency and the domestic economy.
The energy sector is also wary.Concerns about protectionist policies that favour state-owned enterprises over private and foreign investments could also deter foreign investment and impact market confidence.
MARKET UPDATE
S&P 500 -we are in a 5th wave advance.Targets include 5432 level and 5752 max. (If you are a short to medium-term trader/investor, you should be looking to take some profit from your positions.For example, you could look at selling 20% or 30% of your Nvidia (NVDA) holdings stock position and the same with your T-Mobile (TMUS) stock holding).
Gold – retracement in progress.Support lies around the $2,252/$2,220 level.Extended corrective weakness could target $2175 support area. If you don’t have any gold stocks or silver stocks, this retracement provides you with a great opportunity to scale in.Look at (GLD), (WPM), and (SLV).
Bitcoin – short-term retracement.Possibly testing low/mid $60k over the coming days.If you are interested in Bitcoin, this corrective pullback is the time to scale in.
QI CORNER
MY CORNER
Hiking in Reno before the summer heat sent temperatures soaring.
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