October 20, 2023
(SUMMARY OF JOHN’S OCTOBER 18, 2023 MARKET UPDATE WEBINAR)
October 20, 2023
Hello everyone,
WEBINAR TITLE: Going into Combat
LUNCHES
October 20 – London, U.K.
October 30 – Sarasota, Florida
October 31 – Miami, Florida
PERFORMANCE
Year to Date: 63.3%
Trailing one year return: 72.98%
Average Annualized return: 47.71%
POSITIONS
TSLA 10 $200/$210 call spread
NVDA 10 $370/$380 call spread – profits taken & trade expired.
NVDA 11 $370/$380 call spread
TLT 11 $76/79 call spread
METHOD TO MY MADNESS
So far, the damage of the Middle Eastern crisis on Wall Street has been limited. It is anybody’s guess whether this escalates.
The markets are trapped in a narrow range, as the market seems to be dealt a savage hit almost every week. This keeps it swinging back and forth in a narrow range.
From a technical standpoint, a year-end rally is possible, but the market will have to sidestep multiple crisis situations to accomplish this. We all know that the market can climb a wall of worry.
Bonds are getting trashed.
Oil prices and precious metals have risen sharply because of the Middle Eastern war.
John argues that the tech sell-off will be brief, as too many people are trying to get into accelerating long term earnings driven by AI.
Let the market come to you. Be patient.
THE GLOBAL ECONOMY – JITTERS
September nonfarm payroll report rises to 336,000. Still a very resilient economy.
CPI explodes to 3.7%.
The Producer Price Index jumps 0.5%
The International Monetary Fund has raised its U.S. growth projection for this year by 0.3% points compared with its July update, to 2.1%.
Retail sales rise 0.7% in September – greater than expectations. Price increases are not stopping the consumer spending.
Car Strike expands – United Auto Workers closed Ford’s biggest plant.
China Trade drags as both imports and exports decline.
STOCKS – UNCERTAINTY
Earnings come in better than expected in big tech and financials.
JP Morgan sets new record. Buy on any dip.
Threat of a government shutdown on November 17 will continue to cap prices and risk taking.
Middle Eastern war is adding to uncertainty.
Keep positions small until some of the uncertainty is dealt with.
BONDS – CRISIS
Big swings in the U.S. Treasury prices highlight the uncertainty in this market.
10-year Treasury yields hit new 16-year highs at 4.80%. Now heading toward 5.00%
Fear of excessive borrowing is given as the reason, but real borrowing is actually declining.
The real reason according to John is that too many institutions are loading the boat with bonds at the 0.32% yield lows.
The whole falling interest rate, rising bond price trade has been delayed for six months due to hotter-than-expected economic growth at 2.40% for Q2 and the prospect of more Fed rate rises.
Keep buying 90-day T-bills, now pushing a 5.50% risk-free yield.
Junk bond ETFs (JNK) and (HYG) are holding up extremely well with a 8.74% yield.
Stand aside from (TLT) until we find the new floor.
FOREIGN CURRENCIES
USD$ soars on Middle Eastern crisis – flight to safety bid. Top approaching soon.
At new 2023 highs with the Fed’s catchcry “higher for longer” powering the greenback.
Also fuelling the U.S.$ is the approaching government shutdown.
Collapse of $ is a 2024 story.
Aussie $ collapse prompted by slowing Chinese economy not buying their energy or commodities.
Buy (FXE), (FXB), (FXA), (FXY).
ENERGY AND COMMODITIES
Oil surges because of the Middle Eastern crisis.
Saudi Arabia continues Oil supply squeeze into Q4. Price manipulation is moving prices up.
$100 a barrel is possible and higher if we get a cold winter.
The big theme of the century will be electrification. Multiple projects are already underway.
PRECIOUS METALS – FLIGHT TO SAFETY
Precious metals rocket on the back of the Middle Eastern crisis.
Gold has risen 45% over five years.
Gold is headed for $3000 by 2025.
Silver is the better play with a higher beta.
Russia and China are also stockpiling gold to sidestep international sanctions.
REAL ESTATE
New US home mortgage rates hit 17 year- high and have virtually ground to a halt.
Sales volume down to 2008 lows.
S&P Case Shiller rises to new all-time high, for sixth consecutive month as inventory shortages drive up competition.
The median home price for existing homes rose to 1.9% to $406,700 according to the National Association of Realtors (NAR)
The robust housing market suggests that while some buyers have pulled back due to high borrowing costs, demand continues to outweigh supply.
Wishing you all a wonderful weekend.
Cheers
Jacquie
