The US House of Representatives passed a bill effectively banning the Federal Reserve from creating a digital version of the dollar.
Even though this action doesn’t specifically target the tech sector, the tech sector ($COMPQ) has a lot at stake in this bill.
First, the irony here is how polarized the US Central Bank has become in Washington to the point the Federal government wants to ban something from them.
It’s like taking away a dangerous toy from a baby.
It signals there has been a massive failure at the Fed with its blown “transitory inflation” call that has lasted over 4 years.
The Fed could equally screw up the onboarding of the digital dollar, if it ever happens, the U.S. financial system might never recover.
The vote passed but it still would need approval from the Senate and then signed by the President for it to become US law.
Still, as one of the chief opponents of the Bill, Rep. Maxine Waters, put it, "In fact, if this bill becomes law, we would be the only country in the world to ban a CBDC." Prohibiting "innovation" on the central bank digital currency front seems like a policy miss at first sight.
Waters has this backward.
The U.S. adopting a digital dollar would stifle tech innovation.
Money earmarked for innovation would likely go into capital that isn’t tightly controlled and tracked.
Innovation usually happens when big risk-takers deliver big ideas and the implementation of CBDCs would mean that tracking technology could shut down any “big idea” from the top.
China has tried the e-Yuan which has been a massive disaster with little uptake in the project.
Innovation thrives in an environment that offers freedom for the big picture thinkers, and a 3rd party tracking and monitoring apparatus isn’t good enough.
In fact, if CBDC were implemented, it would be the end of US-led tech innovation in modern history.
Few would take risks because it wouldn’t be worth innovating in this type of currency when there are others that would step over the line of privacy.
Scamming would be off the charts as well in this scenario.
Inserting unparalleled surveillance and individualized control would choke off free business and ideas become sterilized.
Anything new laid out would face a gauntlet of obstacles before getting anywhere near a consumer.
Think about all the middlemen on the way nickel and diming you the death as well. We already have that with the blown transitory inflation call by the Fed.
I am a believer that the less government, the better for tech business.
Europe is the poster boy for government-led innovation stifling.
There are no competitive tech companies in Europe that can compete with Silicon Valley because a tech innovator would be crazy to start and grow a company in Europe.
Europe is hostile to free business and tech innovation. They know how to tax and do it highly.
I could easily see how an integration of digital currency could end up in a dystopian situation if carried out by the wrong government.
Of course, the banning of CBDCs at the House level is a good sign that America is open for business, but it will need to become enshrined in law to have some bite.
If CBDCs are implemented by the Fed in the future, 90% of the Nasdaq market would fail leaving just 7 tech stocks.
It would in fact amplify the lack of competition that we are facing these days in the US tech sector.
I am bullish on the tech sector if integration of CBDCs by the Fed and Congress are banned.
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“Someone's sitting in the shade today because someone planted a tree a long time ago.” – Said Legendary American Investor Warren Buffett
https://www.madhedgefundtrader.com/wp-content/uploads/2024/04/warren-buffet.png932738Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2024-05-24 14:00:412024-05-24 14:15:45May 24, 2024 - Quote of the Day
On Wednesday – the International Day for Biological Diversity – the International Union for the Conservation of Nature released a report that found that more than half of the world’s mangrove ecosystems are at risk of collapse due to development, pollution, and sea level rise, the latest evidence of the growing threat to nature.The United Nations Environment Programme has called for a ‘whole of society approach,’ including the private sector, to address both climate change and biodiversity loss.
While there are thousands of companies around the world that are taking action to monitor, disclose, and reduce greenhouse gas emissions, few widespread mechanisms are in place to systematically measure and reduce business impacts on nature.
So, what are businesses doing to reduce other harms to nature?
It’s not just about the half a dozen or so gases that we measure in terms of greenhouse gases.The rest of nature also needs attention.
The Taskforce on Nature-related Financial Disclosures (TNFD) was launched in 2021 as a partnership among financial institutions, corporations, and market service providers with the goal of developing business disclosure practices that would better account for impacts on nature.
Executive Director, Tony Goldner, said the 40 task force member organizations realize that many aspects of business and industry depend on services nature provides, from clean water to the pollination of crops.The estimated economic value of these “ecosystem services.” as scientists call them, amounts to staggering sums.
Let’s consider the role of the humble insect.The U.S. Department of Agriculture said the pollination of crops adds $10 billion in benefits annually just in the U.S.Globally, pollination contributes more than $3 trillion to the world economy.
We are not looking after the insects on our planet.In fact, they are getting a raw deal.Several studies have documented sharply declining populations of insect pollinators in industrialized parts of the world, and scientists link those declines to business activities such as the conversion of natural areas for agriculture and heavy pesticide use.
Goldner points out that if we degrade the systems that provide these benefits to our businesses, those benefits won’t continue to flow into our business models.
At the World Economic Forum’s annual conference in January in Davos, Switzerland, TNFD announced its early adopter companies, and the list has since grown to some 370 companies that have committed to nature-related disclosures.
The task force is part of an emerging effort to get nature on the ledger sheets along with the other assets and liabilities companies track.Proponents argue that this is not just important for environmental improvement, it is a business imperative.
“The hard business realities of the 21st century - you must know your impacts on climate and biodiversity or risk disruption.” (Ethan Soloviev, chief innovation officer at How Good).
1) A huge demographic tailwind has kicked in during the 2020’s
2) The last time this happened was during the 1980’s when stocks rose twentyfold
3) Don’t believe today’s doomsayers, America is the first place to invest and will remain so for decades
4) It all sets up a Pax Americana that could continue for the rest of the century.
Remember the 1980’s, when investing was as easy as falling off a log? If you indexed your portfolio rose twentyfold.
Well, have I got some great news for you. We are about to see a repeat.
I believe that the global economy is setting up for a new golden age reminiscent of the one the United States enjoyed during the 1950s and 1980’s and which I still remember fondly.
This is not some pie-in-the-sky prediction. It simply assumes a continuation of existing trends in demographics, technology, politics, and economics. The implications for your investment portfolio will be huge.
What I call “intergenerational arbitrage” will be the principal impetus. The main reason that we are now enduring two “lost decades” of economic growth during the 2000’s and 2010’s is that 85 million baby boomers are retiring to be followed by only 65 million “Gen Xer’s.”
When the majority of the population is in retirement mode, it means that there are fewer buyers of real estate, home appliances, and “RISK ON” assets such as equities, and more buyers of assisted living facilities, health care, and “RISK OFF” assets such as bonds.
The net result of this is slower economic growth, higher budget deficits, a weak currency, and registered investment advisors who have distilled their practices down to only municipal bond sales.
Fast forward to today when the reverse happens and the baby boomers are exiting the economy, worried about whether their diapers get changed on time or if their favorite flavor of Ensure is in stock at the nursing home.
That is when you have 65 million Gen Xer’s being chased by 85 million of the “Millennial” generation trying to buy their assets.
By then we will not have built new homes in appreciable numbers for 20 years and a severe scarcity of housing hits. Residential real estate prices will soar. Labor shortages will force wage serious hikes.
The middle-class standard of living will reverse a then 40-year decline. Annual GDP growth will return from the current subdued 2% rate to near the torrid 4% seen during the 1990s.
The stock market rockets in this scenario. Share prices may rise very gradually for the rest of this decade as long as above-average 3.25% growth persists. That will take the Dow to 120,000 by the 2030’s a mere triple from present levels.
Technology and Emerging stock markets (EEM) with much higher growth rates do far better.
This is not just a demographic story. The next 20 years should bring a fundamental restructuring of our energy infrastructure as well.
The 100-year supply of natural gas (UNG) we possess through the new “fracking” technology will finally make it to end users, replacing coal (KOL) and oil (USO). Fracking applied to oilfields is also unlocking vast new supplies.
Since 1995, the United States Geological Survey's estimate of recoverable reserves has ballooned from 150 million barrels to 8 billion. OPEC’s share of global reserves is collapsing.
This is all happening while EV’s are taking an ever-growing share of the new car market, 7.6% in 2023, or some 1,189,043 vehicles, up from 5.9% in 2022. Total US gasoline consumption is now at a ten-year low. Alternative energy technologies will also contribute in an important way in states such as California, accounting for 60% by 2030 and 100% by 2045.
I now have an all-electric garage, a Tesla Model X (TSLA) powered by solar panels and Tesla Powerwalls, allowing me to disappear from the gasoline market completely. Millions will follow. The net result of all of this is lower energy prices for everyone.
It has already flipped the U.S. from a net importer to an exporter of energy in a huge way, with positive implications for America’s balance of payments. That eliminated our once-largest import and turned it into an important export, which is very dollar-bullish for the long term. A strong greenback further reinforces the bull case for stocks as it attracts more foreign buying.
The US is now the world’s largest oil producer at 13 million barrels a day and we are now fueling much of Europe with our natural gas exports, replacing Russia.
Accelerating AI technology will bring another continuing positive. Of course, it’s great to have new toys to play with on the weekends, send out Facebook photos to the family, and edit your own home videos.
But at the enterprise level, this is enabling speedy improvements in productivity that are filtering down to every business in the U.S., lowering costs everywhere. Humans are being replaced with Chatbots at blinding speed. When was the last time you talked to an actual human in customer support?
This is why corporate earnings have been outperforming the economy as a whole by a large margin.
Profit margins are at an all-time high. Living near booming Silicon Valley, I can tell you that there are thousands of new technologies and business models that you have never heard of under development.
When the winners emerge, they will have a big cross-leveraged effect on the economy.
New healthcare breakthroughs will make serious diseases a thing of the past, which are also being spearheaded in the San Francisco Bay area. I tell my kids they will never be afflicted by my maladies. When they get cancer in 20 years they will just go down to Wal-Mart and buy a bottle of cancer pills for $5, and it will be gone by Friday.
What is this worth to the global economy? Oh, about $2 trillion a year, or 4% of GDP. Who is overwhelmingly in the driver’s seat on these innovations?
The USA.
There is a political element to the new golden age as well. Gridlock in Washington can’t last forever. Eventually, one side or another will prevail with a clear majority.
This will allow the government to push through needed long-term structural reforms, the solution of which everyone agrees on now, but for which nobody wants to be blamed.
That means raising the retirement age from 66 to 70 where it belongs and means-testing recipients. Billionaires don’t need the maximum $36,156 annual supplement. Nor do I.
A Pax Americana would ensue.
That means China will have to defend its own oil supply, instead of relying on us to do it for them. That’s why they have recently bought a second used aircraft carrier. The Middle East is now their headache.
The national debt then comes under control, and we don’t end up like Greece.
The long-awaited Treasury bond (TLT) crash never happens.
Sure, this is all very long-term, over-the-horizon stuff. My markets are discounting this now. That’s how we got to Dow 40,000, up from 600 when I first entered the US market 42 years ago.
Dow Average 1900-2024
Another American Golden Age is Here
https://www.madhedgefundtrader.com/wp-content/uploads/2024/05/american-golden-age.png448584april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-05-24 09:02:532024-05-24 17:20:28Welcome to the Pax Americana
“I wouldn’t want to see everyone get down to where Detroit is before we declare a bottom in residential housing,” said David Blitzer, former chairman of the S&P 500 Index Committee.
https://www.madhedgefundtrader.com/wp-content/uploads/2011/11/detroit05.jpg400400DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2024-05-24 09:00:312024-05-24 17:20:11May 24, 2024 - Quote of the Day
When you're at a racetrack, eyeing the horses before the big race, you're not just looking for a quick win. You want a stallion that'll keep delivering, race after race.
Well, that's exactly what we're hunting for in the stock market – companies that can keep those dividend payouts growing year after year. And if there's one thoroughbred you won't want to miss, it's Abbott Laboratories (ABT).
This biotech and healthcare giant isn't just keeping pace; it's setting the darned pace. Abbott is dominating the medical devices arena, a sector projected to skyrocket from $518.5 billion in 2023 to a whopping $886.8 billion by 2032. That's a steady 6.3% annual growth rate.
However, Abbott's not content with just one race – they've got their fingers in the lucrative pies of diagnostics and nutritional products, too.
But hold your horses, partner. Abbott isn't some one-trick pony. They've got their fingers in the lucrative pies of diagnostics and nutritional products too. Earlier this year, I gave this stock a thumbs-up, and it's only become more of a hot ticket since.
Fresh off their first-quarter reveal in April, Abbott's core business – think medical devices, diagnostics, and even baby formula – grew organically by an impressive 10.8% year-over-year.
This marks the fifth consecutive quarter of double-digit growth, so we're not just talking about a lucky streak here.
From what I can see, their Medical Devices segment is the real workhorse, surging 14.2% over the previous year. Their FreeStyle Libre device isn't just flying off the shelves, it's practically teleporting, with sales up 23% from last year. And with the FDA's recent green light for innovative products like TriClip and Amulet, Abbott isn't just playing in the major leagues, they're calling the shots.
Their Nutrition sector wasn't a slouch either, pulling in $2.1 billion in sales, a 5.1% increase over last year. Abbott's new Protality shake, launched in January, is specifically designed for those on weight loss journeys, adding another feather to their growth cap. Needless
Even their Diagnostics segment, which saw a dip due to the waning of COVID-19 testing, showed underlying strength in non-COVID testing. Their recent clearance for a concussion diagnostic test proves they're not slowing down on the innovation front.
When it comes to financials, Abbott is built like a brick house. With rock-solid interest coverage and debt servicing capacity, it's no wonder analysts are predicting a steady climb in their earnings. They've got a pipeline of new products and a market that's bouncing back from the pandemic, creating a recipe for success.
And don't even get me started on the dividends. Sure, Abbott's 2.1% yield might seem modest, but it's the growth story that's truly captivating.
Over the past decade, they've seen a staggering 11.4% annual growth in dividends. This ain't no stagnant stock, folks; it's a purebred built for speed.
Of course, no investment is without its bucking broncos. Abbott's still wrestling with the drop-off in pandemic-related revenues, and while their R&D spending is admirable, there's no guarantee those investments will always pay off. And let's not forget the ever-present threat of cyberattacks—a risk for any big player in today's world.
Still, while there might be a few hurdles in the race, Abbott Laboratories is a thoroughbred built for the long haul. With a rock-solid balance sheet, a track record of innovation, and a dividend that's been growing faster than a foal in springtime, this is a stock that's hard to beat.
And right now, the odds are in your favor. This company’s shares have been trading at a discount. So if you're ready to saddle up with a dividend growth thoroughbred, it's time to consider adding Abbott Laboratories to your stable. Because when it comes to the dividend derby, this is one horse you'll want to back.
I know that most of you bought my recommendation on September 29, 2022, to buy the NVIDIA (NVDA) January 2025 $270-$280 out-of-the-money vertical Bull Call spread LEAPS at $0.50 or best, so I thought I’d give you an update.
Since I sent out this trade alert, (NVDA) shares have catapulted from $127 to $1,050, a gain of 8.27 times, or 827%. Today, the middle market for the LEAPS is $9.20, a gain of 18.4 times, or 1.840%. And this is a position where you never risked more money than you put up.
Those of you who bought this in size have already retired and will never work another day in their lives.
Such is the incredible power of LEAPS.
Of the 38 LEAPS I have issued over the past three years, 36 are at max profit. Only (UNG) and the last (TLT) are sucking hind tit. But they still have eight more months to run. The final bell has not been rung….yet.
There are many more LEAPS recommendations to come from the Mad Hedge Fund Trader. However, you will find I issue many more of these at market bottoms than tops. Timing is everything.
For your edification, I have included the original trade alert below.
Trade Alert - (NVDA) – BUY BUY the NVIDIA (NVDA) January 2025 $270-$280 out-of-the-money vertical Bull Call spread LEAPS at $0.50 or best
Opening Trade
9-29-2022
expiration date: January 17, 2025
Number of Contracts = 1 contract
Keep in mind that NVIDIA is one of the most volatile stocks in the market. You don’t have to buy it today. A big selloff would be ideal. But it should be at the core of any long-term LEAPS portfolio.
If you are looking for a lottery ticket, then here is a lottery ticket.
While the chance of winning a real lottery is something like a million to one, this one is more like 2:1 in your favor. And the payoff is 19:1. That is the probability that NVIDIA shares will double over the next two years and four months.
Santa Clara-based NVIDIA designs and manufactures high-end, top-performing graphics cards or GPUs. There is probably one in your PC. They are essential in the artificial intelligence, automobile, PC, supercomputing, cybersecurity, and gaming industries.
They are also crucial for national defense. The Biden administration recently banned NVIDIA from exporting high-end chips and their manufacturing equipment to China, which they were using to build sophisticated weapons to use against us. This revenue loss is what has taken the shares down to their current low levels, down 65% in six months.
NVIDIA has long been one of the fastest-growing US companies, Since 2005, its annual net income has soared from $89 million to $9.7 billion. Its NVIDIA Titan V graphics processing unit used for supercomputing architecture sells for an eye-popping $2,999.
And before you ask, NVIDIA is an abbreviation for the Latin word for “envy.”
I am therefore buying the NVIDIA (NVDA) January 2025 $270-$280 deep out-of-the-money vertical Bull Call spread LEAPS at $0.50 or best.
Don’t pay more than $1.00 or you’ll be chasing on a risk/reward basis.
January 2025 is the longest expiration currently listed. Please note that these options are illiquid, and it may take some work to get in or out. Executing these trades is more an art than a science.
Let’s say the NVIDIA (NVDA) January 2025 $270-$280 out-of-the-money vertical Bull Call spread LEAPS are showing a bid/offer spread of $0.50-$1.50. Enter an order for one contract at $0.50, another for $0.60, another for $0.70, and so on. Eventually, you will enter a price that gets filled immediately. That is the real price. Then enter an order for your full position at that real price.
Notice that the day-to-day volatility of LEAPS prices is minuscule since the time value is so great. This means that the day-to-day moves in your P&L will be small. It also means you can buy your position over the course of a month just entering new orders every day. I know this can be tedious but getting screwed by overpaying for a position is even more tedious.
Look at the math below and you will see that a 112% rise in (NVDA) shares will generate a 1,900% profit with this position, such is the wonder of LEAPS. That gives you an implied leverage of 19:1 across the $270-$280space.
(NVDA) doesn’t even have to get to a new all-time high to make the max profit. It only has to get back to $270 where it traded last March.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.
This is a bet that NVIDIA will not fall below $280 by the January 17, 2025 option expiration in 2 years and 4 months.
Here are the specific trades you need to execute this position:
Buy 1 January 2025 (NVDA) $270 calls at………….………$11.00
Sell short 1 January 2025 (NVDA) $280 calls at…………$10.50
Net Cost:………………………….…….…..…………...........….....$0.50 Potential Profit: $10.00 - $0.50 = $9.50
(1 X 100 X $9.50) = $950 or 1,900% in 2 years and 4 months.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Vertical Bull Call Debit Spread”by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep-in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
https://www.madhedgefundtrader.com/wp-content/uploads/2022/09/nvidia.png528936april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-05-23 09:02:062024-05-23 11:31:39Behold the Power of the NVIDIA LEAPS
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