November 3, 2023

 

(SUMMARY OF JOHN’S NOVEMBER 1, 2023 WEBINAR)

November 3, 2023

 

Hello everyone,

 

Webinar Title:  The Seasonals are Kicking In

Markets are starting to pick up.

 

Performance:

2023 year to date:  +66.17%

Average Annualized Return:  +47.82%

Since inception for 15 years:  663.36%

Trailing one-year return: 74.44%

 

Positions:

Risk On

NVDA 11/370-380 call spread 10%

TLT 11/76-79 call spread 10%

BRK/B 11/300-310 call spread 10%

 

Method to My Madness

The seasonals are kicking in, putting a floor under all asset classes.

Year-end rally is a natural tendency, but this keeps getting knocked down by events such as government shutdown and Middle Eastern War.

Bonds appear to be bottoming and are attracting long-term money.

Oil prices are selling off, losing the boost from the Gaza war.

AI stocks still attracting investors.

Wait to buy on pullbacks.

 

Global Economy – Red Hot U.S.

The Fed kept rates steady on Wednesday.

ADP rises by 113,000 for private sector payrolls.

U.S. Core PCE jumps 0.3%, in September, the most in four months.

Red Hot U.S. economy at 4.9% growth rate – highest in two years.

Car payment delinquencies hit record rate, with repossessions rising.

Retail sales rise 0.7% in September, much more than expected.  Consumers are still paying up for the price increases.

 

Stocks – Bottom Fishing

All the elements of a year-end rally are setting up.   Hedge Fund shorts at all-time highs.

Earnings coming in better than expected in big tech and financials.

Caterpillar dives on shrinking demand.

Amazon profits jump on the strength of its overwhelming cloud business.

JP Morgan CEO sells $1.38 million worth of stock or 1 million shares in the company.

Government shutdown on November 17 will continue to cap prices and risk-taking.

Ukraine War has become a big generator of U.S. Defence Companies, such as Lockheed Martin (LMT) and General Dynamics (GD).

Meta blows out Earnings with earnings at a breathtaking $34 billion, up 23% YOY.

If you are a long-term investor scale into Tesla.  It is close to LEAPS buying territory.

Snowflake – buy on dips.

Google – buy on dips.

AMD - buy on dips.

BA – close to major buy.

CAT – a lifetime stock – multiple exposures to a recovery in the global economy.

BAC, JPM, IB, BRK/B – buy at these levels.

Netflix – two-year LEAPS possible even going 6 months out.

 

Bonds – Turning Hot

U.S. debt is turning hot, with institutions scaling in at present prices – perceived to be a long-term bottom.

10-year Bonds have repeatedly tried but failed to break the 5.00% yield.

U.S. Treasury to borrow $776 billion by yearend.  It follows this up with an $816 billion draw on the markets from January to June.  If bonds (TLT) can hold up against this onslaught of borrowing they are a “BUY”.

U.S. Government ends 2023 with a $1.7 trillion deficit, up 23%.

Fear of excessive government borrowing is given as the reason, but real borrowing is actually declining.

The whole falling interest rate and rising bond price trade have been delayed for six months on hotter than expected economic growth at 2.40% for Q2 and more Fed rate rises.

Junk bond ETFs (JNK) and (HYG) are holding up extremely well with an 8.74% yield.

Start scaling into long bond positions.  On a six-month view, we could hit 110 TLT.

Worst case scenario in yields – we hit 5.20% and then fall.

 

Foreign Currencies – The Dollar is trying to top out

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. Looking for a final capitulation in the yen and then we enter a decade-long buy.  Expect the Japanese yen to take off like a rocket.

U.K. Interest rates hit 25-year high, at 5.16% for 30-year gilts.  Inflation at 6.7% is the driver with no end in sight.

“Higher for Longer” gives an adrenaline shot for the U.S. dollar taking it to new 2023 highs.

The dollar is also catching a flight to safety bid from the imminent government shutdown.  It should be topping soon.

Collapse of the dollar is now a 2024 story.

Buy (FXE), (FXB), (FXA), (FXY)

 

Energy & Commodities – End of the Party

Middle East crisis sees oil rally despite no supply disruptions whatsoever.

Saudi Arabia continues the Oil supply squeeze into Q4.

The U.S. eases Venezuela sanctions to boost American oil supplies and cap prices.

$100 a barrel and much higher possible if we get a cold winter, which may start to kick in shortly.

Duke Energy goes all in on Hydrogen in Florida, devoting 74.5 MwH solar plant in Debarry towards the electrolysis of water.

Hedge Funds buy into Uranium as the nuclear renaissance gains steam.  If you are in CCJ hold it and add to it on dips.

FCX – strong LEAPS candidate.

 

Precious Metals – Flight to Safety

Middle East delivers a bid for precious metals.

The yellow metal is up 45% over five years. 

Gold headed for $3000 by 2025.

Falling interest rates will be the driver.

Russia and China are stockpiling gold to sidestep international sanctions.

 

Real Estate – Mixed

Supplies are at 40-year lows.

95% of homeowners with mortgages date back to the 3.0% era.

Homebuyers are pouring into ARMs (Adjustable-Rate Mortgages), avoiding 30-year fixed rates at a mind-numbing 8.0%.

ARMs could be had at 6.77% last week.  Overall, mortgage applications are down 22% YOY.

Housing starts jump in September, up 3.2% to 963,000 units.

Single family homes are the overwhelming leaders.

Apartment buildings were up an amazing 17.1%.

CCI – buy at these levels.

ITB – home builder – buy.

 

Cheers,

Jacquie