Jacque's Post Archives

March 4, 2024

Jacque's Post

(COMPOUND INTEREST IS THE SECRET TO GROWING LONG-TERM WEALTH)

March 4, 2024

Hello everyone,

Week ahead calendar

Monday, March 4, 2024

Switzerland Inflation Rate

Previous: 1.3%

Time: 2:30am

Tuesday, March 5, 2024

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

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

10 a.m. Durable Orders final (January)

10 a.m. Factory Orders (January)

10 a.m. ISM Services PMI (February)

Australia GDP Growth Rate

Previous: 2.1%

Time: 7:30pm

Earnings: Ross Stores, Target

Wednesday, March 6, 2024

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

10 a.m. JOLTS Job Openings (January)

10 a.m. Wholesale Inventories final (January)

10 a.m. FED Beige Book

Canada Interest Rate Decision

Previous: 5.0%

Time: 9:45am

Earnings: Campbell Soup

Thursday, March 7, 2024

8:30 a.m. Continuing Jobless Claims (02/24)

8:30 a.m. Initial Claims (03/02)

8:30 a.m. Unit Labour Costs final (Q4)

8:30 a.m. Productivity SAAR final (Q4)

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

3 p.m. Consumer Credit (January)

Euro Area Interest Rate Decision

Previous: 4.5%

Time: 8:15 am

Earnings: Broadcom, Costco Wholesale, Kroger

Friday, March 8, 2024

8:30 a.m. Hourly Earnings preliminary (February)

8:30 a.m. Average Workweek preliminary (February)

8:30 a.m. Manufacturing Payrolls (February)

8:30 a.m. Private Nonfarm Payrolls (February)

8:30 a.m. Unemployment Rate (February)

Macroeconomic concerns will take center stage for investors this week. Fed Chair Jerome Powell is set to give his semiannual monetary policy update to the House of Representatives on Wednesday, and the Senate on Thursday, testimonies that will be dissected by traders for any insight into when lower rates are coming.

Rate cuts are now expected to start later in the year and Wall Street forecasts fewer of them.

U.S. debt now stands at nearly $34.4 trillion. It rises by $1 trillion about every 100 days.

Turkish annual inflation soars to 67% in February. And we think we have problems!

Next Bitcoin target: $68,550.

Albert Einstein called compound interest the eighth wonder of the world. “He who understands it, earns it. He who doesn’t, pays it.” Obviously, without it, we would all be poorer. Compound interest describes the ability to earn not only interest on the principle but also reinvested interest on the interest.

Warren Buffett believes successful investing is like rolling a little snowball down a very long hill – the longer the hill, the bigger the snowball.

Buffett advises that even with a small sum to start, one can accumulate wealth significantly throughout one’s life. For example, $10,000 with compound interest of 10% annually is worth almost $175,000 in 30 years, more than $450,000 in 40 years and $1.17 million in 50 years.

Buffett bought his first stock, Cities Service Preferred for $38 a share at the age of 11. By 16, he had amassed the equivalent of $53,000 in today’s dollars.

In 1965, Buffett took control of the troubled textile manufacturing company Berkshire Hathaway and began using it as a holding company for the many businesses and stocks he purchased over the following decades.

Today, his conglomerate owns everything from BNSF Railway (the old Burlington Northern Santa Fe) to ice cream shop chain Dairy Queen, from auto insurer Geico to 6% of Apple, boasting a total market value above $900 billion.

“The elementary mathematics of compound interest is one of the most important models there is on earth.”

REITS: I wrote recently about some REITS. For those who wanted a recap on the names I mentioned, they are listed here: Realty Income, data centers, Prologis and Equinix, senior housing facilities, Ventas and Welltower.

Cheers,

Jacquie

March 1, 2024

Jacque's Post

(UBER JOINS THE DOW TRANSPORTS, WHILE MICROSTRATEGY GOES ON A BITCOIN SPENDING SPREE)

March 1, 2024

Hello everyone,

Welcome to March.

Uber joins the Dow Transports

Unlike the Dow Industrials, the Dow Jones Transport is not hitting historic highs. The last high was hit in November 2021, and it is now almost 7% below that mark.

Under Dow Theory, the Transports should confirm a new high in the Dow Industrials. The theory is that if you were shipping more, which is what the Transports represent, it’s a positive sign. Uber is not a shipping company, but then neither is Avis, and it is listed in the Transports too. It’s a ground transportation company like Uber. Uber did underperform after its inclusion but shot up again after its first buyback announcement of $7 billion was made on Feb. 14. Uber has far outperformed every other Transport stock in the past 12 months, up 133%. The top performer on the Transports, Matson, is up 68%, while Union Pacific, Old Dominion, CSX, and Kirby are up around 20% to 30%. Uber is overbought as shown in the chart. Wait for a sizable pullback.

The gender pay gap continues.

Men continue to outstrip women in the salary stakes, with men’s annual salary $11,542 greater than women’s, according to newly released data for Australian private companies. It’s a gap of 14.5%, down from last year’s 15.4%. In 2022-23 men’s median annual base salary was $79,613 compared to $68,071 for women. Thank goodness investment returns don’t discriminate based on gender. Investment/trading returns/success is mostly based on behavior.

Under Sea Carbon Storage – a technological leap.

Germany aims to cut its emissions to “net zero” by 2045. To achieve this the country plans to enable underground carbon storage at offshore sites. Specifically, Germany foresees enabling the transport of carbon dioxide and its storage under the sea in Germany’s exclusive economic zone, except in marine conservation areas.

Last year, Denmark launched an ambitious project that aims to bury vast amounts of carbon dioxide beneath the North Sea.

MicroStrategy dosed up on Bitcoin.

MicroStrategy has been buying up Bitcoin in large parcels recently. The latest purchases were made with cash between Feb. 15 and Feb. 25, according to a filing with the US Securities and Exchange Commission on Monday. The company now has a total basket of around 193,000 Bitcoin.

Michael Saylor, the chairman and co-founder of MicroStrategy, started buying Bitcoin in 2020 as an inflation hedge and alternative to holding cash. Bitcoin is up 460% since Saylor began buying. The value of the holdings briefly swelled to $10 billion earlier this month when the price of Bitcoin reached a more than two-year high. With Bitcoin halving coming soon, this stock is one to watch. It could well be a buy the rumour, sell the fact sort of event. When Bitcoin rises, this stock will rise along with it and vice versa. So, perhaps with a Bitcoin target of around $127,000.00, it might not be a bad idea to buy a small parcel when MicroStrategy does pull back.

Cheers,

Jacquie

February 28, 2024

Jacque's Post

(AI TO THE RESCUE WITH CYBERSECURITY THREATS)

February 28, 2024

Hello everyone,

Globally cybersecurity attacks cost an estimated $8 trillion in 2023. Yes, that’s just one year. And that cost is set to rise to $10.5 trillion by 2025, according to Cybersecurity Ventures.

According to CEO Sundar Pichai, intelligence tools could help governments and companies speed up the detection of – and response to – threats from hostile actors.

With the real possibility of AI getting into the wrong hands, everyone is right to be worried. It is really a two-edged sword because while AI can strengthen defenses against nefarious actors, those same actors can also take advantage of this smart technology and exert pressure on governments and/or companies. It comes down to the fact that if you can run a little bit faster than your adversary you will triumph. Take time away from your opponent. And that is what AI will be designed to do for companies.

Last week, Google announced a new initiative offering AI tools and infrastructure investments designed to boost online security. A free, open-source tool dubbed Magika aims to help users detect malware – malicious software. Pichai said the tools were already being used in the company’s products, such as Google Chrome and Gmail, as well as its internal systems.

Companies are also starting to respond robustly to AI-generated “deepfakes” designed to deceive voters in election years. This can’t come soon enough, in my opinion, as the internet becomes an increasingly important sphere of influence for both individuals and state-backed malicious actors.

Former U.S. Secretary of State Hilary Clinton on Saturday described cyberspace as “a new battlefield.”

A report published last week by Microsoft found that state-backed hackers from Russia, China and Iran have been using its Open AI large language model (LLM) to enhance their efforts to trick targets.

Russian military intelligence, Iran’s Revolutionary Guard, and the Chinese and North Korean governments were all said to have relied on the tools.

Cheers,

Jacquie

February 26, 2024

Jacque's Post

(VOLATILITY LIKELY IN THE NEXT TWO WEEKS AFTER CHINESE NEW YEAR ENDS)

February 26, 2024

Hello everyone,

We are in the final week of February. Corporate earnings are winding down. But there will be plenty of economic data being released this week to keep us on our toes. One to watch will be the January personal consumption expenditure report after the consumer price and producer price reports earlier this month came in hotter than expected.

Week ahead calendar

Monday, February 26, 2024

8 a.m. Building Permits final (January)

10 a.m. New Home Sales (January)

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

Japan Inflation Rate

Previous: 2.6%

Time: 6:30 pm ET

Earnings: Fidelity National Information Services, Domino’s Pizza

Tuesday, February 27, 2024

8:30 a.m. Durable Orders (January)

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

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

10 a.m. Consumer Confidence (February)

10 a.m. Ri9chmond Fed Index (February)

Earnings: eBay, First Solar, ExtraSpace Storage, Axon Enterprise, Norwegian Cruise, Line Holdings, J.M. Smucker, AutoZone, Lowe’s

Wednesday, February 28, 2024

8:30 a.m. GDP Chain Price second preliminary (Q4)

8:30 a.m. Wholesale Inventories SA preliminary (January)

1:45 p.m. New York Federal Reserve Bank President and CEO John Williams keynote remarks in an event LIA Regional Economic Briefing, New York.

Earnings: HP, Monster Beverage, Salesforce, TJX Cos, Paramount Global.

Thursday, February 29, 2024

8:30 a.m. Continuing Jobless Claims (02/17)

8:30 a.m. Initial Claims (02/24)

8:30 a.m. PCE Deflator (January)

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

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

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

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

11 a.m. Kansas City Fed Manufacturing Index (February)

8:10 p.m. New York Federal Reserve Bank President and CEO John Williams moderated a discussion in an event at Citizens Budget Commission 92^nd Annual Gala, New York.

Earnings: Hewlett Packard Enterprise, Autodesk, Best Buy, Bath & Body Works,

Hormel Foods.

Friday, March 1, 2024

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

10 a.m. Construction Spending (January)

10 a.m. ISM Manufacturing (February)

10 a.m. Michigan Sentiment final (February)

Euro Area Inflation Rate

Previous: 2.8%

Time: 5:00 am ET

Prediction:

Over the next two weeks volatility returns to the market.

VIX- should break out to the upside.

Markets should correct to the downside.

Crude oil may rise as markets correct.

Bitcoin continues to rise.

Nasdaq- We reached 18,000 and capitulation hit. A reasonable possibility is for tech to fall toward the 200-day MA at around 16,000. First targets are 17,501, and then 16,678.

The U.S.$ will continue to rise for a while – the yen will weaken, and the Euro will fall.

As the U.S.$ goes up Gold will have one more downside push. This is the time to accumulate your one- and two-year out of the money LEAPS in Gold and Silver stocks and even Platinum. Keep averaging in. Gold could fall towards the 1960 -1952 target area.

The peak is coming in the U.S.$. Then we will go to long currencies.

Home Depot and Walmart are stocks to watch as they will show how much disposable income people have in the U.S. If we see data showing less disposable income it will be an early sign of things to come a year from now. Visa and Mastercard are also worth watching.

Warren Buffett’s annual letter has been released. The first without his long-time partner, Charlie Munger, who passed away last November at the age of 99.

Here are three takeaways from that letter to his shareholders.

1/ Quality

“We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring.

Always buy low.

Some of Buffett’s portfolio stocks include Apple, Bank of America, Coca-Cola, and Chevron.

2/ Invest long

“When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable.”

3/ The bigger picture

Buffett’s flagship business, the freight rail giant BNSF is facing earnings headwind, a crunch in margins, and rising costs.

“Rail is essential to America’s economic future. It is clearly the most efficient way – measured by cost, fuel usage, and carbon intensity – of moving heavy materials to distant destinations. Trucking wins for short hauls, but many goods that Americans need must travel to customers many hundreds or even several thousand miles away.

Buffett notes that “a century from now BNSF will continue to be a major asset of the country and Berkshire.”

Cheers,

Jacquie

February 21, 2024

Jacque's Post

(WITH TECH TOPPY, INVESTING IN REITS NOW COULD BE REWARDING)

February 21, 2024

Hello everyone,

Five stocks – Apple, Microsoft, Nvidia, Amazon, and Meta Platforms – appear to be driving global markets. Euphoria about artificial intelligence and its potential to bolster profits have seen these stocks rally strongly in the past year.

This lack of diversification is concerning as it puts the U.S. and the world at risk. All it takes is for one or two of these names to stumble or waver, and the ramifications could be felt globally.

The party around these stocks may wind down at the end of this year.

Make sure you are diversified in your portfolio.

Is it a good time to invest in real estate?

I’m talking about REITS or direct ownership.

Inflation and interest rates have put significant pressure on several sectors – especially real estate. But if we are forecasting interest rates to decline over the next 12 months, now might be an opportune time to invest.

Commercial properties occupied by tenants such as drugstores, retailers, food outlets, and gas stations are not overly sensitive to economic conditions and can post gains even if a recession hits. One name to consider here is Realty Income. Its portfolio includes over 13,000 commercial properties with a 98.8% occupancy rate.

Kevin Brown, equity analyst at Morningstar points out that Realty Income has a triple net lease structure, which means their tenants are responsible for everything – all expenses that can be generated by the property. Furthermore, Brown says that the company is part of the S&P 500 Dividend Aristocrat index and has raised its dividend payout for 25 consecutive years. The REIT has a 5-year average dividend yield of 4.5% and is trading at around a 10% discount to net asset value – a key measure of a REIT’s value – according to FactSet data.

There is also an opportunity in data centers. There is a supply shortage now in conjunction with the severe demand spike due to AI. Data-centred focused REITs include Prologis and Equinix.

Prologis – which owns almost 800 properties globally, including several data centers – is trading at a premium of around 4% to net asset value. Equinix with 250 data centers, is trading at a premium of around 17% according to FactSet data.

As the baby boomer generation ages, we can also think about senior housing facilities. Welltower has exposure to senior housing, outpatient care facilities, and care spaces. Ventas is another REIT which has over 1,400 properties including senior housing facilities and outpatient medical buildings across the U.S., U.K., and Canada. According to FactSet Ventas is trading at a discount of around 3% to its net asset value, while Welltower is trading at a premium of around 55%.

“Personal finance is only 20% head knowledge. It’s 80% behavior!” Dave Ramsey

Happy Wednesday.

Cheers,

Jacquie

February 20, 2024

Jacque's Post

(WHEN IT COMES TO INVESTING DIVERSIFICATION IS KEY)

February 20, 2024

Hello everyone.

The darling of the AI space reports this week. (We all know which stock that is.) And investors will watch closely to see if the frenzied rally will fizzle or fly higher. Even if Nvidia meets or beats expectations, the stock may pull back because of profit-taking.

The path forward for interest rates will also be a talking point this week as the Federal Reserve meeting minutes are also set to be released on Wednesday. The CME Fed Watch Tool reveals that markets are now pricing in only a roughly 50% chance of a quarter percentage point cut in June, based on interest rate futures trading.

There are multiple factors keeping investors on edge about equity markets. High valuations in mega-cap tech stocks, the potential for downside risk in interest rate sensitive sectors such as regional banks, geopolitical risks, and possible volatility around the U.S. election later this year. Many investors believe any of these may limit upside in the equity markets.

Isn’t diversification key here?

If you are wringing your hands about stocks, balance out your portfolio with some bonds. When you invest in the market, you must be comfortable with a certain amount of risk, but having some weight in bonds, if risk materializes out of nowhere, is going to pay if volatility rips through the stock market. With all that being said, any 5-10% pullback in stocks should be seen as an opportunity to buy back in. When rate cuts do happen, they will be fuel for small caps, which have underperformed this year. The Russell 2000 is ahead just 0.7% in 2024.

Markets are closed Monday in celebration of the President’s Day holiday.

Week ahead calendar

Monday Feb. 19, 2024

Presidents Day Holiday

Australia RBA Meeting Minutes

Previous: N/A

Time: 7:30 pm ET

Tuesday, February 20, 2024

10 a.m. Leading Indicators (January)

Canada Inflation Rate

Previous: 3.4%

Time: 8:30 am ET

Earnings: Public Storage, Palo Alto Networks, Diamondback Energy, Caesars Entertainment, Walmart, Home Depot.

Wednesday Feb. 21, 2024

2 p.m. FOMC Minutes

Earnings: Nvidia, Marathon Oil, Etsy, Analog Devices, Exelon.

Thursday Feb. 22, 2024

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

8:30 a.m. Continuing Jobless Claims (02/10)

8:30 a.m. Initial Claims (02/17)

9:45 a.m. PMI Composite preliminary (February)

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

9:45 a.m. S&P PMI Services preliminary (February)

10 a.m. Existing Homes Sales (January)

Earnings: Booking Holdings, Live Nation Entertainment, Intuit, Edison International, Dominion Energy, Moderna, PG&E, Keurig Dr. Pepper

Friday, Feb. 23, 2024

Euro Area Business Climate (DE)

Previous: 85.2

Time: 4:00 am ET

Earnings: Warner Bros, Discovery

REVIEW

S&P500

The S&P is playing cat and mouse with the 5,000 level – now considered a Big Number, a sort of psychological resistance, which may continue for a while yet. Any sustained break above the 5,048 high of February 12^th signals the resumption of Uptrend.

Support lies at 4,920, 4,850/4,820.

GOLD

Gold has been undergoing a broad corrective consolidation, which may be morphing into a larger Symmetrical Triangle pattern. On every pullback, keep accumulating small parcels in gold/silver stocks – average in.

BITCOIN

Uptrend in progress. Using Elliott Wave analysis, Bitcoin is interpreted to be advancing toward its next target around $57,000.

The Bigger Picture remains bullish with the potential to advance toward Key $69,000 resistance and beyond.

Ethereum also presents a bullish picture.

Something to keep in mind…

When investing in equities it pays for individual investors to be long-term investors as opposed to traders.

Cheers

Jacquie

February 14, 2024

Jacque's Post

(CHECKING IN ON MARKET SECTORS)

February 14, 2024

Hello everyone,

Markets suffered a jolt early in the week after the January inflation report showed stubborn inflation is a thorn in the side for the Fed. So, the question is not only when the Fed will cut rates, but by how much. March is definitely off the table, as is May. We were all expecting June to be the month we could see the Fed cutting, but let’s not write it in ink yet.

So, markets are off their highs. Will that pullback continue? In the short term – I believe so.

The Chinese New Year is celebrated from the 10^th to the 24^th of February, and we are in the Year of the Wooden Dragon.

U.S. dollar – there is more upside ahead for the dollar. Therefore, we will see further downside in the Euro, Aussie dollar, Kiwi and the metals.

Gold – as the dollar moves up gold will continue to correct. This is the time to be accumulating positions in Gold. Keep averaging into stocks (GOLD), (GDX), (WPM), (SIL), (SLV) and building more out-of-the-money LEAPS positions in GOLD and other stock positions.

Spot gold 1951 – 1965 is a very good purchasing area in gold. Keep buying all the way down to this zone in Gold.

After these lows we are headed up to new highs.

Daily gold spot chart

Look for targets in gold at levels 2191, 2370 and 2547.

Gold defends against inflation and market corrections.

Silver – like gold, expect more weakness. Spot silver 2068 – 2100 = strong buy territory.

Daily spot silver chart

Nasdaq – we hit 18,000 and almost immediately the market turned on its heel.

Next support levels are 17407 and 17140. Strong support line at 16774.

Nasdaq 100 Daily chart

Bitcoin – target is $57,885. $40,000 offers strong support.

Daily Bitcoin chart

Cheers,

Jacquie

February 12, 2024

Jacque's Post

(INDIA SHINES AMONGST EMERGING MARKETS)

February 12, 2024

Hello everyone,

The S&P500 has hit 5000. The question now is do we consolidate here or just march higher?

My advice: Watch for volatility and a possible very healthy correction after the Chinese New Year festivities close.

Going forward, better-than-expected earnings results as well as signs of easing inflation, a strong labor market, and a more resilient economy point to a rosier outlook than many anticipated going into 2024. Therefore, when we have a market weakness, look at it as an opportunity to add exposure if you haven’t already.

More big earnings results in the week ahead include Arista Networks, as well as Marriott International, Occidental Petroleum, Deere, and Applied Materials.

Wall Street gets more inflation data, and investors expect it will continue to confirm the recent downward trend. Last Friday, stocks rose after December’s inflation reading was revised even lower than previously reported.

Gold – we are in corrective consolidation awaiting a breakout.

Bitcoin – uptrend in progress. Heading towards $57,000. The bigger picture remains bullish, with the potential to advance to extend toward the Key $69,000 resistance and beyond.

Week ahead calendar

Monday Feb. 12, 2024

2 p.m. Treasury Budget (January)

Australia Consumer Confidence Chg.

Previous: -1.3%

Time: 6:30 pm ET

Earnings: Arista Networks, Waste Management

Tuesday Feb. 13, 2024

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

8:30 a.m. CPI (January)

Earnings: MGM Resorts International, Airbnb, Welltower, Akamai Technologies, Marriott International, Howmet Aerospace, Molson Coors Beverage, Coca-Cola Co., Hasbro, Ecolab, Biogen

Wednesday, Feb. 14, 2024

UK Inflation Rate

Previous: 4%

Time: 2:00 am ET

Earnings: Occidental Petroleum, Albemarie, Kraft Heinz, Generac.

Thursday, Feb. 15, 2024

8:30 a.m. Continuing Jobless Claims (02/03)

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

8:30 a.m. Initial Claims (02/10)

8:30 a.m. Empire State Index (February)

8:30 a.m. Philadelphia Fed Index (February)

8:30 a.m. Retail Sales (January)

9:15 a.m. Capacity Utilization (January)

9:15 a.m. Industrial Production (January)

9:15 a.m. Manufacturing Production (January)

10 a.m. Business Inventories (December)

10 a.m. NAHB Housing Market Index (February)

UK GDP Growth Rate

Previous: 0.3%

Time: 2:00 am ET

Earnings: Deere, Applied Materials

Friday Feb. 16, 2024

8:30 a.m. Building Permits preliminary (January)

8:30 a.m. Housing Starts (January)

8:30 a.m. PPI (January)

10 a.m. Michigan Sentiment preliminary (February)

If we focus on emerging markets, India seems to come out on top for investors looking for long-term growth. And one ETF appears to have done a great job at capturing those returns compared to its peers.

I’m talking about the Wisdom Tree India Earnings ETF (EPI). It has nailed a total return of 6.6% through Feb. 8, according to FactSet, and is up 18.7% over the past three months.

That makes it the best performing of the five biggest India ETFs with the iShares MSCI India ETF (INDA) and the Franklin FTSE India ETF (FLIN) both up less than 4% year to date. The Wisdom Tree fund is also beating the S&P 500 which is up less than 5% over the same period.

The Wisdom Tree fund has been a long-term winner as well, with an average annualized return of roughly 12% over the past decade.

Jeremey Schwartz, Wisdom Tree's global chief investment officer explains that EPI is based on an index that weights stocks by their total net income, which keeps investors from overpaying for growth.

What makes India particularly attractive is its population profile, which is indicative of a long-term growth story.

EPI’s outperformance could also be explained by its broader collection of stocks. The fund has more than 400 holdings, including some smaller-cap companies, significantly more than some of its key competitors. Schwartz points out that most of the large-cap indexes for India today hold 50, 75, or 100 stocks. EPI is out in front with 400. The fund holds $2.5 billion in assets.

Something to note is that the fund itself has an expense ratio of 0.85%. The iShares INDA ETF has a 0.65% expense ratio and Franklin Templeton (FLIN) comes in lowest at 0.19%.

Cheers,

Jacquie

February 9, 2024

Jacque's Post

(SUMMARY OF JOHN’S WEBINAR FEBRUARY 7, 2024)

February 9, 2024

Hello everyone,

Title: New All-Time Highs

Performance:

February +2.04%

2024 YTD = -2.24%

51.27% - average annualized return

674.39% since inception

Positions:

(MSFT) 2/$330/$340 call spread

(AMZN) 2/$130/$135 call spread

(V) 2/ $240/$250 call spread

(PANW) 2/$260/$270 call spread

(CCJ) 2/$38/$41 call spread

Total Net Position 50.00%

The Method to My Madness

The one risk to my hyper-bullish scenario is that the economy doesn’t land at all and overheats forcing the FED to RAISE rates.

Focus remains on AI 5 with spectacular earnings announced last week.

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

Saudi Arabia forced to cut oil production goals because of weak China demand.

Domestic plays have gone silent awaiting actual rate cuts.

Buy stocks and bonds but only after substantial dips.

Commodities and industrials are a second half play, we will keep rotating back and forth all year with tech.

The Trader’s Dilemma

The choice is now between 5 stocks that have gone up for 31/2 months, or a dozen interest rate sectors that may be dead money for four months.

Avoid the frustration trade, the one you should have done on October 26, look for the next one.

Wait for the ideal AI entry point, no matter how long it takes.

A big chunk of 2024 performance was pulled forward into 2023 and you made that money.

The sole exception is energy, which is driven by demand from the Chinese economy.

With markets at all-time highs 90-day T-bills are still yielding 5.43%.

The Global Economy – Beginning

Nonfarm Payroll Report comes in hot at 353,000.

The headline unemployment rate held at 3.7%.

The Fed turns dovish, with all members expecting the next move to be a rate cut.

Job openings hit a three-month high, while fewer Americans quit their jobs.

IMF upgrades Global Growth Forecast on the strength of the US by 0.2% to 3.1%

Chinese fiscal stimulus and a strong performance by large emerging market economies all contributed to the slightly brighter picture.

U.S. GDP rocketed by 2.5% in 2023, cementing its position as the strongest major economy in the world. Q4 came in at a hot 3.3%

Stocks – New Highs!

SPY breaks to new high on strong consumer sentiment.

Big tech continues to dominate.

Market will continue to revalue all AI plays.

Biden to Announce Massive Chip Subsidies, to head off a coming shortage driven by AI.

Bull move could continue into February as investors are under-invested, or even short.

Regional Banks get another Scare, as New York Community Bank drops by half.

Domestic plays have gone back to sleep on rising rates.

The flip-flop continues between tech and domestics.

Bonds – Back to Life

U.S. Treasury borrowing to hit $760 billion in Q1, some $55 billion less than expected.

Q2 then drops to only $202 billion.

Bonds rallied on the good news.

U.S. Budget funded only until March 8.

Bonds could be the Big Trade of 2024.

Markets are discounting three cuts starting in May 2024 more likely.

Junk bond ETFs (JNK) and (HYG) are holding up extremely well with a 6.50% yield and 18-month high.

John is looking for an $18 - $28 point gain in 2024 with interest.

Buy (TLT) on the dip.

Foreign Currencies – US$ back in charge

Foreign currencies give up 2024 gains because of the return of higher U.S. interest rates.

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.

Bank of Japan eases grip on bond yields, ending its unlimited buying operation to keep interest rates down.

China markets dive, on news that the central bank was forced into the currency markets to support the yuan.

(FXA) to rally on coming bull markets in commodities.

Buy (FXY) on dips.

Energy & Commodities – Saudi Arabia Cuts

Saudi Arabia cuts oil production target – cratering prices and destroying the entire energy sector.

Lack of demand, especially from China, is the reason.

New U.S. output is fuel on the fire.

Production will be throttled back a million barrels to 12 million barrels a day as a long-term goal.

Freeport McMoran kills it, with an earnings upside blowout, taking the stock up 5%.

Political problems in Chile and Peru are an issue, which generates 40% of the world’s copper.

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

China in free fall is destroying the oil market, the world’s largest energy consumer. There is a “BUY” setting up here in energy when the global economy reaccelerates on a lower interest rates world. Watch (XOM) and (OXY).

Precious Metals – Begging for a Breakout

Gold trending sideways awaiting decisive breakdown in interest rates.

Gold needs a return of falling interest rates to resume rally.

Miners are lagging gold performance but will play catch up.

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

Gold headed for $3000 by 2025 but backing off first from new all-time highs.

Silver is the better play with a higher beta.

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

Real Estate – Gearing up for Spring.

S&P Case Shiller Falls in November for the first time in nine months.

This was back when mortgage rates were peaking at 8.0%.

New Home Sales recover on a falling interest rate push, up 8.0% to 664,000.

Sales increased 4.4% on a year-on-year basis in December.

DR Horton misses in a rare sign of weakness in the new home building industry taking the shares down 10%. This industry has a gale force demographic tailwind.

Tight supply and still-strong demand have kept pressure on home prices.

Do you live in Buffalo, New York? If so, you have the good fortune to occupy the hottest housing market in 2023.

Trade Sheet

Stocks – buy 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.

Cheers,

Jacquie

February 7, 2024

Jacque's Post

(THREE STOCKS TO BUY IN 2024)

February 7, 2024

Hello everyone,

The stock market has started the year in a positive mode with big tech rallying strongly. The S&P 500 is up around 4% year to date after a 24% rise in 2023.

What could sour the mood?

Political tensions, still-high inflation levels, and uncertainty about when the U.S. Federal Reserve will cut interest rates.

All these factors have raised questions about which sectors – and stocks – will outperform looking ahead.

Let’s concentrate on three, I believe will perform well this year.

1/ Microsoft (Stock Price as of 02/06/24 - $403.66)

This company has a focus on cloud computing and mobile technology. Microsoft’s Windows operating system dominates the PC market globally at around 90%. Robust revenue from other segments like Azure, Office 365, and Dynamic CRM are contributing to revenue.

Last week, Microsoft reported a 17.6% year-over-year increase in its revenue for its quarter ending Dec. 31.

Microsoft has a huge diversity in software applications making it a key player in digital transition. It has a strong presence in cloud infrastructure and ties with Open AI making it well placed to meet the rising demand for generative AI.

Over the last 12 months, shares in Microsoft are up almost 60%. Of 52 analysts covering the stock, 48 give it a buy or overweight rating at an average price of $460.37, according to FactSet data. This gives it an upside potential of almost 12%.

My Recommendation: Buy the stock on dips. Average in.

Option Recommendation: One-year LEAPS out of the money.

2/ ExxonMobil

Despite the mixed sentiment on the energy sector presently, amid ongoing geopolitical uncertainties and fluctuating oil prices, I am optimistic about this stock for the long term.

Last week, the stock reported quarterly earnings that beat analysts’ expectations, but profit fell compared to a year before on lower oil prices.

Let’s scan the long-term horizon for this stock.

# Long-term potential from low-carbon investments.

# Strong balance sheet supporting higher capital returns.

A key catalyst is in the pipeline for Exxon with its acquisition of Pioneer Natural Resources valued at almost $60 billion. The deal is expected to close by mid-2024.

Production volume in the Permian Basin located in West Texas and New Mexico is tipped to more than double to 1.3 million barrels of oil equivalent per day once the deal closes.

Other opportunities include growth prospects from the company’s discoveries in Guyana between 2025 and 2026.

Over the last 12 months shares in ExxonMobil are down over 8%.

Of 29 analysts covering the company, 19 have a buy or overweight rating on the stock at an average price target of $124.94, giving it an upside potential of around 22.5%, according to FactSet data.

My Recommendation: Buy small parcels in this stock now. Average in.

For those who trade Options: One-year LEAPS out of the money. You could look at 105/110 or even 110/115. Expiration: January 17, 2025.

You can buy the stock or do the option or do both.

Analyst Price Projections for ExxonMobil

Barrick Gold (Stock Price as of 02/06/24 - $15.09)

Beyond tech and energy, metals get a big tick also, and I favor Canadian miner Barrick Gold here.

There is a positive outlook on gold due to geopolitical uncertainties, making it a reliable safe haven investment during economic challenges. Spot gold prices are up around 7.5% over the last 12 months.

Kevin Teng, CEO of Wrise Wealth Management Singapore argues that despite the lag in performance among gold miners compared to the rising gold prices since 2023, Barrick Gold, being one of the largest gold miners, is poised to benefit from the expected price recovery.

Teng goes on to explain that he is expecting a “sequential improvement” in the company’s output following the expansion in its production of copper production to 240,000 metric tons from the current 150,000 metric tons in its Lumwana copper mine in Zambia. A similar boost in production levels is also expected at its Reko Diq copper-gold project in Pakistan.

So, it is apparent that Barrick Gold’s expansion plans collectively position it for potential growth in the coming year.

Shares in Barrick Gold are down over 15% over the last 12 months.

Of 23 analysts covering the company, 16 have a buy or overweight rating on the stock at an average price target of 29 Canadian dollars ($21.52), giving it an upside potential of almost 40%.

My recommendation: Buy the stock in small parcels. In other words, average in.

If you trade options, I suggest one-year LEAPS. You could look at the 15/17 January 17, 2025, Bull call spread LEAPS.

You can just buy the stock or just do the option. Some people buy the stock and do the option. It’s your choice as are the number of shares or options you purchase.

Cheers,

Jacquie