November 17, 2023
(SUMMARY OF JOHN’S NOVEMBER 15, 2023, WEBINAR)
November 17, 2023
Hello everyone,
WEBINAR TITLE: Happy Days Are Here Again
PERFORMANCE:
November: +10.97
2023 year to date: +77.14%
Average annualized return: +51.26%
POSITIONS:
70% Long, 10% short, 20% cash.
Expiration Value: +82.87%
Risk On:
(MSFT) 12/$320-$330 call spread 10%
(NLY) 12/$15-$16 call spread 10%
(BRK/B) 12 $320-$330 call spread 10%
(CCJ) 12/$35-$38 call spread 10%
(CRM) 12 $185-$195 call spread 10%
(GOOGL) 12 $110-$120 call spread 10%
(SNOW) 12 $135-$140 call spread 10%
Risk Off:
(TLT) 12/$95-$98 call spread 10%
Net Position: 60%
THE METHOD TO MY MADNESS
The Fed may be finally done raising rates and the movement in the markets represents an expectation that the first-rate cut may be in May 2024.
All sectors closely tied to interest rates react – including bonds, REITS, precious metals, and financials.
The year-end rally is here, but there is still a question mark about what happens in January.
The government shutdown is on, but markets are nonplussed.
Oil prices and commodities are now trading as one, selling off on a slowing economy.
The tech bull market is back, and John believes it will continue for years.
The time is now to go aggressively long stocks and bonds.
Commodities and industrials are a second-half play.
THE GLOBAL ECONOMY - COOLING
CPI is unchanged at a cool 3.2%.
Nonfarm Payroll report fades to 150,000 in October, well below expectations.
The unemployment rate rose to 3.9%, the highest level since January 2022. (bad news is often good news for the market)
John believes a soft landing is now more likely. Inflation is falling and could lead to Fed interest rate cuts in H2 2024. Stocks and bonds party on the news/expectation.
Fed Leaves rates unchanged.
Weekly Jobless Claims drop 3,000 to 217,000. Unusually low. Hiring slowed in October as the economy slowed.
Tax cuts are on the table, thanks to inflation driving bracket creep for deductions.
China lent $1.34 trillion for the Belt and Road initiative from 2000 to 2001 to dominate Asian and African infrastructure.
STOCKS – OFF TO THE RACES
Most 2023 stock gains happened in 8 days, up some 14% since January 1.
If you are invested in Day Trading, you probably missed this.
Stocks are up 113 days vs. down 102 days.
Only seven stocks accounted for most of the increase.
Hedge Funds were crushed in last week’s monster rally – the biggest in 31/2 years.
The government shutdown is delayed.
IWM – small caps lead
John is holding back on TESLA because of the price war.
CAT- a great buy – domestic play. Long-term hold.
FCX- waiting for the EV price war to end.
BLK – Bitcoin ETF coming out soon.
BRK/B – LEAPS territory – great buy.
Emerging markets are ready to take off from the impact of a weak dollar.
BONDS
Moody’s rating service downgrades the U.S. citing deteriorating fiscal conditions and worsening chaos in Washington.
However, it maintained its AAA Rating.
Investors poured $5 billion into Bond ETFs in October.
10-year Treasury yields hit a new 16-year high, at 5.0%, then retreated to 4.45%
John states that the whole falling interest rate and rising bond price trade has been delayed for three months – hotter than expected economic growth at 4.9% for Q3 and more Fed rate rises.
Junk Bond ETFs (JNK) and (HYG) are holding up extremely well with an 8.74% yield and an 18-month high.
Buy (TLT) on dips.
Yields down to around 31/2% sometime next year. Look for around 99 in TLT.
FOREIGN CURRENCIES – LEVELLING OFF AT THE HIGHS.
Bank of Japan eases grip on Bond Yields – ending its unlimited buying operation to keep interest rates down.
Japan is the last country to allow rates to rise. Expect the Japanese yen to take off like a rocket.
The collapse of the U.S.$ is a 2024 event, and falling interest rates will control this narrative.
The Aussie dollar improving on a slowly recovering Chinese economy.
Buy (FXE), (FXB), (FXA), (FXY)
ENERGY & COMMODITIES
The sector hits a four-month low at $75 a barrel, down 4% as the shine comes off the energy sector.
Gaza boost is gone, which never delivered a supply cut-off despite many threats.
Fears of a global economic slowdown are mounting.
China’s oil imports have fallen for six consecutive months, the world’s largest importer.
Strategic Petroleum Reserve at $79 provides a floor bid.
Warm weather is capping rallies in natural gas (UNG).
Copper Bull predicts an 80% gain in the coming decade.
PRECIOUS METALS
Gold is the new hedge for 2024 market volatility.
Goldman Sachs bets on a 21% gain in gold for 2024.
Gold is headed for $3000 by 2025.
Drivers: soon-to-fall interest rates.
Silver is the better play with a higher beta.
Russia and China are also stockpiling gold to sidestep international sanctions.
REAL ESTATE - STALLED
Real Estate Commissions are about to drop sharply, the outcome of a court decision against the National Coalition of Realtors.
It’s estimated that the $100 billion paid in real-estate commissions annually could be cut by 30%, with as many as 1.6 million agents lowing their source of income.
Buyers are pouring into ARMs, or adjustable-rate mortgages – at 6.77% last week.
Fixed Rate mortgages around 8.00%.
Median home price for existing homes rose to 1.9% according to the National Association of Realtors (NAR).
The robust housing market suggests that while some buyers pulled out due to high borrowing costs, demand continues to outweigh supply.
TRADE SHEET
Stocks: buy any dips
Bonds: buy dips
Commodities: buy dips
Currencies: sell dollar rallies, buy currencies
Precious Metals: buy dips.
Energy: stand aside
Volatility: stand aside
Real Estate: buy dips.
NEXT WEBINAR: November 29, 2023
Cheers,
Jacquie
