March 23, 2023
SUMMARY OF MARCH 22, 2023 WEBINAR
Hello everyone,
John has just completed his webinar, so I thought I would provide a summary of the main points for you.
Title: Banking Crisis
During the Great Depression, 9,000 banks failed. $7 billion was lost.
Dodd Frank has required banks with over $250 billion to be massively over-capitalized.
Top 20 banks could handle double the 2008 number of defaults.
Treasury has proven aggressive in putting out fires quickly.
The goal is to protect all depositors.
Now no management walks away with $100 million in bonuses after 2008.
John is 80% long, 20% short, and 0% cash.
VIX is at 30 – this is where you want to be fully invested.
Volatility has nearly doubled in the last two weeks.
It is certain that the Fed will prioritize saving the financial system over fighting inflation today. Yes – Fed has just delivered a .25% rate hike.
There has been a flight to safety – yields are back to the bottom of the range.
Energy is pushing to new lows on new recession fears.
Gold, Silver upside breakout on lower interest rates sooner.
U.S.$ gets a small pop off a one-year low as interest rates stay higher for longer.
Look for S&P 500 at $4,800 by the end of 2023.
VIX rockets to $31 – Everything is now tradeable.
Global Economy – Recession Fears
Fed spends $297 billion to bail out the financial system.
Europe raises interest rates by 50 basis points.
Core inflation at 6.0% YOY rate.
Swiss National Bank bails out Credit Suisse, which has taken pressure off the US market.
PPI down to 0.1%
Non-Farm Report – hot at 311,000.
Unemployment rate rose from 3.5 – 3.6% - a 53-year low.
Stocks – Crisis
Banks deliver the biggest sell-off in a decade.
Many customers flooded out of small banks to jump into the big banks on the coasts.
JPM has been turning down new applications.
First Republic (FRH) and Fifth Third (FITB) take the biggest hit – but even big safe banks are down 20%.
Microsoft adds AI to Word and Excel. AI Co-pilot for Microsoft 365. No doubt we will pay more next year for our renewal.
Meta lays off 10,000 workers.
It’s a great time to do LEAPS – on the banks.
Suggestions: JPM 135/130 March 2024 LEAP
LEAPS could also be done on Morgan Stanley and Goldman Sachs.
Rivian is a long-term hold. Two years LEAPS are possible here.
Suggestion: March 2025, 22/20, LEAP
Freeport McMoran (FCX) LEAP suggestion: March 2024, 36/33, LEAP
LEAPS are possible on all the following: MS, JPM, Citigroup, and Schwab.
Berkshire Hathaway is a great buy and a LEAP opportunity.
Bonds – Flight to Safety
Bank crisis brings a record peak in bond prices, drop in yields, which may accelerate Fed interest rate-cutting policies.
WHAT TO KNOW:
Big hedge funds trade indexes down and buy individual stocks on the way up.
10-year yields plunge 3.90% to 3.30%.
Crash of TLT from 180 to 92 over 2 1/2 years brought bankruptcy of Silicon Valley Bank.
Looking for 2.50% yield by the end of 2023.
TLT should reach $120 in 2023. Keep buying TLT calls, call spreads, and LEAPS. Junk bond ETFs (JNK & HYG) great high-yield plays.
Currencies
U.S.$ peaking.
Buy AUD, Pound, Euro, and Yen on dips.
Precious Metals
Gold breaks out.
Flight to safety bid kicks in.
The world’s second largest producer of Platinum is Russia, who’s supplies have been cut off.
(Buy GLD, GDX, GOLD, SLV, PPLT, WPM on dips.)
Wishing you all a great day.
Cheers,
Jacque
