Jacque's Post Archives

December 18, 2023

Jacque's Post

(MARKETS ARE OVERBOUGHT AS THEY COUNTDOWN TO YEAREND)

December 18, 2023

Hello everyone,

Calendar for Week Ahead

Monday, Dec. 18

10 a.m. ET NAHB Housing Market Index

Tuesday, Dec. 19

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

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

Earnings: FedEx

Wednesday, Dec. 20

8:30 a.m. Current Account (Q3)

10 a.m. Consumer Confidence (December)

10 a.m. Existing Home Sales (November)

Earnings: General Mills, Micron Technology

Thursday, Dec. 21

8:30 a.m. GDP Chain Price final (Q3)

8:30 a.m. GDP (Q3)

8:30 a.m. Initial Claims (12/16)

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

10 a.m. Leading Indicators (November)

Earnings: Nike, CarMax

Friday, Dec. 22

8:30 a.m. Durable Orders preliminary (November)

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

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

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

10 a.m. Michigan Sentiment final (December)

10 a.m. New Home Sales (November)

One week until Christmas. Happy Holidays. If you have family around and go all out on the gift-giving and the food, I wish you well and hope the day is memorable for all the right reasons.

Me. I prefer to go to the beach, take an esky, an umbrella, a beach towel, a good book, and soak up some sun and enjoy the warm ocean water. No stress, no hassle, no family arguments. Just a really chill day.

So, at this time of year, the markets are starting to wind down. We have had a great bull move over the last couple of months, and I hope many of you have made good profits this year.

Stocks last Friday registered their seventh straight week of gains. For the S&P 500, that’s the best winning streak since 2017. For the DOW, it’s the best going back to 2019.

This week coming is expected to be a slower one. With the last Fed meeting of 2023 behind us, we are heading into the holidays with few catalysts. But let’s remember, any indication the Fed may not start to cut rates as they suggested in 2024 could hurt stocks. Just stay mindful of this. It will be several data points during the next several months that ultimately matter.

Some notable earnings to look out for include FedEx on Tuesday and General Mills on Wednesday. Results from retail company Nike are also on deck Thursday and should give investors insight into the state of the consumer, as well as clarity into markets abroad, particularly China.

Most investors expect stocks to continue the rally into the final part of the year in the so-called Santa Clause Rally. In other words, the stretch between Christmas Day – Dec. 25 through to January 2.

The rally is broad, and so is lifting all boats. But we are very overbought.

With this in mind, let’s look at some of the most overbought names in the market right now.

Boeing (BA)

FedEx (FDX)

D.R. Horton (DHI)

Equifax (EFX)

Caterpillar (CAT)

Skyworks Solutions (SWKS)

BA climbed about 8% last week. The company announced leadership appointments over the course of the week with Stephanie Pope chosen as operations chief and Brian Moran as sustainability chief. The stock has soared more than 38% this year. Two out of every three analysts have a buy rating on (BA), however, the average analysts expect shares to slide lower in the next 12 months following recent gains.

Cheers,

Jacquie

December 15, 2023

Jacque's Post

(SUMMARY OF JOHN’S DECEMBER 13, 2023 WEBINAR)

December 15, 2023

Hello everyone,

Title: The Fed Wins

Performance:

2023 year to date: +78.86%

Since inception +676.05%

Average annualized return: +52.00% for 15 years

Trailing one-year return: 75.38%

Positions:

90% long, 10% short, 0% cash.

Risk on

(NLY) 12/$15-$16 call spread. 10%

(BRK/B) 12 $320-$330 call spread 10%

(GOOGL) 12 $110-$120 call spread 10%

(CAT) 12 $220 - $230 call spread 10%

Risk off

No positions 0%

Total Aggregate Position = 40.00%

Method to my Madness

The Fed is done raising interest rates. Markets are now discounting the first rate cut which could be as early as March, but more likely June 2024.

All interest rate plays reacted positively to the news – bonds, REITS, precious metals, and financials.

The year-end rally is on, but what happens in January?

All economic data is globally slowing.

Oil prices and commodities are now trading as one, selling off on a slowing economy.

The tech bull market is back and will continue for years.

Time to go aggressively long on stocks and bonds.

Commodities and industrials are a second-half play.

The Global Economy - Shrinking

Non-farm payrolls come in soft in November at 199,000. The headline unemployment rate fell to 3.7%, near a 50-year low.

US GDP revised up to a blistering 5.2%.

S&P Global Services PMI comes in flat at 50.8, but still above the boom/bust level. It’s the 11^th consecutive month over 50 in expansion territory.

Fed’s favorite inflation gauge rises a modest 0.2%, and 3.5% on a YOY basis, a new cycle low.

ISM Services came in at 52.7 versus an estimated 52.4. No recession here, nor a super-heated economy. Another Fed-friendly number.

China moves to further stimulate the economy after many failed efforts. This time through reduced reserve requirements.

Stocks – Buy Back Boom

The year-end rally started on October 26, happened in November, now losing momentum.

Santa came early this year, clearly confusing Thanksgiving with Christmas.

70% of corporate profits went into stock buybacks this year.

Alaska Air Buys Hawaiian for $1.9 billion in a big overpay. (ALK) dropped 15% on the news.

Uber entered the S&P500 on December 18, taking the stock up 10% on the news.

IBM announces New Quantum Computing Chip.

Snowflake delivers a big beat, taking the stock up 10% in hours.

Berkshire Hathaway fails to fall on Munger's death.

Bonds – Blowout Top

Panic buying drives Treasury yields to 4.13%, down nearly a full percentage point in little more than a month on weakening economic data.

US Government to finance million-dollar mortgages, through its Fannie Mae and Freddie Mac finance agencies.

Fed to Cut interest rates as early as March or so says the futures market, which gives this a 40% probability.

Crown Castle International catches activist bid from Elliot Management

Junk bond ETFs (JNK) and (HYG) are holding up extremely well with an 8.74% yield and an 18-month high.

Buy (TLT) on dips.

Foreign Currencies – Massive Yen Reversal

Massive short cover hits Japanese yen, taking it up 10% in days.

The prospect of falling US interest rates adds fuel to the fire.

Buy (FXY) on dips.

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

Japan is the last country to allow rates to rise.

Expect the Japanese yen to take off like a rocket.

The collapse of dollar is a 2024 story.

Energy and Commodities- New Lows

Exploding sales of EVs are ringing the bell for Oil, leading forecasters to speed up their projections for when global oil will peak, as public subsidies and improved technology help consumers overcome the sometimes-eye-popping sticker prices for battery-powered cars.

Oil crashes from $96 down to $68 in less than six months, as fears of a global economic slowdown continue.

US Gasoline prices hit a three-year low on recession fears and replacement concerns by EVs.

Energy stocks are tracking the downside tic for tic, pulling down all other commodities.

There is a BUY setting up here when the global economy reaccelerates on a lower interest rates world. Watch (XOM) and (OXY).

Warm weather is capping rallies in natural gas (UNG).

Precious Metals – A New 10-year bull market

Gold hits a new all-time high – another falling interest rate play.

Sharp drop in interest is very positive for gold.

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

Gold headed for $3,000 by 2025.

Silver is the better play with a higher beta.

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

Real Estate – The Bull is Back

Refi demand rockets, as interest rates plunge to four-month lows.

The rate for the popular 30-year mortgage fell back toward 7% after hitting 8% earlier this fall.

Applications to refinance a home loan index increased 14% from the previous week and were 10% higher than the same week one year ago.

Zombie Malls are a new term you should get used to. People are just not coming back to work.

It’s very bad in San Francisco where tech discovered the wonders of cost-cutting, taking the office vacancy rate up to 35%.

Pending home sales collapse, dropping to the lowest level since the National Association of Realtors began tracking them in 2001.

Tight supply and still-strong demand have kept pressure on home prices, which only continue to hit new highs. S&P Case Shiller hits new highs – 3.9% higher in September.

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 at $12.

Real Estate – buy dips.

Next Strategy Webinar: January 10 from Silicon Valley

Here is a copy of the November Jacquie’s Post zoom meeting. Enjoy!

https://www.madhedgefundtrader.com/meeting-replay-november-2023/

Cheers,

Jacquie

December 13, 2023

Jacque's Post

(THIS SELF-DRIVING CAR TECHNOLOGY STOCK WILL REAP REWARDS FOR ITS INVESTORS)

December 13, 2023

Hello everyone,

Ever heard of Innoviz Technologies (INVZ)?

It’s an Israeli firm, which is listed on the Nasdaq, and it makes sensors and automotive software that are key to enabling driverless cars. The company’s LiDAR (“light detection and ranging”) sensors are used by autonomous vehicles to navigate their surroundings without human intervention.

This is one to sink some funds into. Analysts at three investment banks are arguing that this stock could rise over 400% in the next 12 months.

The company has several major partnerships in the pipeline, including with luxury carmaker BMW which uses Innoviz’s sensors in its advanced driver assistance system for the 7 Series sedan.

Innoviz has also said it has partnerships with Volkswagen and an unnamed major Asian automaker, representing nearly $7 billion in potential revenue over the next decade.

Wall Street has a bullish outlook on this stock.

JP Morgan has the highest price target on Wall Street at $13, implying over 626% returns from current levels. The company’s stock currently trades at $2.20

JPMorgan analysts, Samik Chatterjee and Joseph Cardoso note that they expect the combination of numerous wins, large volume wins, a balance of LiDAR costs and performance, and the ability to support highway autonomy at high speeds to position Innoviz to ramp revenues well through the end of the decade, while cost discipline should drive profitability.

German investment bank Berenberg also sees big potential at the firm, giving it a $12 price target, representing a 570% upside.

The bank’s analyst believes Innoviz is the best-positioned LiDAR player, with around 15% global market share based on expected production volumes.

Analysts at WestPark Capital also expect Innoviz shares to rise by more than 450% to $10 a share over the next 12 months.

Although bullish, other Wall Street brokers are more moderate on the upside for Innoviz shares.

Cantor Fitzgerald analysts expect the stock to rise to $6 a share, which still represents a 235% upside from current levels.

Meanwhile, Rosenblatt analysts believe another top 10 global automaker will select Innoviz for an autonomous driving system by the end of the year. They expect shares to rise 173% to $5.

While optimistic about the self-driving opportunity, analysts do caution that there are risks around competing technologies and regulations that could slow adoption.

High-profile short-seller Citron Research has also backed the company by disclosing a long position in the stock. Citron said Innoviz has over $5 billion in “committed contracts” with most of their customers.

Innoviz posted revenue of $3.5 million for the third quarter, beating Wall Street’s expectations.

The company said the strong result was driven by higher sales volumes of its InnovizTwo sensor and additional non-recurring engineering (NRE) revenue. NRE refers to customers’ upfront cash payments during the development and testing phases.

A stock worth some attention.

Daily Chart

Weekly chart

Cheers,

Jacquie

December 11, 2023

Jacque's Post

(A WEAK U.S. DOLLAR CREATES RIPPLE EFFECTS ACROSS THE WORLD)

December 11, 2023

Hello everyone,

Economic Calendar for the week ahead.

Monday December 11, 2023

Australia Consumer Confidence change

Previous: 2.6%

Time: 6.30 pm ET

Tuesday, December 12, 2023

US Core Inflation Rate

Previous: 4.0%

Time: 8:30 am ET

Wednesday, December 13, 2023

US Interest Rate Decision

Previous: 5.5%

Time: 2:00 pm ET

Thursday December 14, 2023

ECB Interest Rate Decision

Previous: 4.5%

Time 8:15 am ET

Friday December 15, 2023

EA Manufacturing PMI

Previous: 44.2

Time: 4:00 am ET

A weak U.S. dollar has ramifications for investors across the world.

The dollar index measures the US dollar’s value against a basket of six key currencies: the euro, the Japanese yen, the pound sterling, the Canadian dollar, the Swedish krona, and the Swiss franc.

The dollar normally rises when the US Federal Reserve raises interest rates (which it has been doing over the past 18 months) as overseas investors flock to US bonds because of the higher yields that they offer. Now the greenback is overvalued. The US dollar could still rise for the next few months, but by this time next year, it will be lower than where it is now.

As the US dollar is the world’s reserve currency, it is important for a lot of financial products.

So, if it weakens, how does it affect these products?

Commodities

Assets that are denominated in US dollars should do well if the dollar weakens. In other words, if the denominator gets smaller, the price goes higher. A weak US dollar makes dollar-denominated assets cheaper to buy with other currencies.

This should make commodities attractive: all the main raw materials are priced in US dollars, except for cocoa, which is priced in sterling. You could play this through a broad commodity exchange-traded fund (ETF) such as the Wisdom-Tree Enhanced Commodity ETF.

Within commodities, gold is likely to be the biggest winner – it hit a record high of over $2,100 last week, at which point it had climbed 16% in the space of two months.

Gold is benefiting from several different trends: US dollar weakness, central banks buying bullion, expectations that real interest rates will fall, and geopolitical turmoil. If an investor expects the US dollar to weaken then gold is a good asset in which to take a position.

Consider the iShares Physical Gold exchange-traded commodity (ETC) or the Invesco Physical Gold ETC.

Emerging Markets

Historically, when the dollar has been strong, the stock markets of emerging countries have performed worse than developed markets. These periods occurred between 1995 and 2000, and 2012 and 2015.

By contrast, emerging market equities performed well between 2003 and 2007, 2009 and 2012, and 2017 and 2018 – periods when the dollar was weak.

The reason is that many developing nations borrow in US dollars, so weakness in their currency relative to the dollar means it’s more expensive to afford the interest on that debt and to repay their loans.

The opposite is also true; if the dollar is weak relative to their currency, it is cheaper for them to borrow and service their debts.

You could consider a cheap index-tracking fund to take advantage of this, such as the iShares Core MSCI EM IMI ETF or the Fidelity Index Emerging Markets fund.

How does a weak dollar influence the movement of stocks?

When the dollar is weakening it tends to mean that global economic growth and, consequently, risk appetite are strong. This can be positive for equities.

A weaker dollar means that it’s cheaper for non-US companies with US supply chains to import goods. It also means that US exporters’ goods and services are cheaper for overseas customers to buy.

But a weaker dollar can also have a negative impact on companies that sell a lot of goods and services to Americans because those US earnings become worth less when converted back to their base currency.

If you own shares in an ETF that tracks the performance of America’s S&P 500, a weak dollar relative to the pound, for example, will affect your returns.

In the long term, these peaks and troughs tend to even out. In the past five years, the Vanguard S&P500 ETF is up 81.5% in US dollar terms and has gained 83.3% in sterling terms.

December 8, 2023

Jacque's Post

(THE PRESIDENTIAL ELECTION YEAR AND THE STOCKMARKET)

December 8, 2024

Hello everyone,

Welcome to Friday and Non-farm payrolls.

What typically happens to stocks in a presidential election year?

If we look at history, it will give us a guide as to what we can expect.

Stocks are riding high into the end of 2023. All three major averages are coming off five straight weeks of gains, while the S&P has reached fresh highs for the year. The Dow has advanced more than 8%, while the S&P has surged more than 18% and the tech-heavy Nasdaq Composite has rocketed 35% this year.

If we look at history, does it show us that there will be a repeat performance in 2024 when incumbent President Joe Biden runs for re-election? Stock Trader’s Almanac data shows that election years are typically weaker than pre-election years. On average, stocks during pre-election years advance 10.4%, while in election years, they gain 6%.

That still means another positive run for equities – only a more modest rise. We could see the S&P at around the 4,843 level in the S&P 500 at the end of next year.

Chief investment strategist at CFRA Research, Sam Stovall, comments that investors should expect a good year. And he points to history to argue his point here, because historically he argues that we’ve had positive returns in the presidential election year of first-term presidents with a very high frequency of gain and an abnormally high return.

Additionally, he adds that investors should not rule out the Federal Reserve's possibility to cut rates during an election year, as the central bank has either raised or lowered interest rates every election year since 1992.

Investors should take special note of how markets behave during the July 31 to October 31 period. In data going back to 1944, analysts find a rising stock market usually points to the re-election of the incumbent, while a falling market suggests a replacement.

Cruising is back and one stock in particular looks attractive.

2023 has been a great year for cruise lines as people have returned to this form of travel/tourism for their vacation after the height of the pandemic. And demand is expected to continue in 2024. Around 35.7 million passengers are expected to take a cruise next year, up from 31.5 million in 2023 and 6% higher than 2019, according to the Cruise Lines International Association.

Shares of Royal Caribbean have jumped 140% so far this year and hit a 52-week high Thursday. Carnival is up about 120%, while Norwegian Cruise Line Holdings added 51%.

Despite these huge moves up, many Wall Street analysts are still bullish. Analysts argue that a $135 price target on Royal Caribbean is quite possible as demand is strong.

Cruises have a low-cost advantage. While prices have been rising, cruises are about 25% to 30% cheaper than a land-based vacation.

If people are looking for relative value, it is still a cruise.

As long as fundamentals remain stable in the economy, cruise lines should continue their growth post-pandemic.

Cheers,

Jacquie

December 6, 2023

Jacque's Post

(HARVESTING RETURNS FROM COMMODITIES IN 2024)

December 6, 2023

Hello everyone,

In 2024 and 2025, the commodities area that will be a gold mine for investors will be precious metals.

I have been calling for you all to keep scaling into positions in precious metals for the entire year. 2024 will see the metals power up from their present position. And J.P. Morgan agrees.

The firm expects gold prices to hit a targeted peak of $2,300 an ounce.

Why will gold rocket next year?

J.P. Morgan believes slowing U.S. GDP growth will solidify expectations that the Federal Reserve will slash rates to head off a recession, with a cutting cycle equal to 100 basis points in the second half of 2024 pushing gold prices to new nominal highs.

Gold is vulnerable to a retreat toward the $1900 in the coming months, and if this comes to pass, it will set investors up to position themselves for the midyear rally.

Silver will also get a boost. It will push above $30 per ounce on the rate-cutting cycle, according to J.P. Morgan.

We could see a 6% return from precious metals by the end of 2024.

The global economy is expected to slow, but according to J.P. Morgan, it will avoid a recession from 2024 to 2025, which makes it difficult to give a decisive overarching call as to whether commodities as a whole will be bullish or bearish. The bank goes on to say that commodities are unlikely to benefit from inflation next year with core inflation expected to fall to 2.9%.

The price of a barrel of oil is expected to rise according to J.P. Morgan and they see $90 as a target for Brent Crude.

Natural Gas prices on the New York Mercantile Exchange are also forecast to increase according to J.P. Morgan. There will be solid demand growth, though the narrative won’t materialize until the second half of 2024.

J.P. Morgan forecasts the BCOM Energy Index will decline in the first two quarters of next year but deliver an 8% return in the third quarter and ultimately finish out the year with a 10% return.

If we turn our focus to agricultural commodities, we find that the bank has a bullish outlook on sugar with more modest gains across grains, oil seeds, and the cotton market throughout 2024. J.P. Morgan states that the BCOM Agriculture and Livestock Index is forecast to deliver peak returns of 8% in the second and third quarters before declining to 5% at year-end.

Cheers,

Jacquie

December 4, 2023

Jacque's Post

(THE STARS ARE ALIGNING FOR THE S&P500 AS WE STRIDE THROUGH DECEMBER AND INTO 2024)

December 4, 2023

Hello everyone,

The stock market had an extraordinary November. The S&P500 was up 8.9%, its best month since July 2022, and the fourth-best November since 1950.

The set-up for December and into early 2024 is very strong and great for investors.

We’re going into a usually strong seasonal period, with December mostly the third-best month of the year, averaging gains of 1.4%, according to the Stock Trader’s Almanac. The difference with this December is that it is a pre-election year, and December pre-election years are stronger than the other Decembers: up 2.9% on average, up 75% of the time since 1950.

So, start writing that buy list.

Historically, the first part of December is usually the weakest due to tax loss selling. The second half, however, is where most of the gains usually occur, particularly after the quarterly expiration of individual stock options, options indexes, and index futures, which happens on December 15 this year.

Quite apart from seasonals, the macro backdrop is strong too.

10-year Treasury yields have dropped from 4.9% at the start of November to 4.3%.

Inflation is continuing to moderate: October core PCE was in line with expectations at 0.2% month over month and up 3.5% year over year. A little over a year ago, in September 2022, it was 5.5%.

Solid GDP growth: third quarter GDP was raised to 5.2%. The Atlanta Fed’s GDPNow Tracker is predicting a respectable 2.1% growth in the final quarter of the year.

Moderating inflation: Solid GDP growth. Unemployment is still low.

Wall Street is bullish. Most strategists are expecting higher stock prices in 2024.

Market Update

S&P 500

According to Elliott Wave analysis, the market is still rallying to a climatic 5th Wave. However, with bullish sentiment returning to the markets, the market seems “right” for approaching another peak soon. So, we could see around 4,700 before exhaustion and a medium-term pullback.

Gold

Gold has now completed its bullish five-month Inverse Head and Shoulders continuation pattern and will probably rally to $2,210 and $2,250. Support lies at $2000 (max).

Bitcoin

The uptrend is in progress, with a target around $43,000 where we see resistance and probably a medium-term pullback.

Musk and the Cyber Truck.

We finally had the launch of the Cyber truck last week in Austin, Texas, with Musk raving about its qualities, including its towing abilities, and its race-car-like acceleration. He even showed off its bulletproof doors.

Covid’s supply chain shortages and manufacturing problems delayed production by a few years.

Once the current volatility is digested, we should see higher moves in Tesla into 2024.

Love or hate Musk, his behavior can create volatility in the stock and that can potentially be profitable. We could see a move up in Tesla in the first part of the year to around $300.

Scaling in here could be a good move.

Cheers,

Jacquie

December 1, 2023

Jacque's Post

(SUMMARY OF JOHN’S NOVEMBER 29, 2023, WEBINAR)

December 1, 2023

Hello everyone,

Welcome to December and the start of a new season – winter or summer, depending on where you live in the world.

Let’s get into the summary of John’s most recent webinar.

Title: Approaching the Finish Line

December 5-7 Mad Hedge Traders & Investors Summit – 9:00 to 5:00 p.m. EST

Attendance is free. $100,000 in prizes. A wide choice of trading strategies is offered.

Performance:

November 2023- +17.15

Average Annualized Return: +48.57

2023 year to date: +83.32%

Since inception: 680.51%

Positions:

90% Long, 10% short.

Risk On

(MSFT) 12 /$320-$330 call spread

(NLY) 12/$15-$16 call spread.

(BRK/B) 12/$320-$330 call spread

(CCJ) 12/$35-$38 call spread

(CRM) 12/$185 - $195 call spread

(GOOGL) 12/ $110-$120 call spread

(SNOW) 12/$135-$140 call spread

(CAT) 12/ $220- $230 call spread

(XOM) 12/ $97-$100 call spread

Risk Off

(TLT) 12/$95-$98 call spread

Expiration Value: +86.17%

The Method to My Madness:

This is not the time to be buying stocks. It appears the Fed is done raising rates and markets are now discounting the first rate cut in March.

Bonds, REITs, precious metals, and financials have all responded.

We will probably continue this rally until the end of the year, but what happens in January?

The government shutdown is delayed until February – and markets have responded well to this.

Oil prices and commodities are now trading as one – selling off on a slowing economy.

After a rest, the tech market is marching higher again, which will probably continue for many years.

Go long stocks and bonds on any pullbacks in the market.

Commodities and industrials are a second-half play.

Stocks – Best in 18 months:

Just saw the fastest 10% rise in history.

Big tech leads, with financials catching up and energy suddenly cheap.

Company buybacks are about to increase, as companies race to pick up their stocks before the yearend deadline.

Apple is the top buyback stock followed by Alphabet (GOOGL) and Microsoft (MSFT)

Money is pouring into Defence ETFs, like (PPA) and (ITA), with $600 million entering the sector.

Fisker dives 18% after a disastrous earnings report. Companies trying to challenge TSLA are coming off second-best.

Short seller, Jim Chanos shuts down after a large short in TSLA shares blew up. His capital diving from $6 billion to $200 million.

2024 favorite sector is cyber security. Look at PANW, SNOW, and the ETF HACK. Governments are big targets for cybercriminals.

Safest Stock: Microsoft (MSFT) – ramping up efforts in AI. The future will see cancer cures with AI.

The government shutdown was delayed until February.

Bonds – Prices Taking a Break:

Government bond auctions suddenly improve, taking prices to two-month highs.

The Fed will cut interest rates as early as March – the futures market gives this a 40% probability.

Investors poured $5 billion into Bond ETFs in October.

10-year Treasury yields hit a new 16-year high, at 5.08%, then retreated to 4.33%

The whole falling interest rate and rising bond prices have been delayed for three months – hotter than expected economic growth at 4.9% for Q3 and more Fed rate rises.

Junk Bond ETFs (JNK) and (HYG) are holding up extremely well with an 8.74% yield and an 18-month high.

Buy (TLT) on the dip.

Foreign Currencies:

Sizeable pay hikes will lead to a strong Japanese Yen.

Whiskey Maker, Suntory offering 7% pay hikes.

The expectation of falling US interest rates is adding fuel to the fire.

Buy (FXY) on dips.

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

Japan is the last country to allow rates to rise.

Expect the Japanese yen to rise.

The 2024 story will be the US$ short.

Energy and Commodities:

Oil dropped from $96 down to $72 in less than two months as fears of an economic slowdown continued.

US Gasoline prices hit three three-year- lows, on recession fears and replacement concerns by EVs.

Energy stocks are lower and pulling down all other commodities.

There is a BUY setting up here when the global economy reaccelerates on a lower interest rates world. Watch (XOM) and (OXY).

China’s oil imports have fallen for six consecutive months, the world’s largest importer.

Biden provided a floor bid from the Strategic Petroleum Reserve at $79.

Warm weather is capping rallies in Natural Gas (UNG)

(XOM) is moving into Lithium.

(OXY) Buffett is an owner – 45% of the company.

(FCX) in buy territory – LEAPS territory soon.

Precious Metals:

The sharp drop in interest is very positive for Gold.

Goldman Sachs goes bullish on Gold: The investment bank expects the S&P GSCI, a commodities market index, to deliver a 21% return over the next 12 months.

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

Gold is headed for $3000 by 2025.

Falling interest rates are the accelerator.

Silver is the better play with a higher beta.

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

(GOLD) $50 is the 2024 target.

Real Estate- Hopes Abound

Pending Home Sales Plunge to 13 year-low, down 4.1% in October, on a signed contracts basis.

Sales were down 14.6% year over year.

The median price of an existing home sold in October was $391,800, an increase of 3.4% from October 2022.

These are the last poor sales numbers before the collapse in interest rates.

At the end of October, there were 1.15 million homes for sale, down 5.7% from a year earlier.

This is about half as many homes as were available for sale pre-Covid.

At the current sales pace, that represents a 3–6-month supply.

Six-month supply is considered a balanced market between buyer and seller.

Homebuilder sentiment drops, down six points to 34 in November.

Trade Sheet:

Stocks: buy the big dips at the bottom of the range.

Sell big rallies to hedge holdings.

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: December 13, 2023

Cheers,

Jacquie

November 29, 2023

Jacque's Post

(WE COULD SEE A SECULAR BULL MARKET FOR THE NEXT DECADE)

November 29, 2023

Hello everyone,

It’s the question on everyone’s lips – will this rally continue throughout 2024 and beyond?

One Bank seems to think so, and that bank is Deutsche. And they are not allowed in this bullish outlook.

Deutsche sees the S&P 500 rallying 11% to a record high next year and has a 2024 year-end target of 5,100 on the S&P500. It incorporates expectations of a mild, short recession that has been pulled forward.

In its most bullish case, Deutsche expects the S&P500 could climb to 5,500 or more than 20% above where the benchmark closed last.

The bank notes that the S&P 500 has been in a clear trend-up channel since the Great Financial Crisis. Jim Reid, London-based head of global economics and thematic research points out that after falling below last year, the rally in the first half this year took it back up to the bottom and it has been muddling along at the lower end since. A continued muddle through along the bottom implies 5300 by the end of 2024, while a move to the middle to 6000.

Deutsche expects markets have already priced in concerns around higher interest rates and geopolitical risks and argued that any sell-off from a possible recession would be short-lived and mild.

Historically, equities typically rally in the aftermath of a U.S. presidential election, set for next November. Reid expects a sizeable potential upside risk from tight labor markets may bolster productivity by encouraging the adoption of new technologies such as generative artificial intelligence.

The German bank remains neutral on mega-cap growth and technology stocks, citing elevated valuations after their rally this year. Going forward, the bank recommends overweight positions in financials and consumer cyclicals (AMZN, HD, TSLA, MCD, AAPL) that could bounce back after their recent weakness and remain neutral on energy while turning overweight on materials. It remains underweight in defensive stocks until it sees falling bond yields coupled with recession fears

Deutsche Bank sees the rally this year continuing into 2024 and beyond and makes bold 2024 year-end targets.

According to RBC technical analyst Robert Sluymer.

The stock market has surged nearly 20% this year, but the rally could be part of a larger secular bull market cycle that sends the S&P 500 to 14,000 by 2034.

Sluymer maintains and argues that the long-term secular trend for US equity markets remains positive with an underlying 16-to-18-year cycle supportive of further upside into the mid-2030s, potentially to S&P 14,000.

Sluymer’s forecast for the S&P 500 to trade as high as 14,000 by 2034 represents a potential upside of 209% from current levels or an average annualized gain of just under 10% over the next 11 years.

Sluymer looked at a long-term chart of the S&P 500 going back to the Great Depression in 1929. Since then, there have only been two secular bull markets, with one occurring during the 1950s and 1960s, and another occurring during the 1980s and 1990s.

Both generated total returns of about 2,300%.

Sluymer points out that if the current cycle generates a similar rally of +2000% the S&P could move toward 14,000 by 2034 which is when we expect the current 16-to-18-year secular bull cycle to peak.

Between now and 2034, Sluymer advises long-term oriented investors to lean bullish and view selloffs in the stock market as opportunities to increase exposure to secular and cyclical growth stocks, including industrials.

In a nutshell, Sluymer recommends long-term investors stay the course and remain optimistic.

Cheers,

Jacquie

November 27, 2023

Jacque's Post

(THE MARKETS AHEAD AND A COUPLE OF STOCKS FOR YOUR CHRISTMAS STOCKING)

November 27, 2023

Hello everyone,

Welcome to the last week of November. In the Northern hemisphere, you are heading into winter and in the southern hemisphere, we are heading into a hot summer. Bushfires have already been experienced in four states, including New South Wales, Western Australia, Queensland, and Victoria. And on top of the cost-of-living crisis in Australia, we are now going through our eighth Covid wave, with many deaths being recorded.

Economic Calendar

Markets will have one hurdle to clear in the week ahead. On Thursday, investors will get the October personal consumption expenditures reading, which is the Federal Reserve’s preferred inflation gauge. It’s set to show a rise of 0.2%, down from the 0.7% rise in the prior month, according to FactSet consensus estimates.

In a nutshell, if the number is hotter than expected, it could call into question whether the Fed is done tightening. So, in other words, it could be negative for the markets if the number comes in worse than expected.

Several retailers are also set to report. Here’s a summary.

Monday, Nov 27

8 a.m. Building Permits final (October)

10 a.m. New Home Sales (October)

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

Tuesday, Nov 28

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

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

10 a.m. Consumer Confidence (November)

10 a.m. Richmond Fed Index (November)

Earnings: Hewlett Packard Enterprise, NetApp, Intuit

Wednesday, Nov 29

8:30 a.m. GDP Chain Price second preliminary (Q3)

8:30 a.m. GDP Second preliminary (Q3)

Earnings: Costco Wholesale, Synopsys, Dollar Tree, Hormel Foods

Thursday, Nov 30

8:30 a.m. Continuing Jobless Claims (11/18)

8:30 a.m. Initial Claims (11/25)

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

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

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

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

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

Earnings: Ulta Beauty, Salesforce, Kroger

Friday, Dec. 1

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

10 a.m. Construction Spending (October)

10 a.m. ISM Manufacturing (November)

Earnings: Dominion Energy, Cboe Global Markets, Cardinal Health, Gartner

Market Update:

Wall Street looks set to wrap up a strong month this week as stocks head for new highs heading into the year-end. The major averages have rallied after cooler inflation reports appeared to confirm the Federal Reserve is done hiking, raising hopes it can start cutting next year. The Nasdaq Composite is on pace to close out the month with a double-digit advance, up 10%.

Historically, the market has done well in the final quarter of a pre-election year, and even better for a first-term president seeking re-election, according to CFRA’s Stovall. Since World War II, the market has risen 6% on a total return basis and has never dropped.

Some analysts consider the market overbought now, and they are expecting the market to start to slow going into this week. We will have to wait and see who has called this market correctly.

I still see the S&P 500 rallying up towards 4,700 to 4,800 and I am looking for a double top in the Nasdaq before the market starts to pull back.

Gold is displaying a developing inverse Head and Shoulders continuation pattern. A sustained break above neckline resistance at $2,017 completes this bullish structure, yielding an upside target of $2,210 over the coming weeks.

The uptrend is still in progress in Bitcoin with a target of around $43,000.

What should you have in your portfolio for the long term?

Wall Street loves many of Warren Buffett’s stock picks.

These are two I would recommend.

Amazon (AMZN)

84% of Wall Street analysts rate this stock as a buy. Analysts argue that there is still a 22% upside from current prices. The company recently solidified a deal with Snap that allows users of the platform to purchase Amazon products without leaving the Snapchat application.

Snowflake (SNOW)

56% of Wall Street analysts rate SNOW as a buy with price targets giving the stock upside of 19% from current levels. The company is still in the early innings of growth.

Cheers,

Jacquie