June 12, 2023
(SUMMARY OF JUNE 7, 2023, MAD HEDGE WEBINAR)
June 12, 2023
Hello everyone,
Hope you had a wonderful weekend.
Welcome to a new week.
Title: The Next Rotation is Here
The Mad Hedge Traders and Investors Summit. Don’t forget to register.
Lunches
July 6 New York
July 13 Seminar at Sea
July 19 London
Trade Alert Performance
June 0.01%
2023 year to date +61.74%
+658.93% since inception
40 out of 44 trade alerts profitable.
Trading opportunities very few.
Positions
TSLA 6/120-130 call spread 10%
FCX 6/32-35 call spread 10%
20% long
80% cash
VIX – at $13.
Method to My Madness – A Bipolar Market
Equity allocations are at a 15 year low with massive amounts of cash in 90-day T-bills.
Expect funds to pour into stocks in the second half of the year as per the Mad Hedge play book.
Big rotation out of cash into Industrials, commodities and energy is near.
Bonds weaken – looking for another 0.25% rise June 14th.
Summer will present the best buying opportunity of the year. Precious metals and commodities should be at the top of your list.
Global Economy
Non-farm payroll soars by 339,000 in May for the 10th consecutive month of increases.
Unemployment jumped 0.3% to 3.7%.
The biggest rise in unemployment for three years.
Inflation continues to fall 0.4% in April.
China’s PMI dives – struggling out of the post-covid world.
Stocks
They are not reflecting the massive increase in earnings and the large multiple expansion.
Record $8.5 billion poured into tech stocks last week – “the Magnificent Seven”.
Don’t forget to take profits in tech if you are a short-term trader.
Tech could move sideways before the next move up.
Rotate into commodities, industrials, and energy.
If a Black Swan decides to land on us, it could take the S&P500 down 17-20%.
“The Magnificent Seven” has made new highs for the year. (Apple, Google, Meta, Amazon, Salesforce, Nvidia, and Tesla).
LEAPS candidates
CAT Caterpillar
FCX Freeport McMoran
X US Steel
GS Goldman Sachs
MS Morgan Stanley
Bonds
Bonds plunge on a red-hot May non-farm payroll, which suggests another quarter point interest rate rise from the Fed at the June or July meeting.
Fitch puts US debt on credit watch. First time since 2011 Moody’s downgrades from AAA to AA+.
Treasury to issue $1 trillion in Y-bills within weeks after debt ceiling deal, pushing short-term yields up.
Keep buying 90-day T-bills now pushing a 5.2% risk-free yield.
Looking for 2.5% yield by the end of 2023.
June bond ETFs (JNK) and (HYG) are a great high-yield play.
Foreign Currencies
US$ jumps on May nonfarm payroll suggesting another ¼ point interest rate hike from the Fed at the June13-14 meeting.
Any strength in the dollar will be temporary.
Rapidly worsening economic data sparking recession fears.
10 consecutive months of inflation is another indicator of a slowdown.
Looking for new dollar lows by the end of 2023.
Buy FXE, FXB, FXY, and FXA on dips.
Energy and Commodities
Saudi Arabia cuts again adding another 1 million barrels a day reduction to the existing 2 million one.
The goal is to prevent a price collapse in the face of a slowing global economy.
Oil collapse is signaling a recession as is weakness in other commodities, even lithium.
Tesla becomes world’s largest selling car.
Buy (USO) on dips as an economic recovery play.
China expects LNG price spike later this year due to coming supply shortages and a recovering economy.
Precious Metals
Fear of rising interest rates causing metals to drop and bounce around a lot.
JP Morgan recommends adding cash and Gold.
Gold headed to $3000 by 2025.
Soon-to-be falling interest rates is the main driver here, and the winter season in crypto.
Silver has a higher beta and is a better play.
Russia and China are also stockpiling gold to sidestep international sanctions.
LEAPS candidates
GOLD Barrick Gold
GDX VanEck Vectors Gold Miners ETF
SLV iShares Silver Trust ETF
WPM Wheaton Precious Metals
Real Estate
30-year fixed rate mortgage jumps back to 7.0%.
Worst case, home prices go sideways from here until lower interest rates launch a new bull market in housing.
Home builder sentiment up for the 10th straight month, as it will be for the next decade.
CCI – Crown Castle International – great income play, with 5.50% yield.
Next Webinar is on June 21, 2023.
Wishing you all a week filled with adventure and wonder.
Cheers,
Jacquie
