March 22, 2024
(SUMMARY OF JOHN’S MARCH 20, 2024, WEBINAR)
March 22, 2024
Title: Commodities are Back
Trade Alert Performance
March: 1.34%
Since Inception: 681.11%
Average annualized return: +51.40 for 16 years
Trailing One Year Return: +48.70%
Portfolio:
(TLT) 4/$87 - $90 call spread
(FCX) 4/$37 - $40 call spread
(XOM) 4/ $100 - $105 call spread
All positions 10% each.
Total aggregate position = 30%
Method to My Madness
Overheating risk is rising.
Tech will have a “time” correction, not a crash.
Major sector rotation is underway out of big tech and into commodities, energy, and precious metals.
All falling interest rate plays had a great week, including bonds, precious metals, energy, and even uranium.
All economic data is globally slowing, except for the U.S. with the only good economy in the world.
Buy stocks and bonds but only after substantial dips.
The Global Economy – Even Bad News is Good News.
PPI comes in hotter than hot at 0.6%. That was higher than the 0.3% forecast from Dow Jones and comes after a 0.3% increase in January.
CPI comes in hot at 0.4% in February. YOY inflation crawled up to 3.2% to 3.1% expected
Nonfarm Payroll Report rose275,000 in February.
The Headline unemployment rate rose to 3.9%, a two-year high.
Beige Book comes in moderate, saying “labour market tightness eased further,” in February but noted “difficulties persisted attracting workers for highly skilled positions.”
JOLTS Job Openings Report rises by 140,000 to 8,890,000 less than expected.
China Targets 5% Growth for 2024, but nobody buys it for a second.
Stocks – Commodities are Back!
NVDA replaces TSLA as top traded stock, with volumes migrating to the options market as well.
Fed to scale back bank capital requirements, according to his congressional testimony Wednesday.
Rivian shares soar, on news it is halting plans to build a new $2.25 billion factory in Georgia.
New York Community Bancorp bailed out, with a cash infusion led by former Treasury secretary, Steve Munchin.
Target rockets 10% on an earnings blowout, but the company said it expects another year of weak sales.
Dell becomes an AI stock, sending the shares up 47% in a day.
Private Equity targets Macy’s (M) with a $6.6 billion buyout bid, taking the shares up 16%.
Bonds – Doldrums
Bond investors are moving out the risk curve.
The U.S. market for one of the riskiest types of corporate debt is resurging this year, as companies cater to investor demand for assets that can lock in high yields for several years ahead of an expected decline in interest rates.
Holders of these bonds, called junior subordinated debt, are among the last to be paid in case of a default and companies can defer interest payments.
The word is out: Interest rates are falling.
Europe moves towards interest rate cuts, igniting a global bond market rally.
US National Debt is rising by $1 Trillion every 100 days. A trillion here, a trillion there, sooner or later that adds up to a lot of money.
Bonds may have put in a bottom, markets unable to take prices any lower, yields any higher with the current interest rate outlook.
Foreign Currencies – Another Run at the Dollar Highs
Higher for Longer rates mean higher for longer Greenback.
Bank of Japan cuts interest rates, bringing to an end a 34-year stimulus program that was a dismal failure.
The Japanese yen should have rocketed but collapsed instead.
US$ holds three-month highs.
You need falling interest rates for a weak dollar.
A dollar rally could last a couple of months, so a new currency entry point is approaching.
However, eventual falling interest rates guarantee a falling dollar for 2024.
Energy & Commodities – Range Bound
A global commodity rally has dragged oil up.
US continues to dominate markets with 13 million barrels/day production.
The US has saved Europe’s bacon with 1,300 takers of natural gas in two years, replacing Russia practically overnight.
In the meantime, coal has plunged from 50% to 19% of US electricity output in 20 years.
Electrification of the US economy will continue to be a driving theme.
The Uranium Shortage is getting extreme, with yellow cake up 112% in a year, owners of left-for-dead uranium mines are restarting operations to capitalize on rising demand for the nuclear fuel.
AI is finding new copper deposits.
Precious Metals - Signs of Life
Precious metals have a great week on slightly falling rates.
Gold needs – falling interest rates to resume rally (Fed statement confirmed rate cuts – metals rallied thereafter).
Miners are lagging gold performance but will play catch up.
Investors are picking up gold as a hedge for 2024 volatility.
Gold head for $3000 by 2025.
Silver will also rally. (Initial target is around $37.00)
Russia and China are also stockpiling gold to sidestep international sanctions.
Real Estate – Demographic Tailwind
Home prices have risen 2.4 times faster than the inflation rate since 1963.
Gail force demographic tailwinds are the reason helped by a chronic housing shortage.
New Home Sales weaken, curbed by frigid weather increasing 1.5% to a seasonally adjusted annual rate of 661,000 units in January.
But demand for new construction remains underpinned by a persistent shortage of previously owned homes.
Toll Brothers rocks, taking the shares up 6%, with extremely strong demand for new homes on the horizon. The gale force demographic tailwind continues.
Trade Sheet
Stocks: buy any dips
Bonds: buy dips
Commodities: buy dips
Currencies: sell dollar rallies, buy currencies
Precious Metals: buy dips.
Energy: buy dips
Volatility: buy $12
Real Estate: buy dips.
Next Strategy Webinar: April 3 from Key West, Florida at 12 EST
Cheers,
Jacquie
