(MARKETS HAVE A LOT OF DATA TO DIGEST THIS WEEK)

April 8, 2024

Hello everyone,

Week ahead calendar

Monday, April 8

Switzerland Unemployment Rate

Previous: 2.4%

Time: 1:45 am

Tuesday, April 9

6 a.m. NFIB Small Business Index (March)

Japan Consumer Confidence

Previous: 39.1

Time: 1:00 am

Wednesday, April 10

8:30 a.m. Consumer Price Index (CPI) (March)

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

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

10 a.m. Wholesale Inventories final (February)

2:00 p.m. Treasury Budget NSA (March)

2:00 p.m. FOMC Minutes

Earnings: Delta Air Lines

Thursday, April 11

8:30 a.m. Continuing Jobless Claims (3/30)

8:30 a.m. Initial Claims (04/06)

8:30 a.m. Producer Price Index PPI

Euro Area Interest Rate Decision

Previous: 4.5%

Time: 8:15 am

Earnings: CarMax

Friday, April 12

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

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

10 a.m. Michigan Sentiment preliminary (April)

UK GDP Growth Rate

Previous: -0.3%

Time: 2:00 am

Earnings: State Street, Wells Fargo, JPMorgan Chase, Progressive, Citigroup

Top of mind for investors this week will be inflation numbers that are out on Wednesday. Markets are already digesting rising Treasury yields, so the data could provide an added dose of medicine that the market may love or just really hate.

The numbers will confirm whether we are headed towards the Fed’s 2% target or whether a reassessment or shift is needed on interest rate policy and outlook.  Even if March numbers are good, investors should still remain cautious about where inflation will sit in the months ahead.

The number of jobs added to the U.S. economy in March was beyond expectations, really highlighting the labour market’s strength.  Of significance, however, was the fact that average hourly earnings were in line with forecasts, suggesting that the labour market and the economy as a whole are not overheating.  Currently, the CME Fed Watch Tool shows markets are pricing in three rate cuts this year, starting in June.  Wait for the data; it will tell a story.

The markets are feeling brittle about yields, and any further negative data could tip us into a little more volatility, and more of a correction here.

Rising Treasury yields and higher oil prices saw the DJIA close lower by 2.3% last week.  West Texas Intermediate crude oil futures topped $87 a barrel last week, reaching a five-month high.  The 10-year Treasury yield hit 4.4% last Friday.

Despite these readings, many investors remain optimistic that stocks can continue to rally, citing a broadening out in the rally – meaning that it is not just the tech sector leading the rally, but a participation of all sectors – and a strong economy, which are constructive signals for markets.

The market’s “Bigger Picture” outlook remains Bullish.  We would need to see a strong break below 5,140 to signal a deeper retracement back towards the 4990 area.

The uptrend in Gold and Silver remains in progress, and we are awaiting a breakout from a symmetrical triangle in Bitcoin, with a target of around $82,000.

Cheers,

Jacquie

(ANALYSTS AND INVESTORS ARE STARTING TO PAY ATTENTION TO THE ENERGY SECTOR)

April 3, 2024

Hello everyone.

The month of April is upon us, and the market environment has turned a little cloudy.

Economic data and heightened geopolitical risks appear to be fuelling the move higher in Oil prices.  With the new month, investors have been greeted with escalating tensions in the Middle East with indirect Iranian involvement.  OPEC member Iran has blamed Israel for a deadly air strike Monday on its consulate in the Syrian capital of Damascus that reportedly killed seven of its officers.

On Tuesday, Tehran pledged to take revenge for the attack, which was seen as a major escalation in the Israel-Hamas war.  It is clear that the potential for direct Iranian involvement in the Israel-Hamas war could ignite a widespread regional conflict with a significant impact on oil supply.

Meanwhile, in Ukraine, we have seen Ukrainian strikes on one of Russia’s largest oil refineries with a drone attack on the highly industrialized Tatarstan region, some 800 miles from the front lines of the conflict.  Russia has been hit by many Ukrainian drone strikes in recent months and has sought to escalate its own attacks on Ukraine’s energy infrastructure.

Robert Schein, CIO at Blanke Schein Wealth, believes energy could be the story of the summer.  He goes on to comment that energy stock valuations are “really attractive” pointing to multiples that are largely in the low-teens range.  Furthermore, he notes that the companies in the space have strong cash flows and balance sheets.

Schein sees this move in oil stocks as the start of a rebound.  The Energy Select Sector SPDR Fund (XLE) has added more than 12% in the first quarter of 2024, outperforming the S&P500’s gain of just over 10% during the same period.  The fund lost more than 4% in 2023, bucking the broader market’s uptrend.  But energy has now started to break out after being “left behind” as Schein puts it. 

Schein points out that a rise in crude oil into the mid-$80 price range bodes well for stocks in the sector.   “If they’re making money at $70 a barrel, they’re printing money in the $80s and $90s.”

Adding further fuel to the fire of supply chain disruptions is the Port of Baltimore bridge collapse.  And that event is on top of the ongoing geopolitical conflicts that have already been providing upward pressure.

Schein argues that most investors are probably underweight on energy.  His team has been currently boosting its exposure to the sector. The Energy Select Sector SPDR Fund (XLE) is a diversified way to add weight.

On February 8, 2024, under the newsletter titled “Three Stocks to Buy in 2024,” I recommended Exxon Mobil (XOM) and suggested you buy the stock or buy LEAPS, or do both.  The price of (XOM) at the time was $102.20. For those who trade options, I recommended one-year LEAPS out of the money and gave the following suggestions on strike prices:  105/110 or even 110/115 with an expiration of January 17, 2025.  (Congrats to you if you invested!) Price of (XOM) stock now is $119.28.  I also put out a trade alert to purchase two-year LEAPS in July 2023 on Chevron (CVX).   

Schein notes that these large-cap picks can be advantageous during tough times, as the companies typically support their stocks by doing buybacks.

Bullish move underway in Oil.

A Global Chip Supplier that is worthy of attention

The boom in demand for artificial intelligence is rocketing many technology stocks.  However, one in particular is a global chip supplier that manufactures key AI components and is presently undervalued.  Taiwan Semiconductor Manufacturing Co Ltd (TSM) ($140.22) is a supplier to chip giants such as Nvidia, Advanced Micro Devices and Qualcomm.  Wall Street analysts are arguing that (TSM) could rally another 27%.  The stock currently trades at 21 times forward price to earnings versus 31 times for the broader Van Eck Semiconductor Index (SMH).

What’s the reason for the potential rally?

More customers will require leading-edge tools for new AI products.  Wall Street analysts including JPMorgan argue that the expectation for strong wafer shipments will see second-quarter revenue up 6%-8% quarter over quarter.  Furthermore, the investment bank comments that the overall 2025 demand picture (outside of AI) is also constructive following nearly two years of inventory correction.

Please note, that I am not recommending you buy the stock right now.  I am merely drawing your attention to the stock and giving you information, so you can make informed decisions about whether to purchase this stock at any time in the future.  Put it on your Watch List.

Cheers,

Jacquie

(CEOs ARE SELLING INTO THIS MARKET RALLY – IS SOMETHING BREWING…?)

March 27, 2024

Hello everyone,

Insiders are selling the market rally.

CEOs of technology companies and other firms have been cashing in on this market rally, including a massive sale last week from Michael Dell, founder and CEO of Dell Technologies.

Dell, who took his namesake company public for a second time in 2018, racked up $468 million in stock sales over the past week, according to securities filings and Verity Data.  Those moves bring Dell’s total sales this month to nearly $800 million.

If you look at Dell’s stock chart it appears to have topped out, at least in the short term.  Shares of Dell are up 200% over the past year, but the stock has fallen over the past three weeks.

Mark Zuckerberg has also been selling off stock.  Securities filings and Verity Data show that roughly $114 million has been sold of late.

It seems that Zuckerberg’s moves were done as part of a 105b-1 plan, which is a document filed with the Securities and Exchange Commission to schedule stock sales for executives.  His sales also came from several entities, including the Chan Zuckerberg Initiative, a charitable foundation Zuckerberg runs with his wife, Priscilla Chan.

Like Dell, Zuckerberg’s sales come after a massive run-up for his stock.  Shares of the company formerly known as Facebook are up more than 40% year to date.

CEOs in the following companies have sold off significant parcels of stocks.

Cadre Holdings - $50.3 million

Arista Networks - $40.9 million

Ares Management - $32.7 million

Gitlab - $16.5 million

Cadence Design Systems - $14.7 million

AppLovin - $9.5 million

Cleanspark - $9 million

As I have been saying, it’s always good to have insurance on your portfolio, and taking some profits is always a good idea. 

Is a Boeing turnaround expected soon?

The shake-up at Boeing this week with the CEO set to step down by year-end may have sparked optimism among investors.  Boeing has faced significant challenges over the years with the latest incident involving a door plug on an Alaska Airlines 737 Max 9 in January.  Numerous groundings and substantial financial losses have come as a result.  The stock is down by more than 27% since the start of the year. 

The chart of Boeing above shows basically a double bottom.  Instead of buying the stock outright, we could purchase a bull call spread to lessen the risk.  For a short-term spread trade, you could buy a $190 call and sell a $195 call with an expiration on April 19.  If BA trades at or above 195 by the expiration date, this trade could yield a good return.

To get creative with your trades, either change the strikes or change the expiration.  If you place your strikes toward $200 you are being more aggressive.  If you place your strikes underneath the stock price, (in the money), you are being more conservative.

Tesla is out of favour.

Bernstein has cut its Tesla’s price target from $150 to $120, citing growing demand constraints.  The new forecast implies a downside of 30% over the next 12 months.

This quarter to date, Tesla has experienced soft China/Europe demand and constrained US Model 3 production.   Bernstein expects lukewarm growth in 2024, as well as 2025, bringing into question the company’s growth narrative.  Tesla has lost 30.5% in 2024, making it the worst-performing S&P 500 stock.

Have a great week.

Cheers, 

Jacquie

(SUMMARY OF JOHN’S MARCH 20, 2024, WEBINAR)

March 22, 2024

Title:  Commodities are Back

Trade Alert Performance

March:  1.34%

Since Inception:  681.11%

Average annualized return:  +51.40 for 16 years

Trailing One Year Return:  +48.70%

Portfolio:

(TLT) 4/$87 - $90 call spread

(FCX) 4/$37 - $40 call spread

(XOM) 4/ $100 - $105 call spread

All positions 10% each.

Total aggregate position = 30%

Method to My Madness

Overheating risk is rising.

Tech will have a “time” correction, not a crash.

Major sector rotation is underway out of big tech and into commodities, energy, and precious metals.

All falling interest rate plays had a great week, including bonds, precious metals, energy, and even uranium.

All economic data is globally slowing, except for the U.S. with the only good economy in the world.

Buy stocks and bonds but only after substantial dips.

The Global Economy – Even Bad News is Good News.

PPI comes in hotter than hot at 0.6%.  That was higher than the 0.3% forecast from Dow Jones and comes after a 0.3% increase in January.

CPI comes in hot at 0.4% in February.  YOY inflation crawled up to 3.2% to 3.1% expected

Nonfarm Payroll Report rose275,000 in February.

The Headline unemployment rate rose to 3.9%, a two-year high.

Beige Book comes in moderate, saying “labour market tightness eased further,” in February but noted “difficulties persisted attracting workers for highly skilled positions.”

JOLTS Job Openings Report rises by 140,000 to 8,890,000 less than expected.

China Targets 5% Growth for 2024, but nobody buys it for a second.

Stocks – Commodities are Back!

NVDA replaces TSLA as top traded stock, with volumes migrating to the options market as well.

Fed to scale back bank capital requirements, according to his congressional testimony Wednesday.

Rivian shares soar, on news it is halting plans to build a new $2.25 billion factory in Georgia.

New York Community Bancorp bailed out, with a cash infusion led by former Treasury secretary, Steve Munchin.

Target rockets 10% on an earnings blowout, but the company said it expects another year of weak sales.

Dell becomes an AI stock, sending the shares up 47% in a day.

Private Equity targets Macy’s (M) with a $6.6 billion buyout bid, taking the shares up 16%.

Bonds – Doldrums

Bond investors are moving out the risk curve.

The U.S. market for one of the riskiest types of corporate debt is resurging this year, as companies cater to investor demand for assets that can lock in high yields for several years ahead of an expected decline in interest rates.

Holders of these bonds, called junior subordinated debt, are among the last to be paid in case of a default and companies can defer interest payments.

The word is out:  Interest rates are falling.

Europe moves towards interest rate cuts, igniting a global bond market rally.

US National Debt is rising by $1 Trillion every 100 days.  A trillion here, a trillion there, sooner or later that adds up to a lot of money.

Bonds may have put in a bottom, markets unable to take prices any lower, yields any higher with the current interest rate outlook.

Foreign Currencies – Another Run at the Dollar Highs

Higher for Longer rates mean higher for longer Greenback.

Bank of Japan cuts interest rates, bringing to an end a 34-year stimulus program that was a dismal failure.

The Japanese yen should have rocketed but collapsed instead.

US$ holds three-month highs.

You need falling interest rates for a weak dollar.

A dollar rally could last a couple of months, so a new currency entry point is approaching.

However, eventual falling interest rates guarantee a falling dollar for 2024.

Energy & Commodities – Range Bound

A global commodity rally has dragged oil up.

US continues to dominate markets with 13 million barrels/day production.

The US has saved Europe’s bacon with 1,300 takers of natural gas in two years, replacing Russia practically overnight.

In the meantime, coal has plunged from 50% to 19% of US electricity output in 20 years.

Electrification of the US economy will continue to be a driving theme.

The Uranium Shortage is getting extreme, with yellow cake up 112% in a year, owners of left-for-dead uranium mines are restarting operations to capitalize on rising demand for the nuclear fuel.

AI is finding new copper deposits.

Precious Metals - Signs of Life

Precious metals have a great week on slightly falling rates.

Gold needs – falling interest rates to resume rally (Fed statement confirmed rate cuts – metals rallied thereafter).

Miners are lagging gold performance but will play catch up.

Investors are picking up gold as a hedge for 2024 volatility.

Gold head for $3000 by 2025.

Silver will also rally.  (Initial target is around $37.00)

Russia and China are also stockpiling gold to sidestep international sanctions.

Real Estate – Demographic Tailwind

Home prices have risen 2.4 times faster than the inflation rate since 1963.

Gail force demographic tailwinds are the reason helped by a chronic housing shortage.

New Home Sales weaken, curbed by frigid weather increasing 1.5% to a seasonally adjusted annual rate of 661,000 units in January.

But demand for new construction remains underpinned by a persistent shortage of previously owned homes.

Toll Brothers rocks, taking the shares up 6%, with extremely strong demand for new homes on the horizon.  The gale force demographic tailwind continues.

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:  April 3 from Key West, Florida at 12 EST

Cheers,

Jacquie

(SLOWING ECONOMIC DATA MAY SHIFT THE FED INTO REACTIONARY MODE)

March 18, 2024

Hello everyone,

We are in for an action-packed week with central bank meetings taking place around the world.  Inflation remains the sticking point.  The Fed could hold tight for longer – weakening the economic landscape – and then go into overdrive at year end – by loosening the reins at top speed to stop us from sliding into a deep recession.

Investors will digest statements from the FED and gain some insight on what the plan for interest rates is going forward.

The risk is that the Fed will lean a little hawkish, which would throw cold water on the recent equity rally.

If no changes are mentioned, it will be benign for the markets, however, if fed funds rate projections move higher, which means fewer rate cuts, that is going to be seen as a negative for markets and will result in volatility, both in fixed income markets and equity markets.

Interestingly, some market observers believe the Fed will have to cut more than it, or markets, are currently anticipating, regardless of what the central bank signals this week.

Softening economic data as well as the pressure of the Fed’s extensive tightening campaign, could well slow economic growth markedly by year-end, and consequently, we may see the Fed cut five times, even if they signal just three in their plan.  Some analysts are anticipating a 20%-35% downside for stocks that won’t bottom until next year.

Better get that insurance in place now.  SDS is for those cloudy days when those recessionary drums start pounding.   Don’t leave that until the last minute.  There is also insurance you can buy for your tech stocks.  Have a look at (PSQ) Pro Shares Short QQQ or (QID) Pro Shares Ultra Short QQQ.

Flying under the radar has been the Energy and Commodities Sector.  Stocks in this sector have been quietly moving to the upside.  Most investors have had their attention glued to the tech sector. 

On February 7, 2024, my newsletter was titled Three Stocks to Buy in 2024.  These stocks were Microsoft (MSFT), Barrick Gold (GOLD), and ExxonMobil (XOM). At the time MSFT was sitting at $403.66, GOLD was priced at $15.09 and XOM was at $102.20. In this newsletter I recommended that subscribers buy small parcels of stock – average in – and purchase LEAPS on these stocks – and suggestions for strikes and expiration times were given.

MSFT is now at $416.42.  GOLD is at $15.76.

(XOM) was around $102 when I issued a recommendation to purchase small parcels of the stock and out of the money LEAPS.  The stock is now trading near $111.00.  If you took my advice, you would be sitting in a good position now.  Even though (MSFT) and (GOLD) could retrace a little from their recent highs, they will resume their uptrend after taking a breath and march on to higher targets over the next year and beyond. 

Be patient.

Week ahead calendar

Monday, March 18, 2024

10 a.m. NAHB Housing Market Index

Japanese Interest Rate Decision

Previous:  -0.1%

Time: 11:00 pm

Tuesday, March 19, 2024

8:30 a.m. Building Permits SAAR (Preliminary)

8:30 a.m. Housing Starts

Canada Inflation Rate

Previous: 2.9%

Time: 8:30 am

Wednesday, March 20, 2024

2:00 p.m. FOMC Meeting

2:00 p.m. Fed Funds Target Upper Bound

Earnings:  Micron Technology, General Mills

Thursday, March 21, 2024

8:30 a.m. Current Account SA

8:30 a.m. Continuing Jobless Claims SA

8:30 a.m. Initial Claims SA

8:30 a.m. Philadelphia Fed Index SA

9:45 a.m. PMI Composite SA preliminary

9:45 a.m. Markit PMI Manufacturing SA preliminary

9:45 a.m. Markit PMI Services SA (Preliminary)

10 a.m. Existing Home Sales SAAR

10 a.m. Leading Indicators SA M/M

UK Interest Rate Decision

Previous: 5.25%

Time: 8:00 am

Earnings: Nike, FedEx, Darden Restaurants

Friday, March 22, 2024

UK Retail Sales

Previous: 3.4%

Time: 3:00 am

Cheers,

Jacquie