Economists expect a monthly increase of 0.3% for both the headline CPI reading and core CPI, which excludes volatile food and energy prices.The November producer price index, scheduled for Thursday, is expected to show an increase of 0.2% in its headline and core readings. The thinking on Wall Street is that the Fed is highly likely to cut interest rates next week if inflation comes in at or below expectations in those two reports.Still, there is an element who disagrees and believes the Fed will hold if the CPI reading came in above 0.40%.The Labor market remains front of mind for the Fed.
WHAT TO BUY BEFORE TRUMP’S TARRIFS ARE ROLLED INTO PLACE
According to Trump’s policy promise, he plans to issue a 25% tariff on products from Canada and Mexico on his first day in office, as well as an additional 10% on top of the rates still in place from his first administration on Chinese imports.
The importers paying the tariffs will likely pass them on to consumers.
Many retailers are already preparing their customers for increased prices and encouraging them to shop now.
Of course, it’s unclear how much prices will increase and which specific items will be affected, but it would be a good idea to start thinking about any large purchases you might be planning.For instance, do you need to upgrade your iPad or your MacBook?My advice: Do it now.
These are some of the categories where prices are expected to increase.
Laptops and tablets
Videogame consoles
Smartphones
Apparel, footwear and accessories
AUSTRALIAN NEWS CORNER
The Reserve Bank of Australia keeps interest rates on hold at 4.35%.People hoping for an early Christmas gift from the RBA were let down once again.Now, the odds are that the RBA won’t start to cut interest rates until about April next year, so Australia still has some time to wait.
WORLD NEWS CORNER
Syrian regime falls.Assad flees to Russia.Full implications are still unfolding, but the hope is that the factions that make up the rebel force can work together to bring some semblance of stability to the country.
(CHARGING CABLES MAY BECOME A THING OF THE PAST + THE RISE OF THE DISGRUNTLED CUSTOMER)
December 9, 2024
Hello everyone
WEEK AHEAD CALENDAR
MONDAY DEC. 9
10 a.m. Wholesale Inventories final (October)
10:30 p.m. Australia Rate Decision
Previous: 4.35%
Forecast: 4.35%
Earnings: Oracle
TUESDAY DEC. 10
8:30 a.m. Unit Labor Costs final (Q3)
8:30 a.m. Productivity final (Q3)
6:50 p.m. Japan PPI MoM
Previous: 0.2%
Forecast: 0.2%
Earnings: AutoZone
WEDNESDAY DEC 11
8:30 a.m. Consumer Price Index (November)
8:30 a.m. Hourly Earnings (November)
8:30 a.m. Average Workweek final (November)
9:45 a.m. Canada Rate Decision
Previous: 3.75%
Forecast: 3.25%
Earnings: Adobe
THURSDAY DEC 12
8:15 a.m. Euro Area Rate Decision
Previous: 3.25%
Forecast: 3.00%
8:30 a.m. Continuing Jobless Claims (11/30)
8:30 a.m. Initial Claims (12/07)
8:30 a.m. Producer Price Index (November)
Earnings:Broadcom, Costco Wholesale
FRIDAY DEC 13
8:30 a.m. Export Price Index (November)
8:30 a.m. Import Price Index (November)
8:30 a.m. US Import Prices
Previous: 0.3%
Forecast: -0.3%
MARKET UPDATE
S&P500
Uptrend is intact, and the bias remains higher.Just don’t expect a straight line up.
Support: $6050, $6000, $5,800
Resistance:$6,100, $6,130, $6,200
GOLD
After a huge uptrend from the October 2023 low of ~$1800, we will probably see some consolidation and/or wide-ranging movements in gold and the precious metals sector as a whole.It will be no surprise to see gold consolidate for several months before any significant low is made.We could see $2,400 or even $2,200 during this period.
Resistance = ~$2,670, $2,730, $2,750
Support = ~$2,600, $2,550
BITCOIN
Bitcoin uptrend remains intact.We have seen some churn around the $100k mark thus far, and this may continue for a time before we break out to the next resistance areas, which are about $105k and then $109K.(If you own any MicroStrategy (MSTR), I recommend taking some profits – 25%-50% - and rolling that into Larry Fink’s iShares Bitcoin Trust (IBIT).Diversification in every sector is key.(IBIT) is a good vehicle to enter the crypto space if you don’t own any Bitcoin directly through a crypto exchange. (IBIT) launched in January this year.It is secure, transparent, and has $50 billion in assets under management.
Support = ~$94,500, $91,800, $87,500
WHAT’S ON THE RADAR THIS WEEK
Last Friday in the U.S., we saw stronger-than-expected employment data.This week, we will see three major rate decisions from the Euro Area, Canada, and Australia.U.S. inflation statistics are expected on Wednesday morning.
HAVE YOU GOT A BOX FULL OF CHARGING CABLES? WE MAY NOT NEED THEM IN THE NOT-TOO-DISTANT FUTURE.
Thanks to British scientists, who have invented a diamond battery that never dies. The lab-grown diamonds encase a slice of the radioactive material carbon-14.
Carbon-14 is used by archaeologists to date fossils and loses just half of its radioactivity every 5,700 years.
Scientists argue that if a diamond battery had existed at the dawn of human civilization around 4,000BC, it would still have around half of its charge left.
What are the benefits of a diamond battery?
Safer, low emissions
Sustainable – no need to send to landfill.
Range of uses
Deep space missions, satellites, healthcare devices such as pacemakers, hearing aids, wrist watches, computer chips, etc.
The next few years will be about organizing production and enhancing power performance.
THE ACTIONS OF DISGRUNTLED CUSTOMERS ARE ESCALATING
We all know the CEO of United Healthcare, Brian Thompson, was recently shot as he walked along a footpath in New York.The assailant has not yet been found.But evidence of his reasons was found at the scene.Delay, Deny, and Defend were words found on the shell casings at the scene.Apparently, the culture of healthcare companies across the U.S. is to avoid paying claims in any way they can, and these three words echo the tactics that are commonly used.There has been an outpouring of rage after this event, and media outlets have confirmed that thousands of Americans go bankrupt, lose their homes, of die every year due to medical insurer practices.The United States has the world’s most expensive healthcare system of any country.A medical consultation with the GP, on average, is about $190. And, if you are unlucky to find yourself in hospital, the bills can amount to tens or even hundreds of thousands of dollars.
In another example of a customer dissatisfied with the service he received, we find ourselves in Surfers Paradise in Australia.One man, after leaving a massage parlour, returned in the early hours of the morning and firebombed the premises, burning it to the ground.
We are constantly asked to write reviews every time we use a service, visit a hotel, use a hire car, eat at a restaurant, go through an airport, get our hair cut, and even visiting department stores.But words don’t seem to be getting the message across much anymore. Messages can be deleted and ignored. And nobody is listening.It seems if you don’t provide good customer service and the business does not do its job well, some customers will make sure they are heard and will deal with you bluntly.
QI CORNER
SOMETHING TO THINK ABOUT
A walk along one of Australia’s finest beaches at dusk.
(THE WEIGHT LOSS REVOLUTION COULD TRANSFORM OUR ECONOMY)
December 6, 2024
Hello everyone
The weight loss revolution is having far-reaching economic effects
Shopping habits are changing with the advent of weight loss drugs, as are foods purchased and exercise habits.
The active ingredient in most weight loss drugs – including Mounjaro, Wegovy, and Ozeumpic – mimics a hormone called glucagon-like peptide-1 (GLP-1).That peptide slows digestion and sends fullness signals to the brain, resulting in people eating less.
Waistlines are not the only thing being reduced.
The drugs have created ripples across the US economy due to the country’s large uptake – about 7 million Americans take the drugs, according to Morgan Stanley, and that number is predicted to rise to 24 million by 2035.
Food shopping bills are being slashed - down from $400 per week to $150-$200, according to one family.
Res-Med – an Australian medical device company that makes CPAP machines for sleep apnea and is worth $56 billion – saw a drop in its share price earlier this year largely due to the belief that GLP-1s would lead to fewer people suffering from sleep apnea.
ResMed – chief executive Mick Farrell told the ABC’s The Business the opposite had occurred, with the company’s data indicating patients with sleep apnea using GLP-1 drugs were almost 11 percent more likely to use a CPAP machine.
The food and fashion industry could be reshaped.
Some studies indicate GLP-1 may change food preferences and reduce cravings for processed foods while boosting the desire for fresh fruit and vegetables.
It appears to be typical for most people using GLP-1s to reduce their calorie consumption by about 30 to 35 percent.
Adam Spielman is the head of future health at Citigroup and co-authored a report looking at the reach of GLP-1 medications in the US and possible future commercial implications.
He believes the weight loss drugs could have “a profound effect” on the economy.He expands this argument by pointing out that if 20 percent of Australians end up taking these drugs, then it is quite easy to argue that total calorie consumption in Australia could fall by roughly 6 percent. And the food products that would benefit the most would be fruit and vegetables.The fast-food industry may face its worst nightmare – people not wanting their type of food anymore because of different food tastes and behaviours.This would force the industry to shift its offering to fit in with the changing palates of customers.
Weight loss pills will change society, but it will take decades to really understand what the true impact will be.
The worst telecom hack in U.S. history
Many Americans’ data have been stolen in a telecoms attack allegedly carried out by a Chinese hacking group dubbed “Salt Typhoon.”
The White House has confirmed that at least eight U.S. telecom firms, as well as dozens of nations, have been impacted by this attack.
According to the FBI, the hackers used their access to telecom networks to target the metadata of a large number of customers, including information on the dates, times, and recipients of calls and texts.
The hackers also succeeded in retrieving the actual audio files of calls and content from texts from a much smaller number of victims.
US government officials and prominent political figures have also been impacted by this hack.
Telephones belonging to then-presidential and vice-presidential candidates Donald Trump and JD Vance were also affected.
China has denied all claims.
Cybersecurity needs to be bolstered to fill the gaps that the Chinese are apparently exploiting.
Cyber-attacks are our modern warfare. So, if we can understand that, then cyber security companies should always do well and should be part of any long-term portfolio.
Housekeeping
Thank you to those who joined the monthly Zoom meeting on December 5.
Percentage gain from 08/07/24 to 11/29/24 = 84.14%
Core Scientific (CORZ) daily chart
Core Scientific is a sort of rags to riches story.This year it went from bankruptcy to an investor’s favourite by betting on two big technology trends:AI data centres and bitcoin mining.Shares are up around 400% this year.
Core Scientific has been earning steady profits by hosting servers owned by companies that sell cloud services to AI providers.
Data centres are in high demand because tech companies need them to power their AI applications.
Core Scientific operates nine grid-connected warehouses in six states with access to so much electricity they could serve several hundred thousand homes.
The company started the year focused entirely on crypto mining, but it quickly pivoted as it saw demand surge for electricity for AI data centres.
In June, the company signed a deal with a company called Coreweave to lease data centre space for AI cloud services.Coreweave has since agreed to lease 500 megawatts worth of space.Core Scientific says it will get paid $8.7 billion over 12 years under the deal.
Privately held Coreweave is one of the fastest-growing companies behind the AI revolution.It was once a cryptocurrency miner, but has since transitioned to offering cloud services, with a particular focus on artificial intelligence.It’s closely connected to Nvidia, which has invested money in Coreweave and given the company access to its top-end chips.Coreweave expects to be one of the first customers for Nvidia’s upcoming Blackwell GPUs.
Analysts see EPS in the company jumping tenfold by 2027.Shares trade at about 13 times those 2027 estimates.
The data center opportunity should only grow from here, as tech companies build more powerful AI systems.Of the 1,200 megawatts worth of gross power capacity Core Scientific has contracted, about 800 megawatts are going to data center computing deals and 400 megawatts toward Bitcoin mining.
QI CORNER
Recording of October Zoom monthly Meeting (apologies for the late arrival of this recording)
This week’s employment data, culminating in Friday’s Nonfarm Payrolls report, is expected to return to normal after last month’s unusual numbers, which were off-kilter by virtue of hurricane disruptions and labour strikes.Investors will also watch Federal Reserve Chair Powell’s upcoming speech for clues about how the central bank might respond to the trade policies expected from the Trump administration.
FOOD WASTE – WHAT TO DO ABOUT IT
A Melbourne start-up, Freshho, aims to tackle the $940bn food waste crisis.The startup has raised $17m to expand its platform that, which eliminates food waste and saves wholesalers a fortune by taking the guess work out of food ordering.In other words, they are better able to anticipate their restaurant customers’ needs, thanks to artificial intelligence.
Fresho, which James Andronis and Huw Birrell founded in 2015, is now looking to expand to the US, with the raising – led by Geoff Tarrant, co-founder and former executive chairman of Payapps – valuing the company at $120m.
The pair have developed a platform that aims to make ordering produce more efficient at a wholesale level.
Mr Andronis said it had replaced fresh food wholesalers dedicating overnight staff to manually process orders, which typically arrived via email. Text, voicemails, and even faxes, which often resulted in errors and wastage.
Fresho’s AI-powered system automatically converts incoming orders into structured data while giving restaurants direct access to live pricing and availability through its app.
According to Oz Harvest, about 1.3 billion tonnes of food produced is wasted each year, costing the global economy about $940bn.It’s also bad for the environment, with up to 10 percent of global greenhouse gas emissions coming from goods that are produced but not eaten. Oz Harvest commented that “if food waste was a country, it would be the third-biggest emitter of greenhouse gases after the US and China.
Mr Andronis says Fresho – which has processed 30 million orders since its inception and 10 million orders in the past year- says its platform has led to a dramatic reduction in food waste.
Investor Geoff Tarrant will join Fresho as a director.Payapps, the global construction software firm he co-founded, was acquired by Autodesk for $600m in 2024.
The software platform Fresho will provide benefits for all participants in the fresh food market.
Note:This is an item of interest post.I will monitor Fresho’s progress as it expands to the U.S.
Fresho’s app automates sales orders to eliminate errors and guesswork that fuels food wastage.
MARKET UPDATE
S&P500
Uptrend is still intact and showing no signs of exhaustion yet.The Santa rally is in front of us.
Next year, I will be looking for some sort of correction, be it a time correction or price correction.
Support:$5950/$5890
Next resistance targets:$6085/$6120
GOLD
Consolidating taking place in gold after a strong rally. Rally will continue, but we may not hit new highs until next year.Time will tell.
Support: $2615/$2560
Next resistance target: $2,820
BITCOIN
The uptrend continues here.It is expected that we will break through $100k before year-end.
Support:$95,800/$94,900/$90,560
Next resistance target: $100,650/$109,280
PORTFOLIO UPDATE
PALANTIR (PLTR) Recommended on March 20, 2024, at $23.00.
Today’s recommendation:Take some profits off the table.
Daily chart
Weekly chart
Palantir stock has soared nearly 277% this year, climbing 47% just in the past month after the analytics software provider beat the Street’s earnings and sales estimates in its third quarter, raised its forecasts for future profit, and decided to move its stocks listing to the Nasdaq stock market from the NYSE.
I recommended Palantir on March 20 this year when the stock was sitting at $23.00.At the end of September, we were up 61.73%.At the end of November, however, we were up 191.65%.Now, that’s quite a tidy return.Let’s stick to our regime of taking some profits off the table, as after such a strong rally, we may find some sort of correction that could follow in the new year.
Bonds are instruments used by companies and governments when they need to raise money in the form of a loan.
If, for instance, a company issues a Bond and the investor buys the bond, the company gives a promise to repay the money at an agreed-upon interest rate.
Bonds are issued at the par value of $1000, which is the standard.
The Interest rate depends on several factors.
One of the most important is the Credit Rating.
The lower the credit rating, the higher the risk and the higher the interest paid.
The U.S. government has never defaulted on a bond, so they are considered a very low credit risk, and therefore, they have a low interest rate.
A Bond states three things:
Par value, also called face value, its coupon rate, which is stated as a percentage of par and its maturity date.
What is the coupon rate for bonds?
The coupon rate is just another term for the bond’s interest rate.
In other words, it’s the cash that the borrower will pay periodically to the bondholder.
The face value is the lump sum that the borrower is promising to pay at the maturity date.
At the end of the term, you get the principal back.
You can also sell your bond to another person on the bond market.
How do you buy a bond?
Depending on the type, you can purchase bonds through brokers or exchange-traded funds or from the U.S. government at Treasury Direct.You may need to have at least $1,000, the typical starting face value for most bonds.
Comparing bonds and stocks
Let’s draw a comparison between stocks and bonds.When you buy a stock, you own some of the company.When you buy a bond, you are making a loan to a company (or the government), but you do not own any of the company.
Types of Bonds
U.S. Treasury Bonds
The most important bonds are the U.S. Treasury bills, notes, and bonds issued by the Treasury Department.They are used to set the rates for all other long-term fixed-rate bonds.The Treasury sells them at auction to fund the operations of the federal government.
These bonds are also resold on the secondary market.They are the safest since they are guaranteed by the United States government.That means they also offer the lowest return.They are owned by almost every institutional investor, corporation, and sovereign wealth fund.
Savings Bonds
Savings bonds are also issued by the Treasury Department.These bonds are meant to be purchased by individual investors.They are issued in low enough amounts to make them affordable for individuals.
Agency Bonds
Quasi-governmental agencies, like Fannie Mae and Freddie Mac, sell bonds that are guaranteed by the federal government.
Municipal Bonds
Municipal bonds are issued by various cities.They are tax-free but have slightly lower interest rates than corporate bonds.They are slightly riskier than bonds issued by the federal government.Cities occasionally do default.
Corporate Bonds
Corporate bonds are issued by all different types of companies.They are riskier than government-backed bonds, so they offer higher rates of return.They are sold by the representative bank.
There are three types of corporate bonds:
Junk bonds or high-yield bonds are corporate bonds from companies that have a chance of defaulting.They offer higher interest rates to compensate for the risk.
Preferred stocks are technically stocks, but they act like bonds.They pay you a fixed dividend at regular intervals.They are slightly safer than stocks in case of bankruptcy.
Holders get paid after bondholders but before common stockholders.
Certificates of deposit are like bonds issued by your bank.You essentially loan the bank your money for a certain period for a guaranteed fixed rate of return.
(AUSTRALIA CHALLENGES BIG TECH BY IMPOSING SOCIAL MEDIA BANS FOR UNDER 16’s)
November 27, 2024
Hello everyone
AUSTRALIA COULD BE IN THE DOGHOUSE UNDER TRUMP’S WATCH
It seems that Donald Trump’s team finds Albanese’s move to introduce social media bans for those under 16’s a little bit “on the nose,” to say the least.So much so that Australia could find itself hit with hefty US tariffs.
Elon, who is not a stranger to sharing his views bluntly, has already slammed the move within hours of the bill being tabled.“Seems like a backdoor way to control access to the internet by all Australians.”
If the bill is passed, social media companies could be hit with fines of up to $50 million if they fail to do enough to verify a user’s age on their platforms.
The changes will impact social platforms like TikTok, Facebook, Instagram, Reddit, and X, but YouTube will be exempt.
Snapchat is also expected to come under the same Australian law.
A ban on social media won’t be a cure all.Stopping someone looking at social media will not address mental health issues by itself.It’s more complex than that.
Of course, the ban won’t stop teenagers under 16 from using social media.They will find a way to get around it.
Here’s a way to look at the ban.
There are age restrictions on alcohol.Having those restrictions in place at a certain age sets a standard.
The laws would come into force 12 months after passing, and the eSafety commissioner would be responsible for enforcing the legislation.
How they are going to enforce the legislation is not yet clear.
Ultimately, more education programs about social media need to be put in place – in schools, universities, and in workplaces – to highlight the pros and cons and understand its place and function in the world at large.
Such programs would enable parents and children to develop knowledge and awareness of how to navigate these spaces safely.
We all know that the character of people who use this channel of communication can be either destructive or helpful.
Unfortunately, those who want to inflict harm find social media facilitates their malicious intent. They hide behind their anonymity.Fake posts scammers parading around under the guise of “looking for romance” when they are really looking for the contents of your wallet.And let’s not forget your actual friend’s Facebook page being hacked by some loser who has nothing better to do.Or scammers who use Facebook to sell something or offer their trade services and then disappear after they receive the funds.
No doubt, with the advancement of AI, social media could morph into a smarter communication form, which may be able to better police and eradicate the “wolves in sheep’s clothing,” or at least “red flag” the post.
My 19-year-old son only uses Instagram occasionally; he doesn’t use any other social media platforms.Discord is his platform of choice to communicate with friends.
Social media platforms should be held accountable for making sure their platform is a safe space to use.
Equally important is educating users about how to safely traverse these platforms so mental health issues do not dominate their lives.
QI CORNER
SOMETHING TO THINK ABOUT
HOUSEKEEPING
Apologies for the late arrival of the October Zoom meeting recording.It is still being edited.The November Zoom monthly meeting will be held early next week.Zoom links will be sent out in the next couple of days.
Interest rate outlook will take centre stage this week with key inflation data Federal Reserve meeting minutes coming out ahead of Thanksgiving.
The October personal consumption expenditure (PCE) price index set to be released Wednesday may give further insight into the likelihood of a rate cut in December.Many economists are expecting that the PCE may show sticky inflation. It looks like the last stretch to a 2% inflation target could be very challenging.
The FOMC minutes for the November meeting will be closely watched by investors.They want to know what the Fed’s path going forward is regarding interest rates.Are they still committed to interest rate cuts?If investors are confident that the Fed remains committed to further cuts, the investment case for a broadening of the rally in 2025 may well be intact.
It certainly seems that investors are confident about stocks closing out 2024 on a high, which is due to a strong underlying economy, earnings growth potential, and the strength of the artificial intelligence trade.
Earnings to watch include Dell Technologies and CrowdStrike.
Volume is likely to be lower due to the holiday this week, so movement could be sharper because of the lack of liquidity in the market.
The consensus amongst strategists for 2025 is for a roughly 10% gain or more for the broader index.
2025 will be the third year of the bull market.
The S&P500 surged 24% in 2023, and so far in 2024, the S&P500 is up 25%.
S&P500 predictions for the end of 2025
Goldman Sachs = 6,500
Morgan Stanley = 6,500
UBS – 6,400
BMO Capital = 6,700
WILL GOOGLE BE FORCED TO SELL OFF CHROME?
Google and other tech giants’ dominance of the internet and search has been under the microscope of American authorities in recent years.
In August this year, a judge ruled Alphabet had a monopoly over online search and related ads.
District Judge Mehta agreed with the US Department of Justice (DOJ) that Google broke the law by paying $41 billion to ensure it was the default search engine on smartphones and browsers.
Recently, the DOJ asked the same judge to force Google to sell Chrome due to its market dominance.
They say the company should also share data and search results with rival browsers like Edge, Firefox, or Safari.
The DOJ’s court filing accuses Google of “unlawful behaviour” by trying to prevent rivals from being able to get a foothold in the market.
Like many countries, the U.S. has “antitrust” laws, which allow the government to break up monopolies and large corporations through the court.
If Judge Mehta rules in favour of all the DOJ’s demands, it would mean:
# Google would be forced to sell Chrome
# It would be banned from releasing a new web browser for five years.
# If competition doesn’t improve, Google will have to sell its Android operating system for smartphones.
# Google would be banned from paying billions of dollars to companies like Apple to make itself the default search engine on their devices.
Of course, this is unlikely to happen overnight, as experts say Google has the option to appeal any rulings.
We also need to consider the new administration and its stance on Big Tech.
Regardless of the position they take, experts say it’s unlikely Judge Mehta will agree with all the DOJ’s demands.
If Google is forced to sell Chrome, who would be the buyer?At around $US15 billion, they would need deep pockets.My thinking here - US-based artificial intelligence players.
And what would this mean for the internet?We are likely to see more innovation and competition in the web browser market.
MARKET UPDATE
S&P500 – Bull run to continue
As I said last week, we are watching the 5,697 level.Any significant break below that level could take the market back to around 5,400 in the short to medium term and then extend to 5,120.
But let’s work with what we see in front of us now.We are extending in this 5th wave, and there may be a likelihood that this wave stretches to around 5,465.
Support = ~5925/5890
Immediate resistance = ~6,017/6085
GOLD – Uptrend to persist
We should see gold continuing to advance.The recent correction/consolidation was well overdue.Recently, I did recommend taking some profits (scale out/take a % off the table) to lock in some profits.This provides some income (if you don’t do LEAPS/options) while still holding positions in your portfolio.In other words, you are taking a little bit of profit - 10%-25% – but you are still left with a healthy investment in your stock/s to allow for growth.
Short term Support = $2,675
Next Target = $2,820
BITCOIN – Rally to continue
The uptrend in Bitcoin is still intact; there are no signs of exhaustion yet.
Very short-term support = ~ $95,650/$94,900/$85,100
Next target = ~$100,600 and then around $109,250
WHAT IS BETA?
Beta is a measure of a company’s stock volatility relative to the overall market.In other words, you are looking at a company’s stock returns (change in stock price) relative to the overall market returns (change in market stock price).
24 professionals will be sharing their knowledge and expertise.They will be showing you their favourite trading strategies in all asset classes, including currencies, commodities, precious metals, and energy.
Lots of prizes.
Sign up for the link we will be sending out shortly.
Attendance is free.
PERFORMANCE
November - +15.01 to date
Since inception - +744.68%
Average annualized return - +53.02% for 16 years.
PORTFOLIO
Risk On
(JPM) 12/$210-$220 call spread 10%
(NVDA) 12/$117-$120 call spread 10%
(TSLA) 12/$230-$240 call spread 10%
(TSLA) 12/$250-$$260 call spread 10
(TSLA) 12/$270-$275 call spread
(MS) 12/$110-$115 call spread
(C) 12/$60-$65 call spread
(BAC) 12/$41-$44 call spread
(VST) 12/$115-$120 call spread
Risk Off
No positions
THE METHOD TO MY MADNESS
The election brought a total strategy flip.
All interest rate plays were dumped, including gold, silver, homebuilders, bonds, and REITS.
US dollar rockets at higher rates for longer.
Technology stocks fade on threats to international business.
Energy swings lower on coming overproduction and oil glut.
Buy the election winners, sell the losers.
THE GLOBAL ECONOMY – IN TURMOIL
Fed cuts interest rates by 0.25%, taking the overnight rate to 4.50%, but future rate cuts are now in doubt.
CPI comes in line at 2.6%, up 0.2% in October.The Core CPI accelerated 0.3% for the month and was at 3.3% annually.
Retail sales come in hot, up 0.4% in October.
PPU roses 2.4% YOY, some 0.2% in October.
China stimulates again with a $1.4 trillion package while signaling more economic support would come next year.
University of Michigan Consumer Sentiment Index comes in hot.
US Wholesale Inventories turn down in September amid a sharp decline in motor vehicle stocks.
STOCKS – THE NEW GAMES
Get out of all falling interest rates plays, like homebuilders, real estate, home repair, precious metals, and fixed income.
Get out of international commitment plays like defense and any exporters.
Go into deregulation plays like brokers, banks, money managers, and nuclear.
Defense stocks swing lower on Peter Hegspeth Defence appointment.
JFK Health & Human Services Appointment crushes Pharma stocks.
Morgan Stanley reverses bearish tilt.
Now predicting that the S&P 500 will reach 6,500 and possibly 7,400 in 2025.
Investment Guru Ron Baron sees Tesla at $1,200 in 5 years and at $7,200 someday.
NVDA's target could be around $180.
May see Tesla hit$500 in 2025.
BONDS- BEAR MARKET
Inflation fears are the next big trade.
Since Trump’s victory, the benchmark U.S. 10-year Treasury yield has risen 20 basis points.
Bonds plunge on Trump's win, with the (TLT) down $12 from the recent high, anticipating higher for longer interest rates.
Moody’s getting ready to downgrade US on the prospect of massive Trump borrowing.
Money Market Funds top $7 trillion for the first time as bond investors flee the market.
Expect (TLT) to decline to $82 as the National Debt increases by $10 trillion.
Avoid (TLT), (JNK), (NLY), (SLRN) and REITS.
FOREIGN CURRENCIES – US DOLLAR REBORN
Dollar hits two-month high on rising US interest rates. Ten-year Treasuries have risen from 3.55% to 4.50%.
Higher for longer interest rates mean higher longer US dollar.
Don’t sell the US dollar until the next recession is on the horizon.
Avoid (FXA), (FXE), (FXB), (FXC), and (FXY).
ENERGY & COMMODITIES – CRUDE AWAKENING $60 IN PLAY
Crude Oil is now down on the Year after a precipitous selloff.
Blame a weak China, lost OPEC discipline, and overproduction by Iraq.
Avoid the worst-performing asset class in the market.
US Oil production hits an all-time high.In August 2024, U.S. oil production hit a record 13.4 million barrels per day, according to the U.S. Energy Information Administration.
Unlimited new drilling and opening up of federal lands will crash oil prices.
Big Oil has become more productive as horizontal drilling and hydraulic fracturing, which is also known as fracking, have seen technological breakthroughs.
Russia bans Uranium Exports in response to American sanctions.
PRECIOUS METALS – GAME OVER
Interest rates higher for longer is a death knell for precious metals, with gold down 8.3% since November 5.
The opportunity cost of owning gold is about to rise sharply.
Gold is up 40% in a year, so it was ripe for profit taking.
$600 million in selling of gold ETF’s last week.
Gold has become the only way the average Chinese can save as they can no longer speculate in real estate or copper and don’t trust the Chinese Yuan, so there is support lower down.
Central banks in emerging market countries are continuing to buy gold, with 693 metric tonnes of buying, or $5.3 billion this year.
Avoid (GLD), (SLV), (AGQ), and (WPM).
REAL ESTATE – POST – ELECTION FREEZE
Post-election interest rate rise is postponing any real estate recovery.
Mortgage Rates are rocketing, off the back of a Trump win, taking the 30-year fixed-rate conventional loan up to 7.12%.
But transactions are coming back from a pre-election Zero for all cash transactions.
Apartment vacancies fall in Q3 for the first time in more than two years, down 0.2% to 5.3%
Renters are soaring to new all-time highs as the cost of home ownership rises beyond reach.
Average age of a homebuyer rises to 56 as prices and mortgage payments soar beyond the average working people.
That is up 7 years since July 2023.
TRADE SHEET
Stocks – buy the next big dip
Bonds – stand aside
Commodities – stand aside
Currencies – stand aside
Precious Metals – stand aside
Energy – buy nuclear dips
Volatility – sell over $30
Real Estate – stand aside
NEXT STRATEGY WEBINAR
12:00 EST Wednesday, December 11, from Lake Tahoe, Nevada.
Housekeeping
The recording of my October Zoom Monthly meeting will be shared next week.
Trump, the dealmaker, will have to use all his “box of tricks” and then some to secure an end to the conflict between Ukraine & Russia.
Let’s remember it was Trump’s boast that he would end the war in a day.We’re not there yet.
One thing is certain, and that is that President Zelensky will come under heavy pressure from the newly elected Trump administration to reach a settlement with Moscow.
But what if Zelensky feels backed into a corner?What will be his reaction?
For those of us who live far away from the conflict zone, we may think that the impact of this war will be minimal on our life.But, the outcome of the Ukraine conflict will have global consequences.Even Australia won’t be immune.
Let’s sit with this idea for a moment.A Putin win will encourage his expansionist impulses in Asia, as well as Europe, strengthen the axis of autocrats, devitalize the democracies, and promote a deals-based order where the strong do what they will, and the rest of us roll with the fall-out as best we can.
How Trump, the dealmaker, behaves and acts regarding this conflict will be telling, as his actions will illustrate America’s international policy in a Trump-revived world.
It is probable that Trump’s actions will be more robust than Biden’s.Biden provided enough weaponry to continue the war but not enough for the Ukrainians to fully exploit Russia’s weaknesses and gain the upper hand.
Biden’s 11th-hour concession allowing Ukraine to strike Russia with long-range US missiles may be too little, too late.
So, what does Trump’s peace plan look like?
Kyiv will likely have to give up territory in exchange for US security assurances and European financial support for post-war reconstruction.The current battle lines could become a border – a heavily fortified 1200km long demilitarised zone patrolled by a multinational peacekeeping force.
So, now Putin would be in control of 20 percent of Ukraine.
What a heavy price to pay for that territory!
600,000 Russian soldiers were killed.
And economically, the war has been a debacle.
Russia’s strategic position has been weakened by the self-inflicted enlargement of NATO to include Sweden and Finland along its northwestern border.
Without US military support, it is hard to see Ukraine winning this war with Russia. Zelensky may find himself in a position where he must accept Trump’s plan since Europe is not willing or even able to fill the gap.The EU couldn’t even provide the million 155mm artillery shells promised to Ukraine by March.
Getting Putin to agree might prove tricky for Trump.
Complicating the negotiations is the fact that North Korea’s “Storm Corps” are fighting on Russia’s side.Now, we can see how this conflict seems to be gradually changing into a Eurasia-wide struggle for geopolitical ascendancy.
In this war, North Koreans serve a good tactical and political purpose for Putin.They won’t change the course of the war.But their involvement may deepen a sense of isolation Ukrainians feel as the axis forces work together to crush their resistance.Europe’s support is softening, and under Trump, Americans are poised to bail out.
A bilateral defence pact signed in June between Russia and North Korea will see the hermit kingdom benefitting nicely.
$200m for its troops and the provision of missile and satellite technology, as well as
700,000 tonnes of rice to feed the half-starved population.
Should South Korea begin arming Ukraine, this could destabilize the relationship with North Korea and easily ignite an Asia-wide conflict.This would draw Australia into the war, as we have a historical commitment to the defense of South Korea.
How this plays out – nobody really knows.
It has become a game of chess.
But one thing has become clear – democracies will need to grow a backbone, show some brawn, and match the defense spending and singlemindedness of the autocrats.They play to win at all costs.We need to up the ante and check them before they check mate us.
PORTFOLIO REVIEW
I would think about taking some profits from your gold stocks.Most of you will be sitting on healthy profits – take some off the table.
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