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april@madhedgefundtrader.com

June 7, 2024

Jacque's Post

 

(THE AI GENIE IS OUT OF THE BOTTLE – ARE HUMAN RIGHTS AT STAKE?)

June 7, 2024

 

Hello everyone,

A recent report from the UN is shining a spotlight on the risks of generative AI.  The report explores 10 human rights that generative AI may adversely impact.

The paper says that “the most significant harms to people related to generative AI are in fact impacts on internationally agreed human rights” and lays out several examples for each of the 10 human rights it explores:  Freedom from Physical and Psychological Harm; Right to Equality Before the Law and Protection against Discrimination; Right to Privacy; Right to Own Property; Freedom of Thought, Religion, Conscience, and Opinion; Freedom of Expression and Access to Information; Right to Take Part in Public Affairs; Right to Work and to Gain a Living; Rights of the Child; and Rights to Culture, Art, and Science.

There is already talk about generative AI’s impact on creative professions.  This report discusses this issue and how it can be used to create harmful content from political disinformation to nonconsensual pornography and CSAM (child sexual abuse material).  Over 50 examples in the report illustrate the potential human rights violations, which creates an alarming picture of what’s at stake as companies rush to develop, deploy, and commercialize AI.

The report also asserts that generative AI is both altering the current scope of existing human rights risks associated with digital technologies and has unique characteristics that are giving rise to new types of human rights risks.  For instance, the use of generative AI for armed conflict and the potential for multiple generative AI models to be fused together into larger single-layer systems that could autonomously disseminate huge quantities of disinformation.

Of some concern is the idea that “other potential risks are still emerging and, in the future, may represent some of the most serious threats to human rights linked to generative AI.

One particular risk the report brings to light surrounds the Rights of the Child.  “Generative AI models may affect or limit children’s cognitive or behavioral development where there is over-reliance on these models’ outputs, for example when children use these tools as a substitute for learning in educational settings.  These use cases may also cause children to unknowingly adopt incorrect or biased understandings of historical events, societal trends, etc.”

The report also notes that children are especially susceptible to human rights harms linked to generative AI because they are less capable of discerning between synthetic content and genuine content, identifying inaccurate information, and understanding they’re interacting with a machine.

Let’s think of children and social media for a moment.  They were given daily access to social media without virtually any transparency or research into how it might impact their development or mental well-being.  It’s well known that children have been harmed by social media companies’ apparent lack of guardrails surrounding the technology.  This issue came to light earlier this year when the CEOs of Meta, Snapchat, TikTok, X, and Discord testified before Congress in a heated hearing that looked at social media’s role in child exploitation as well as its contribution to addiction, suicide, eating disorders, unrealistic beauty standards, bullying, and sexual abuse. It’s been shown that children were treated as guinea pigs on Big Tech’s social media platforms; repeating those mistakes with generative AI would be shameful.

The Right to Work and to Gain a Living was also covered in the report and showed interesting findings.  Of note was the fact that economics, labor markets, and daily work practices could be drastically altered by Generative AI.  The future may include employers using generative AI to monitor workers, and the idea that workers engaged in labor disputes with employers may be at heightened risk of being replaced with generative AI tools.

How we implement the technology will be important as well as the guardrails – or lack thereof – we put around it.  Perhaps the most significant takeaway is the understanding that Generative AI as a technology won’t commit these human rights violations independently, but rather powerful humans acting recklessly to prioritize profit and dominance will.

The May Monthly Zoom Meeting recording will be sent out next week.

 

QI CORNER

 

 

 

 

 

 

Cheers,

Jacquie

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april@madhedgefundtrader.com

June 5, 2024

Jacque's Post

 

(AUSTRALIAN RED TAPE IS A REAL SPOILER FOR FOREIGN DATA CENTRE OPERATORS)

June 5, 2024

 

Hello everyone,

Established data centre operators in Australia have an economic moat.  Red tape appears to be preventing foreign data centre owners from operating in Australia.

There is a growing appetite for more data storage and management, which is being pushed along by the AI technology revolution.   Morgan Stanley points to the fact that Australian companies such as Goodman Group and NextDC have a special home advantage.  They are potentially better positioned because they have significant, well-established land banks that hold large value.

Analysts at Morgan Stanley point to the challenging issues global competitors are encountering.  Difficulties with working with local councils and utilities are stalling progress, and then there is the cost of development approvals and so on.

That advantage for existing Australian companies will provide attractive opportunities.  Morgan Stanley expects data centre operators – the sector as a whole – to grow at a compound annual growth rate of 13% out to 2030.

It’s all good news for Goodman.  Analysts at Morgan Stanley see the market pricing in a data centre pipeline of $9 billion, but it puts that figure at more like $20 billion.

Goodman also has significant flexibility with the land bank, where it can sell with approvals or develop the land to client specifications.  Land that is developed into data centres is valued at a significant premium to that of typical industrial use, providing an attractive return-on-investment option should the company not want to hold the land long-term.

NextDC has a similar narrative to Goodman, with recent contracts confirmed and international expansion in the pipeline.

This sector has growth written all over it.

(This is an article of interest, not a recommendation to purchase Goodman Group or Next DC).

 

 

 

Natural disasters are a real threat to a large percentage of Australian properties.

Consider this scenario. You have finally purchased your home.   And for a while, all is well in your world.  Then a natural disaster strikes.  Suddenly, everything is not so rosy anymore.  Are you insured?  If you are insured, will the insurance company cover all costs?

In Australia, many properties are at risk of being severely damaged or lost to a natural disaster. And what makes the situation even worse is the fact that premiums are so high that many have chosen not to insure.  On top of that, in some areas that have a high flood risk, insurers may be unlikely to insure your property anyway.

Research shows that half of all Australian homes are at risk of natural disasters.  5.6 million properties are at risk of bushfires, almost 1 million are at risk of floods and thousands more are threatened by coastal erosion.

The NSW suburb of Ballina has the highest flood risk in the country.  Victoria’s Upper Yarra Valley has the highest bushfire risk and Queensland’s Surfers Paradise has the biggest coastal erosion threat.

From my research, it seems many Australians are unaware of the dangers and have become very complacent.

 

 

 

 

QI CORNER

 

 

 

 

 

Cheers,

Jacquie

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april@madhedgefundtrader.com

June 3, 2024

Jacque's Post

 

(ENERGY STOCKS ARE IN CONFLICT OVER GUYANA OIL ASSETS)

June3, 2024

 

Hello everyone,

 

Week Beginning June 3

The Bank of Canada and the European Central Bank are set to kick off June’s Central bank meetings on Wednesday and Thursday, respectively.  Both are anticipated to reduce their interest rates by 25 bp.  For the ECB, this adjustment would mark its first rate cut since 2016.

Investors are heading into a seasonally weak period for the markets, and while signs of inflation easing has buoyed investors, traders will still be relying on and watching macroeconomic data closely to navigate an expected choppy market.

 

The week ahead calendar

Monday, June 3

9:45 a.m. Markit PMI Manufacturing final (May)

10 a.m. Construction Spending (April)

10 a.m. ISM Manufacturing (May)

 

Tuesday, June 4

10 a.m. Durable Orders final (April)

10 a.m. Factory Orders (April)

10 a.m. JOLTS Job Openings (April)

Australia's GDP Growth Rate

Previous: 0.2%

Time: 9:30pm ET

Earnings: Hewlett Packard Enterprise, Bath & Body Works

 

Wednesday, June 5

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

9:45 a.m. Markit PMI Services final (May)

10 a.m. ISM Services PMI (May)

Canada Interest Rate Decision

Previous: 5.0%

Time: 9:45 am ET

Earnings:  Campbell Soup, Dollar Tree

 

Thursday, June 6

8:30 a.m. Continuing Jobless Claims (05/25)

8:30 a.m. Initial Claims (06/01)

8:30 a.m. Unit Labor Costs final (Q1)

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

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

Euro Area Interest Rate Decision

Previous: 4.5%

Time: 8:15 am ET

Earnings: J.M. Smucker Co.

 

Friday, June 7

8:30 a.m. May Jobs report

Previous: 175k

10 a.m. Wholesale Inventories final (April)

12 p.m. Fed Governor Lisa Cook gives commencement address at Girls Global Academy, University of the District of Columbia, Washington, D.C.

3 p.m. Consumer Credit (April)

 

Exxon Mobil and Chevron are in a battle over lucrative offshore oil assets in Guyana.

Exxon has outpaced Chevron this year with the oil majors gaining roughly 15% and 6%, respectively.

But the environment for Chevron may look brighter in the second half of the year if it can exercise a favourable outcome from its feud with Exxon over an offshore oil development in Guyana called the Stabroek Block.

Exxon leads that development with a 45% stake, but Chevron is seeking to get in on the action through its pending acquisition of Hess Corp, which has a 30% holding in Stabroek.

Hess shareholders approved the Chevron merger last Tuesday, but it’s still unclear when the deal will close.

Exxon has dragged Chevron and Hess before an arbitration court to defend its claims to a right of first refusal over Hess’ Guyana assets under a joint operation agreement.

Chevron came into the year facing production issues in the Permian Basin and cost overruns at its Tengiz project in Kazakhstan that frustrated investors.  Chevron has been bouncing around in a price range between $40 and $65 for most of this year.

Exxon, on the other hand, hasn’t really faced any execution issues this year.  In fact, Exxon’s performance is a reversal from the decade leading up to the Covid-19 pandemic, when the company underperformed Chevron due to its capital expenditures during a period when oil prices were low.

Since 2020, Exxon has outperformed Chevron as the company has implemented capital discipline. Additionally, investors have noted Exxon’s lead position in the lucrative offshore oil development in Guyana.

Kevin Holt, senior portfolio manager of the Invesco Energy Fund (FSTEX) believes that the Guyana development is probably the best project the oil sector has seen in 25 years with very productive wells at a relatively low cost.  Holt goes on to say that Chevron would look very attractive if the Hess deal closes due to the latter’s large stake in Guyana.  However, if Exxon prevails in the arbitration case, the merger will terminate and Hess would remain a stand-alone company, raising questions about Chevron’s next move.

It is unclear how long the arbitration will take.  There is a possibility it may drag into 2025.

Holt sees the odds in Chevron’s favour regarding the arbitration, and points to other issues at Tengiz and in the Permian as short-term bumps in the road that will be resolved.  The resolution of all the latter will see Chevron in a very good position.

The fund manager argues that both companies are inexpensive

 

QI CORNER

 

 

 

 

I found this post interesting form Jason Sen.   I have underlined the parts of the post that I have recommended to other traders and investors:

Scaling into a trade or an investment – not committing all your capital at once.

Place your stop loss when you enter the trade – takes the emotion out as you now have a defined risk, and you are sticking to a plan.

Scaling out of positions – allows you to take some profits but still let part of the position run to capture further potential profits.  In other words, you can have two take profit positions set.

I refer to the scaling in and out strategy as pyramiding in and out of a position.

Monthly May Zoom Meeting

Thank you to all those who attended the May monthly meeting on Friday afternoon/evening.

We had a great turn out – subscribers from United Kingdom, Australia and the U.S. tuned in.

A recording will be sent out shortly after the presentation has been edited.

 

 

Cheers,

Jacquie

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april@madhedgefundtrader.com

May 31, 2024

Jacque's Post

 

(SUMMARY OF JOHN’S MAY 29, 2024 WEBINAR)

Friday, May 31, 2024

 

Hello everyone,

TITLE:  The Nvidia Boom

 

PERFORMANCE:

Month to date - +3.74%

Since inception - +694.98%

Trailing one-year return - +33.25%

Average annualized return - +51.79%

 

PORTFOLIO:

No Positions.

 

THE METHOD TO MY MADNESS:

Focus has shifted to the spectacular performance of NVDA and other AI stocks.

Downside is expected to be limited to 5-8% with $8 trillion in cash on the sidelines and a further $26.8 trillion in short-term US treasury bills.

John says technology stocks won’t crash; look for a sideways “time” correction.

All economic data is globally slowing, including the US.

Interest rates are higher for longer but September is on the plate in view of recent data releases.

Buy stocks and bonds on dips.

 

THE GLOBAL ECONOMY – STILL SLOWING

CPI comes in cool in April at 0.3% versus 0.4% expected.

Global Flash PMI jumps 50.9 for services, and 54.8 for manufacturing, a one-year high.

Weekly jobless claims fall, down 215,000 – down 8,000, the steepest decline since September.

Federal Reserve officials are looking for further weakening in demand as they try to tame inflation without triggering a surge in unemployment.

Consumer Inflation expectations at 3.3%, according to the University of Michigan, the amount of price rises expected in the coming year.

Fed Minutes turn bearish, from their last meeting a month ago.

Chinese government to buy unsold homes to rescue the local real estate market.

 

STOCKS – BLOWOFF TOP

As the DOW tops 40,000 investors are pouring money into both bonds and stocks, according to the Bank of America.  Equity funds saw $11.9 billion in inflows, while bond funds drew in $11.7 billion.

NVDA has triggered split fever in the wake of its own 10:1 announcement last week and traders are piling into the shares of the next candidates.

DOJ to break up Live Nation, seeking to end the monopoly on ticket sales which have sent ticket prices soaring.

Thousands of young traders are getting wiped out following the trading advice of London-based IM Academy and the so-called guru, Chris Terry.

Biggest bear on Wall Street turns bullish.  Mike Wilson at Morgan Stanley is targeting $5,400 on the S&P500.

Elon Musk’s X.ai is potentially a trillion-dollar company.

Netflix may be the next candidate to stock split, and to offer a dividend.  If it does stock split, the stock will perform very well.  Google and Amazon could also be stock split candidates.

Caterpillar (CAT) buy near 200-day MA.  If you see weakness in Freeport McMoRan (FCX) buy.

Buy Berkshire Hathaway (BRK/B) on weakness.

Adobe in LEAPS territory.   Visa (V) is setting up for another buy.

 

BONDS – TAKING IT ON THE NOSE:

Today’s treasury auction bombed for two- and five-year notes taking the TLT down $1.31.  Oversupply is the big problem.  Traders are nervous about this week’s looming inflation data.

Bond investors are making a killing, with the US Treasury paying out $900 billion in interest in 2023.

That’s double the annual cost of the past decade.  Remember those coupons?

That’s another reason for the Fed to cut rates soon, so it lessens the backbreaking burden on the government.

After being held hostage by zero-rate policies for almost two decades, US Treasuries are finally reverting to their traditional role in the economy.

Bonds are becoming respectable again after a long winter.  Buy (TLT) on dips.

The US Treasury announced a Bond buyback program, with the first scheduled on May 29.

The Treasury’s last regular buyback program began in the early 2000s and ended in April 2002.

 

FOREIGN CURRENCIES – DOLLAR ROLLING OVER

Most currencies have been hitting two-month highs due to the coming dollar interest rate cuts and are close to upside breakouts.

Japanese yen collapsed to 160 and looking for lower lows.

Bank of Japan intervened with a $35 billion yen buy, dollar sell.  Avoid (FXY).

Chinese Yuan remains weak. International trade is collapsing.

Declining exports, collapsing foreign investment, and minimal population growth = weaker Chinese economy.

Higher for long rates means higher for longer greenback (although a downturn in the $ is close).

 

ENERGY & COMMODITIES – CHEVRON WIN

Chevron's takeover of Hess for $53 billion goes through, creating the second-largest US oil major.

The approval clears one hurdle, but the deal still requires regulatory approval and must face a lengthy arbitration battle with Exxon and CNOOC, Hess’s partners in Guyana.

Buy (CVX) on dips.

Copper slide continues - down 7% in three days as the extent of Chinese speculation becomes clear.

The takeover battle for Anglo American continues with the company turning down the latest $49 billion offer from BHP.

While Anglo’s copper assets have long been coveted by rivals, its complicated corporate structure and unusual mix of commodities have largely deterred potential suitors until now.

(OXY) great buy for the long term.

 

PRECIOUS METALS – NEW HIGHS

Silver goes ballistic on Chinese speculation to $32.70/ounce heading for $50.

Gold follows by half to $2,460.  It is targeting $3,000.

Solar panels are driving global silver demand.

Global investment in solar PV manufacturing more than doubled last year to around $80 billion.

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

Demand for silver from the makers of solar PV panels, particularly those in China is forecast to increase by almost 170% by 2030 to roughly 273 million ounces – or about one-fifth of total silver demand.

Buy (SLV) and (WPM) on dips.  (GLD) is a great buy on dips – correlates with the price of gold.

 

REAL ESTATE – SOARING PRICES, FALLING SALES

New Home Sales tank in Aril is down 4.4% and 7.7% in March.

The median price of a new home was $433,500, 4% higher than it was in April 2023.

Builders say they cannot lower prices due to high costs for land, labor, and materials.

The big production builders have been buying down mortgage rates to help boost sales, as they are able to do that because of their size.  Smaller ones can’t.

30-year fixed rate mortgage drops below 7.0%.  The housing market is taking a step back in April after a strong performance in the first quarter.

Existing home sales fall, down for the second month in a row at -1.9% to 4.14 million rate in April.

The nascent recovery in demand from a 13-year low in October is being hindered by limited inventory which is keeping asking prices elevated.

 

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

Wednesday, June 12 from Incline Village, Nevada.

 

QI CORNER

 

 

 

 

Cheers,

Jacquie

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april@madhedgefundtrader.com

May 29, 2024

Jacque's Post

 

(BUCKLE UP WHEN FLYING - CLIMATE CHANGE MAY BE INCREASING CLEAR-AIR TURBULENCE)

May 29, 2024

 

Hello everyone,

Scientists at Reading University in the UK have studied clear-air turbulence. 

Their research shows that severe turbulence has increased by 55% between 1979 and 2020 on a typically busy North Atlantic route.

Scientists have found that changes in wind speed at high altitudes due to warmer air from carbon emissions have played a role.

Prof. Paul Williams, an atmospheric scientist at the University of Reading has co-authored a decade-long study in this area.  He argues that the focus should be on investing in improved turbulence forecasting and detection systems to prevent the rougher air from translating into bumpier flights in the coming decades.

Flight routes in the USA and North Atlantic have seen the largest increases in turbulence.  Europe, the Middle East, and the South Atlantic also have seen significant increases in turbulence.

Prof Williams explained that increased turbulence was due to greater wind shear – or differences in wind speed – in the jet stream, a strong wind system blowing from west to east, about five to seven miles above the Earth’s surface.  Williams further shows that it exists largely due to the difference in temperature between the world’s equator and poles.

While satellites can’t see the turbulence, they can see the structure and the shape of the jet stream, allowing it to be analysed.

Radar can pick up turbulence from storms, but clear-air turbulence is almost invisible and hard to detect.

We all know that turbulent flights are uncomfortable, but they can also cause injuries for those on the flight.  Severe turbulence is very rare, but clear-air turbulence can come out of the blue when passengers are not belted in.

It is sensible to keep your seat belt fastened all the time, unless you are moving around.

The financial costs for airlines can be huge.  The aviation industry loses between $150 and $500 million in the US alone annually because of turbulence, including wear and tear on aircraft.  There is also an environmental cost, as pilots burn up fuel avoiding the turbulence when they can.

A case in point is the Singapore Airlines flight (SQ321) from London to Singapore on May 21.  About 10 hours into the flight when the staff were serving breakfast, the airline hit severe clear air turbulence passing over the Irrawaddy Basin (Myanmar).  The crew requested an emergency landing at Bangkok airport as one of the passengers had died.  At least 50 people were injured including two crew members and a toddler.  All were admitted to a hospital in Bangkok; some had serious injuries.  More than 20 were admitted to ICU with spinal injuries.  (Many people were obviously not wearing their seatbelts).

On Sunday, May 26 a Qatar Airways flight from Doha to Dublin experienced clear air turbulence but managed to land safely in Ireland.  12 people were injured and eight were taken to hospital.

In August 2023 a Delta flight hit severe turbulence about 40 miles outside of Atlanta catapulting passengers out of their seats.  Another incident involving an Allegiant Air flight last July that was flying from North Carolina to Florida.  One passenger described the experience like being in “The Matrix.”

NASA is working on a way to detect clear-air turbulence.

The technology, under development at NASA’s Langley Research Centre and involving government, university and private sector experts, anticipates using ground-mounted infrasonic microphones that can pick up ultralow frequencies produced by turbulence -possibly as far as 300 miles away.

Such microphones could provide an early warning for what’s known as “clear-air turbulence,” the top cause of inflight injuries and fatalities, according to researchers at the University of Reading.

Clear air turbulence differs from other forms of turbulence in several ways, and it can occur without warning at altitudes of 20,000 to 40,000 feet.  The unstable air masses can be as much as 100 miles wide and 300 miles long, and they often are found just above the jet stream core, researchers say.

Turbulence is expected to get worse as the world warms.

Prof. Williams and his team at the University of Reading project that the frequency of clear-air turbulence events will double by 2050 and that the intensity of such events will increase by as much as 40%.

The NASA research effort could make flight crews, passengers, and aircraft more resilient to that future.

 

 

Market Update

The summer season is almost upon us.  A retracement is imminent in the DOW and S&P500 in line with retracements in the metals sector and Bitcoin & crypto in general as well.

S&P500 – expecting a pullback to 5221 or as far as 5140.

DOW – looking for trendline support around 37810 price point.  A lower price point would be 37000.

US tech 100 – looking for consolidation now towards the 18450-price level.  18085 possible support level before a further rally in the tech sector.

GOLD- looking for a correction back towards the 2275 price range and potentially as low as 2220.  Subsequent profit targets for further highs sit at 2482 and 2689. 

SILVER – expecting retracement towards 3050.  Following correction, the metal will rally toward the longer-term target of 3470.

US dollar –expecting a short-term rise in the USD basket towards 10800 before a decline to the 10,000-price zone.  So, you should be looking to short the US dollar in 4-6 weeks and buy the EURO, POUND Sterling, and Australian dollar.

 

 

Cheers,

Jacquie

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april@madhedgefundtrader.com

May 27, 2024

Jacque's Post

 

(ARE WE ON THE VERGE OF A RENAISSANCE IN NUCLEAR ENERGY?)

May 27, 2024

 

Hello everyone,

Week Ahead Calendar

Monday, May 27

Australian Retail Sales

Previous:  -0.4%

Time: 9:30 p.m. ET

 

Tuesday, May 28

9 a.m. FHFA Home Price Index (March)

9 a.m. S&P/Case Shiller comp. 20 HPI (March)

10 a.m. Consumer Confidence (May)

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

Australia CPI Indicator

Previous: 3.5%

Time: 9:30 p.m. ET

 

Wednesday, May 29

10 a.m. Richmond Fed Index (May)

2 p.m. Fed Beige Book

Germany Inflation Rate

Previous: 2.2%

Time: 8:00 a.m. ET

Earnings:  HP, Salesforce, Afilent Technologies

 

Thursday, May 30

8:30 a.m. Continuing Jobless Claims (05/18)

8:30 a.m. GDP (Q1)

Previous: 3.4%

8:30 a.m. Initial Claims (05/25)

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

10 a.m. Pending Home Sales (April)

Earnings: Costco Wholesale, Ulta Beauty, NetApp, BestBuy, Dollar General, Hormel Foods

 

Friday, May 31

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

Previous: 2.8%

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

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

 

Strong US PMI data last week brought back uncertainty about rate cut possibilities this year.  Markets are now predicting only one 25 bps rate cut by the end of the year, with that cut likely delayed until November.  US GDP data and the closely monitored PCE inflation rate coming this week could shift the odds further in either direction, possibly affecting USD prices as well.

Are we at the beginning of a resurgence in nuclear energy?

Fifteen years ago, the notion of a nuclear renaissance got shelved due to the political emphasis on renewables and competitively priced alternatives.

The 2011 Fukushima nuclear disaster in Japan also heightened scrutiny on safety.

Now, there are rumblings afoot that there is a resurgence on the horizon.

Electricity demand is forecast to surge due in part to the growth of data centres and artificial intelligence.  Demand is growing at the same time that countries are in search of reliable carbon-free energy to address climate change.

After a spate of nuclear plant closures over the past decade, reactors are now being modernized to extend their service life and communities are showing interest in new plants as they phase out coal, according to Morgan Stanley analysts.

Various nations throughout Europe are endeavouring to shore up their energy independence in the wake of Russia’s full-scale invasion of Ukraine. Morgan Stanley analysts expect that 20-25 new third-generation nuclear power plant builds will eventually take place in Europe alone over the next decade.

Curtiss-Wright is one stock poised to benefit from the increasing number of power plants and the modernization of current plants, which is designed to extend their service life. 

The company supplies equipment, technical talent and advanced technology and innovative solutions in operating reactors to ensure their safe and reliable operation.

The company supplies all 94 reactors in the U.S. and all nineteen in Canada as well as plants in South Korea.  According to management at Curtiss-Wright, modernization of current nuclear plants in the U.S. is a $7 billion opportunity through 2050.

Morgan Stanley estimates that Curtiss-Wright could realize $4.9 billion in revenue through 2050 on AP1000 builds.  With this scenario, the company’s valuation rises to $488 per share, implying nearly 74% upside from Friday’s close.

I am not recommending you buy this company now.  I wanted to inform you of the interesting developments in this space and the potential of significant investment in this area and be aware of opportunities that will exist going forward.

Market Update:

S&P500 – Advance in progress. 

Gold – has succumbed to a short-term correction.  We see chart support at around $2270. In the “Bigger Picture” the outlook remains bullish with the next target situated at around $2,530.

Bitcoin -Advance in progress.  The next key targets are $71,957, $73,794 and $80,628.  Support lies at a max. position of $63,000.  (As I said last week, I would not be surprised to see a drop to around $50k in bitcoin at some stage in the future before strong upside rally takes hold).

 

 

 

 

Wishing you all a great week.

Cheers,

Jacquie

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april@madhedgefundtrader.com

May 24, 2024

Jacque's Post

 

(MAY 22ND WAS WORLD BIODIVERSITY DAY)

 

 

May 24, 2024

 

Hello everyone,

On Wednesday – the International Day for Biological Diversity – the International Union for the Conservation of Nature released a report that found that more than half of the world’s mangrove ecosystems are at risk of collapse due to development, pollution, and sea level rise, the latest evidence of the growing threat to nature.  The United Nations Environment Programme has called for a ‘whole of society approach,’ including the private sector, to address both climate change and biodiversity loss.

While there are thousands of companies around the world that are taking action to monitor, disclose, and reduce greenhouse gas emissions, few widespread mechanisms are in place to systematically measure and reduce business impacts on nature. 

So, what are businesses doing to reduce other harms to nature?

It’s not just about the half a dozen or so gases that we measure in terms of greenhouse gases.  The rest of nature also needs attention.

The Taskforce on Nature-related Financial Disclosures (TNFD) was launched in 2021 as a partnership among financial institutions, corporations, and market service providers with the goal of developing business disclosure practices that would better account for impacts on nature.

Executive Director, Tony Goldner, said the 40 task force member organizations realize that many aspects of business and industry depend on services nature provides, from clean water to the pollination of crops.  The estimated economic value of these “ecosystem services.” as scientists call them, amounts to staggering sums.

Let’s consider the role of the humble insect.  The U.S. Department of Agriculture said the pollination of crops adds $10 billion in benefits annually just in the U.S.  Globally, pollination contributes more than $3 trillion to the world economy.

 

 

We are not looking after the insects on our planet.  In fact, they are getting a raw deal.  Several studies have documented sharply declining populations of insect pollinators in industrialized parts of the world, and scientists link those declines to business activities such as the conversion of natural areas for agriculture and heavy pesticide use.

Goldner points out that if we degrade the systems that provide these benefits to our businesses, those benefits won’t continue to flow into our business models.

At the World Economic Forum’s annual conference in January in Davos, Switzerland, TNFD announced its early adopter companies, and the list has since grown to some 370 companies that have committed to nature-related disclosures.

The task force is part of an emerging effort to get nature on the ledger sheets along with the other assets and liabilities companies track.  Proponents argue that this is not just important for environmental improvement, it is a business imperative.

“The hard business realities of the 21st century -   you must know your impacts on climate and biodiversity or risk disruption.” (Ethan Soloviev, chief innovation officer at How Good).

 

 

 

 

 

 

 

 

Cheers,

Jacquie

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april@madhedgefundtrader.com

May 22, 2024

Jacque's Post

 

(FIRST FLYING VEHICLES TO BE DELIVERED IN 2026)

May 22, 2024

 

Hello everyone,

Xpeng AeroHT, an affiliate of Xpeng, aims to deliver its flying car to customers in 2026.

In 2023, Xpeng AeroHT introduced the Land Aircraft Carrier – a large truck with a flying two-seater passenger electric drone inside.  The flying car can detach from the truck, and people can then get into the drone and fly it.

Brian Gu, co-president of Xpeng is confident about its uptake.  He argued that this vehicle is not for use in urban centres, but mainly for the outskirts in scenic areas.  He went on to say that “we will work with municipalities to create flying parks and flying zones that allow people to enjoy flying without the hassle of getting all the complicated approvals.”

Xpeng stated that the flying car is currently going through a certification process with the Chinese aviation regulator.

It’s been made clear that passengers will not require a special license to fly the drone for initial use.

The company is using leisure and sports-related use cases for the initial use of that flying device.  Of course, if you move closer to an urban area then you do need special licenses.  Securing approval gets complicated then.

Robotics and flying cars are part of Xpeng’s long-term goal.

 

 

Most people don’t use the term “flying car”, rather the acronym, eVTOL is used, which stands for:

electric

vertical

Take

Off and

Landing

Interestingly, more than 400 companies and innovators have registered eVTOL designs and they have attracted billions of dollars in funding over the last decade. Amongst the investors are famous people including LinkedIn co-founder, Reid Hoffman, and musician, WILL.I.AM, and  F1 champion, Nico Rosberg.

Companies investing in this space include Uber, Airbus, Toyota, and American Airlines among others.

If forecasts are correct the eVTOL market will grow from $ 1.2 billion in 2023 to $22.4 billion in 2030.  That equals an annual average growth rate of 52%.

 

 

To reach that target, companies need to work with regulators – the Civil Aviation Administration of China, the US Federal Aviation Administration, and the European Union Safety Agency have laid out various certifications these vehicles will need to meet before taking to the skies.

Type certification- refers to the model design.

Production- Regulators will also want oversight on the production of the vehicles.

Operational Authorization - Pilots may need a special license to operate them.

Air Traffic Infrastructure – how do we fit these vehicles into the skies?

Infrastructure is also paramount – eVTOLS will need a place to take off and land and recharge.

Microscale airports have been proposed. 

The final barrier to this industry taking off is public acceptance.  eVTOLS won’t truly take off until people feel comfortable stepping into one.

 

Portfolio Update

Take profits on

STOCK                             TICKER                    DATE Recommended          BUY PRICE            May 21

Salesforce                        CRM                                     01/06/24                       $260.00              $283.76

United Airways           UAL                                         01/08/24                       $41.76                   $53.03

Humacyte                       HUMA                                 01/31/24                         $3.19                     $7.03

Stop out of

SoundHound               SOUN                                    03/13/24                         $5.86                       $5.12

Li Auto                               LI                                       03/15/24                         $36.47                  $20.96

Innoviz

Technologies                  INVZ                                     12/13/23                      $2.30                         $1.15

 

 

Cheers,

Jacquie

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april@madhedgefundtrader.com

May 20, 2024

Jacque's Post

 

(ECONOMIC DATA POINTS ARE POSITIVE FOR THE MARKET)

May 20, 2024

 

Hello everyone,

 

Week ahead calendar

Monday, May 20

Australia Consumer Confidence Chg.

Previous: -2.4%

Time: 8:30 pm ET

Earnings: Palo Alto Networks

 

Tuesday, May 21

Canada Inflation Rate

Previous: 2.9%

Time: 8:30 am

Earnings:  Auto Zone, Lowe’s Companies

 

Wednesday, May 22

10 a.m. Existing Home Sales (April)

2 p.m. FOMC Minutes

UK Inflation Rate

Previous: 3.2%

Time: 2:00 am ET

Earnings:  Nvidia, TJX Cos, Analog Devices, Target, Raymond James

 

Thursday, May 23

8 a.m. Building Permits

8:30 a.m. Chicago Fed National Activity Index

8:30 a.m. Continuing Jobless Claims

8:30 a.m. Initial Claims

9:45 a.m. PMI Composite preliminary

9:45 a.m. S&P PMI Manufacturing preliminary

10 a.m. New Home Sales

11 a.m. Kansas City Fed Manufacturing Index

Japan Inflation Rate

Previous: 2.7%

Time: 7:30 pm

Earnings:  Intuit, Ralph Lauren

 

Friday, May 24

8:30 a.m. Durable Orders

UK Retail Sales

Previous: 0%

Time: 2:00 am

 

Last week the Dow pushed through 40,000 for the first time ever.  The S&P500 also broke through 5,300 for the first time.  And there are higher targets ahead.

Are you going to argue with a market making new highs?   But many of you will be scratching your heads wondering how healthy this market is and how we got here in the first place.

Let’s start with aggressive market positioning at the end of the first quarter and a test of Wall Street’s faith in an ideal soft economic landing, followed closely by a friendlier set of inflation numbers, and a stellar show of earnings by big companies, and last, but not least, a reversal of the April Treasury yield surge (which I have been predicting for several months through charts on my monthly zoom meetings).

The advice here, then, is not to overthink things and look for elements that don’t fit the narrative thus far.   Many strategists conclude that record closes are more to be respected than feared when they arrive.  Records tend to persist, though one exception is the brief visit to unprecedented heights in 2007.

So, what could go wrong?

Maybe, ugly inflation reports later this month or a not-so-rosy set of numbers from Nvidia’s earnings?   This could stir up the placid landscape and place us all into rethink mode.  But the characteristics we have at the present time are not to be argued with, so let’s go with what the market is giving us – a market with “just the right mix”.

While valuations are elevated at 20.7 times forward earnings, the S&P500 P/E at 5,300 is slightly lower than it was on March 28 with the index at 5,250 because profit forecasts are up more.

The market has shown itself to be a bit more defensive lately.  Consumer cyclicals are losing steam, and transportation stocks are lagging.  The Citi U.S. Economic Surprise index has fallen into negative territory more deeply than any time since late 2022, meaning that the macro data is slipping relative to increased forecasts.  Retail sales for April were flat, too.

So, is this just about the right amount of negative data?   It could actually be seen as a welcome deceleration in the economy that could help the Fed’s disinflationary cause rather than the start of more pronounced weakness.

Lower-income spending softness is being offset by an industrial and tech-hardware capital-spending boom.

Looking more broadly gives us some insights into what is helping sustain bullish sentiment:  there were two bear markets in the past four years, the S&P500 is less than 11% higher than it was 28 months ago, and the current bull run is so far modest in both length and total appreciation compared to historical averages.   In other words, this market has further to run.

 

In other news:

Nvidia will be in the spotlight this week and I’m sure it will attract a lot of attention. Can Nvidia’s earnings results propel the market higher, for those that are sitting on the AI gravy train?

This week also brings inflation data releases for Canada, Japan, and the UK.   Bank of England officials and GBP/USD traders will be watching the data release closely on Wednesday, as the numbers could either solidify the likelihood of an impending rate cut, or further delay cuts. 

 

Market Update

S&P 500 - has rallied as anticipated. The market is undergoing a 5th wave advance onto new highs for the year. First target lies around mid 5,400 and then next target = around 5,700.

Gold – advance in progress.Target = around $2,500.Higher targets are around $2,650 and $3,270.

Silver – advance in progress.Target = around $34.80.

Bitcoin – Uptrend has resumed. The rally will first meet resistance around $73,790 (March 14 peak).After breaking through this resistance, the next target = around the mid $80,000’s.Support is found around $63,000 max. (There is a chance that Bitcoin could retest the low $50k level at some point before continuing to rally – you are forewarned).

 

 

 

Cheers,

Jacquie

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Mad Hedge Fund Trader

May 17, 2024

Jacque's Post

 

(SUMMARY OF JOHN’S MAY 15, 2024 WEBINAR)

May 17, 2024

 

Hello everyone,

 

Title

The Great American Age

 

Performance

2024 YTD +18.75%

695.38% since inception

+51.83 average annualized return

 

Portfolio

Risk On

(GLD) 5/$200-$205 call spread 10%

(SLV) 5/$21-$23 call spread 10%

(TLT) 6/$94-$97 put spread 10%

Risk Off

(NVDA) 5/$980-$990 put spread 10%

(MSFT) 5/$430-$440 put spread 10%

(AAPL) 6/$200-$210 put spread 10%

Total aggregate position = 60%

 

The Method to My Madness

The focus now is on discounting the first rate cut, which = higher prices for everything.

The 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.

Interest rates are higher for longer and September is back on the plate in view of recent data releases.

Buy stocks and bonds on dips.

 

The Global Economy – The Slowing Data

Non-farm payroll comes in at a weak 175,000 in April, the slowest in six months.

The headline unemployment rate ticked up to 3.9% while wage gains slowed.

Fed says no hikes, but no cuts either, triggering a 500-point rally in the market.

Weekly Jobless claims come in at 231,000, the weakest in six months.

Biden to increase China tariffs to 100% on key sectors including electric vehicles, batteries, solar cells, steel and aluminum.

China Home sales plunge by 47%, as the real estate crisis deepens, indicating that a recovery may be far off.

Online Retail Spending up 7% during the January – April period YOY.

US Wholesale Inventories drop by 0.4%.

Morgan Stanley pushes back rate cut expectations to September.

 

Stocks – A New Golden Age

Stocks up 10 out of 11 days on consistently slowing economic data, the soft landing is here.

The Bull Market has five more years to run, with S&P 500 growing earnings at 10% a year for the foreseeable future.

Last year brought in $222 per share, 2024 will see $250, 2025 $270, and $300 for 2026.

The Great American Golden Age has only just begun.

Profit margins will expand to record highs.

Falling interest rates and a weak dollar will boost exports to a recovering Europe.

Inflation should hit the Fed’s 2% in 2025 as AI chatbots replace workers at a breakneck rate, cutting costs dramatically.

The future is happening fast.  Buy everything on dips.

Recommended for LEAPS: ADBE, CRM, AMD.

 

Bonds – Stabilizing

Bond investors are making a killing with the US Treasury paying out $900 billion in interest in 2023.

That’s double the annual cost of the past decade.  Remember those coupons?

That’s another reason for the Fed to cut rates soon, to lessen this backbreaking burden on the government.

After being held hostage by zero-rate policies for almost two decades, US treasuries are finally reverting back to their traditional role in the economy.

Bonds are becoming respectable again after a long winter.  Buy (TLT) on dips.

The US Treasury announced a Bond Buyback Program, with the first scheduled on May 29.

The Treasury’s last regular buyback program began in the early 2000s and ended in April 2002.

 

Foreign Currencies – Sniffing Out a Dollar Top

Japanese yen collapses to at Yen 160.

Bank of Japan intervened with a $35 billion yen buy, dollar sell.  Avoid (FXY)

Chinese Yuan remains weak.  International trade is collapsing.

Declining exports, collapsing foreign investment, minimal population growth, it all adds up to a weaker Chinese currency.

Higher for longer rates mean higher for longer greenback.

Falling interest rates guarantee a falling dollar in 2024.

 

Energy & Commodities – Oil Price Drop

Oil sees biggest drop in three months, as tensions in the Middle East fade, economic data slows.

Both benchmarks are set for weekly losses as investors are concerned higher for longer interest rates will curb economic growth in the U.S., the world’s leading oil consumer, as well as in other parts of the world.

Buy (XOM) and (OXY) on dips.  A new Golden Age consumes a lot of Texas Tea.

Exxon Cuts deal with the FTC, allowing the pioneer deal to go through.

Commodity takeover wars heat up, as Swiss-based commodity giant Glencore also considers a bid for Anglo-American.

Anglo is attractive to its competitors for its prized copper assets in Chile and Peru, a metal used in everything from electric vehicles and power grids to construction, whose demand is expected to rise as the world moves to cleaner energy and wider use of AI.  Follow the big money.

Buy (FCX) and (COPX) on dips.

 

Precious Metals – Geopolitical Fears

Solar Panels are driving global silver demand.

Global investment in solar PV manufacturing more than doubled last year to around $80 billion.

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

Demand for silver from the makers of solar PV panels, particularly those in China, is forecast to increase by almost 170% by 2030, to roughly 273 million ounces – or about one-fifth of total silver demand.

Buy (SLV) and (WPM) on dips.

 

Real Estate – Underwater Homes

Underwater Home Mortgages are Soaring, with the South taking the biggest hit.

Roughly one in 37 homes are now considered seriously underwater in the US.

Nationally, 2.7% of homes carried loan balances at least 25% more than their market value in the first few months of the year.

That’s up from 2.6% in the previous quarter.  It’s another cost of high rates.

Demand for Adjustable-Rate Loans Soar, as the 7.25% 30-year fixed sends borrowers fleeing.

The share of ARM applications rose to 7.8% of mortgage demand last week.

S&P Case Shiller National Home Price Index soars.   Home prices in February jumped 6.4% year over year, marking another increase after the prior month’s annual gain of 6%, and the fastest rate of price growth since November 2022.

 

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

May 29, 2024, from Incline Village, Nevada.

 

 

Cheers,

Jacquie

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