May 17, 2024
(SUMMARY OF JOHN’S MAY 15, 2024 WEBINAR)
May 17, 2024
Hello everyone,
Title
The Great American Age
Performance
2024 YTD +18.75%
695.38% since inception
+51.83 average annualized return
Portfolio
Risk On
(GLD) 5/$200-$205 call spread 10%
(SLV) 5/$21-$23 call spread 10%
(TLT) 6/$94-$97 put spread 10%
Risk Off
(NVDA) 5/$980-$990 put spread 10%
(MSFT) 5/$430-$440 put spread 10%
(AAPL) 6/$200-$210 put spread 10%
Total aggregate position = 60%
The Method to My Madness
The focus now is on discounting the first rate cut, which = higher prices for everything.
The downside is limited to 5%-8% with $8 trillion in cash on the sidelines and a further $26.8 trillion in short-term US treasury bills.
Technology stocks won’t crash, just have a sideways “time” correction.
All economic data is globally slowing.
Interest rates are higher for longer and September is back on the plate in view of recent data releases.
Buy stocks and bonds on dips.
The Global Economy – The Slowing Data
Non-farm payroll comes in at a weak 175,000 in April, the slowest in six months.
The headline unemployment rate ticked up to 3.9% while wage gains slowed.
Fed says no hikes, but no cuts either, triggering a 500-point rally in the market.
Weekly Jobless claims come in at 231,000, the weakest in six months.
Biden to increase China tariffs to 100% on key sectors including electric vehicles, batteries, solar cells, steel and aluminum.
China Home sales plunge by 47%, as the real estate crisis deepens, indicating that a recovery may be far off.
Online Retail Spending up 7% during the January – April period YOY.
US Wholesale Inventories drop by 0.4%.
Morgan Stanley pushes back rate cut expectations to September.
Stocks – A New Golden Age
Stocks up 10 out of 11 days on consistently slowing economic data, the soft landing is here.
The Bull Market has five more years to run, with S&P 500 growing earnings at 10% a year for the foreseeable future.
Last year brought in $222 per share, 2024 will see $250, 2025 $270, and $300 for 2026.
The Great American Golden Age has only just begun.
Profit margins will expand to record highs.
Falling interest rates and a weak dollar will boost exports to a recovering Europe.
Inflation should hit the Fed’s 2% in 2025 as AI chatbots replace workers at a breakneck rate, cutting costs dramatically.
The future is happening fast. Buy everything on dips.
Recommended for LEAPS: ADBE, CRM, AMD.
Bonds – Stabilizing
Bond investors are making a killing with the US Treasury paying out $900 billion in interest in 2023.
That’s double the annual cost of the past decade. Remember those coupons?
That’s another reason for the Fed to cut rates soon, to lessen this backbreaking burden on the government.
After being held hostage by zero-rate policies for almost two decades, US treasuries are finally reverting back to their traditional role in the economy.
Bonds are becoming respectable again after a long winter. Buy (TLT) on dips.
The US Treasury announced a Bond Buyback Program, with the first scheduled on May 29.
The Treasury’s last regular buyback program began in the early 2000s and ended in April 2002.
Foreign Currencies – Sniffing Out a Dollar Top
Japanese yen collapses to at Yen 160.
Bank of Japan intervened with a $35 billion yen buy, dollar sell. Avoid (FXY)
Chinese Yuan remains weak. International trade is collapsing.
Declining exports, collapsing foreign investment, minimal population growth, it all adds up to a weaker Chinese currency.
Higher for longer rates mean higher for longer greenback.
Falling interest rates guarantee a falling dollar in 2024.
Energy & Commodities – Oil Price Drop
Oil sees biggest drop in three months, as tensions in the Middle East fade, economic data slows.
Both benchmarks are set for weekly losses as investors are concerned higher for longer interest rates will curb economic growth in the U.S., the world’s leading oil consumer, as well as in other parts of the world.
Buy (XOM) and (OXY) on dips. A new Golden Age consumes a lot of Texas Tea.
Exxon Cuts deal with the FTC, allowing the pioneer deal to go through.
Commodity takeover wars heat up, as Swiss-based commodity giant Glencore also considers a bid for Anglo-American.
Anglo is attractive to its competitors for its prized copper assets in Chile and Peru, a metal used in everything from electric vehicles and power grids to construction, whose demand is expected to rise as the world moves to cleaner energy and wider use of AI. Follow the big money.
Buy (FCX) and (COPX) on dips.
Precious Metals – Geopolitical Fears
Solar Panels are driving global silver demand.
Global investment in solar PV manufacturing more than doubled last year to around $80 billion.
Miners are expanding their operations and ramping up production as prices for the precious metal climb to decade highs.
Demand for silver from the makers of solar PV panels, particularly those in China, is forecast to increase by almost 170% by 2030, to roughly 273 million ounces – or about one-fifth of total silver demand.
Buy (SLV) and (WPM) on dips.
Real Estate – Underwater Homes
Underwater Home Mortgages are Soaring, with the South taking the biggest hit.
Roughly one in 37 homes are now considered seriously underwater in the US.
Nationally, 2.7% of homes carried loan balances at least 25% more than their market value in the first few months of the year.
That’s up from 2.6% in the previous quarter. It’s another cost of high rates.
Demand for Adjustable-Rate Loans Soar, as the 7.25% 30-year fixed sends borrowers fleeing.
The share of ARM applications rose to 7.8% of mortgage demand last week.
S&P Case Shiller National Home Price Index soars. Home prices in February jumped 6.4% year over year, marking another increase after the prior month’s annual gain of 6%, and the fastest rate of price growth since November 2022.
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
May 29, 2024, from Incline Village, Nevada.
Cheers,
Jacquie
