(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

 

(THE AI REVOLUTION IS CHANGING RURAL AMERICAN LANDSCAPES & CREATING BILLION-DOLLAR PARTNERSHIPS)

March 13, 2024

 

Hello everyone,

Data centres are the new warehouses.

I wrote several weeks ago about REITS and how data centres are featured in that list.  Well, they will be popping up in rural America in big numbers in the future in response to the growing interest in AI.

Prologis, the $100 billion-plus real estate giant, could invest more than $25 billion into this sector in the coming years.  Big tech companies and venture capitalists are pouring billions into generative AI efforts based on its potential to reshape our virtual realities. 

The building boom reflects the physical infrastructure required to make that virtual world a possibility.  And it’s having very real-world consequences.  These data centres are being placed in rural America, which is impacting communities and changing the landscape both socially and culturally and putting added demands on utilities.  The story of how this construction boom pans out and how it affects communities across America is ever-changing.

An AI stock that is gaining traction – SoundHoundAI (SOUN)

This artificial intelligence voice-and-speech stock has surged almost 170% this year and nearly 340% in February alone as investors bet on new applications for the booming technology trend that has taken Wall Street by storm.  Last month, Nvidia (NVDA) revealed a $3.7 million bet on the stock in a securities filing, and management said on an earnings call that “demand is going through the roof.”

According to analysts, this stock is in a great position to capture the AI chatbot market demand wave with its technology providing more use cases going forward. Nvidia’s investment reinforces SoundHound’s value proposition and solidifies the company’s brand within the AI Revolution.  Furthermore, it lays the foundation for a potential larger investment in the future.

The company sits at a roughly $1.7 billion market capitalization and has yet to attain profitability. 

Nvidia is not the only notable partner in SoundHound’s world.   It has been in the process of expanding its market by setting up partnerships with popular restaurant brands, automakers, and hospitality companies to provide AI voice customer solutions.

Voice-enabled units in the automobile sector are expected to grow to 70% of shipments by 2026, which represents a significant opportunity. 

Analysts note that SoundHound has also made important headway within the restaurant industry, recently adding White Castle, Krispy Kreme, and Jersey Mike’s to its growing list of customers.

SoundHound’s expansion into other companies should continue to grow as major players such as McDonald’s, DoorDash, and Wendy’s hunt for ways to expand AI voice use.  We could see an $11 billion market when we factor in immediate opportunities from quick-service restaurants and original equipment manufacturers.

In short, the future looks bright for SoundHoundAI.

But there could be some bumps in the road on the way to profitability.  Uncertainty is often the case in the early stages of product adoption in relation to the pace of revenue growth and profitability.

But analysts believe that longer-term financial and operating benefits will outweigh profitability headwinds.  The general recommendation is to continue accumulating SOUN shares ahead of stronger operating results.

 

 

 

 

Cheers,

Jacquie

 

(SUMMARY OF JOHN’S MARCH 6, 2024, WEBINAR)

March 8, 2024

 

Hello everyone,

 

Title:  Who Needs the Fed

Performance

March: -0.25%

Since inception: +679.5%

Average annualized return: +51.30% for 16 years

 

Trades

(AMZN) 3/$155-$160 call spread 10%.

(SNOW) 4/$150-$155 call spread 10%.

(TLT) 4/$87-$90 call spread 10%.

 

The Method to My Madness

Overheating risk is rising.

Domestic plays have come back to life; is a sector rotation at hand?

It’s been a great week for falling interest rate plays, including bonds, precious metals, energy, and even uranium.

The economic data is showing a global slowdown, except for the U.S. which is in good shape for now.

Buy stocks and bonds but only on substantial dip.

Commodities & industrials are a second half play.

 

 The Global Economy – Heating Up

The soft landing is in the pipeline, according to the G-20 finance ministers in Sao Paulo.

Upside risks include faster-than-expected disinflation.

Core PCE comes in cool, at 2.8%, as expected.

University of Michigan Consumer Sentiment dips, from 79.6 to 76.9 in February.

The Fed may drag out the end of quantitative tightening.

Weekly Jobless claims up 13,000 to 215,000.

Q4 GDP is revised down from 3.3% to 3.2%.

The Conference Board bails on Recession Call.

 

Stocks – Is the Rotation at Hand?

US stocks now account for 70% of Global Stock Market capitalization, thanks to the ballistic move in big tech.

In his annual letter to Shareholders, Warren Buffett says there is Nothing to Buy.

Analysts are raising their year-end targets.  John’s target is now at (SPX) 6000.

Big tech continues to dominate, with NVDA earnings at $22 billion YOY, up 225%.

Regional Bank – New York Community Bancorp, is in trouble. 

European companies are flocking to the US to List.

 

Bonds – A Great Week

The bottom may be in for Bonds.

90-day T-bills at 5.25% still offer an attractive alternative.

Markets are discounting three rate cuts starting around mid-year.

Junk Bond ETFs (JNK) and (HYG) are holding up extremely well with a 6.37% yield.

John is seeing an $18-$28 point gain in (TLT) during 2024.

Buy (TLT) on dips.

 

Foreign Currencies – On Top Again

US$ holds three-month highs.

Falling interest rates guarantee a falling dollar for 2024.

Buy currencies now to position yourself for a US$ fall.

 

Energy & Commodities – Range Bound

A global commodity rally has dragged oil up.

Slow Chinese growth still drags on the global oil market.

Natural gas rallies 10% on the week.

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

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

There is a “BUY” setting up here in energy when the global economy reaccelerates on a lower interest rate world.  Watch (XOM) and (OXY).

 

Precious Metals – Signs of Life

Precious metals have a great week on slightly falling rates.

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

Gold is headed for $3000 by 2025.

Silver is the better play with a higher beta.

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

 

Real Estate – Getting Ready for the Spring

Existing home sales jump 3% YOY.

Construction spending dives in January in a shocking data release, the worst since October 2022.  A jump in mortgage rates from 6.40% back up to a restrictive 7.0% is probably the cause.

New Home Sales weaken.

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 Webinar

12:00 PM EST Wednesday March 20 from Silicon Valley

 

 

Cheers,

Jacquie