Page 417 - Mad Hedge Fund Trader

November 17, 2023

Jacque's Post

(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

Trade Alert - (AMAT) November 17, 2023 - BUY

Tech Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

November 17, 2023

Diary, Newsletter, Summary

Global Market Comments
November 17, 2023
Fiat Lux

Featured Trade:
(NOVEMBER 15 BIWEEKLY STRATEGY WEBINAR Q&A),
(TLT), (AMD), (SPY), (FXA), (WYNN), (MGM), (RCL), (CCL), (TSLA), (SCHW), (BLK), (JPM), (XHB), (TSLA), (FXI), (FCX)

November 15 Biweekly Strategy Webinar Q&A

Diary, Newsletter

Below please find subscribers’ Q&A for the November 15 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Incline Village, NV.

Q: I was a little surprised that you closed the (TLT) $79-$82 vertical bull call spread so early. Why not wait longer?

A: I took an 84% profit in only four trading days and skipped the last 16% which I would have had to wait another month to get. I was much better off putting on another position and making another 100%. In this kind of market, you want to take quick profits and then roll them into new positions as fast as you can. That’s where you make the big money, and that's what we’ve been doing. You have to strike when the iron is hot.

Q: November’s results are phenomenal!

A: Yes they are, 55 years of practice makes it easy.

Q: Thoughts on Advanced Micro Devices (AMD)?

A: It’s going higher. I think the whole semiconductor sector is the leading sector in the market; we have seen that with these gigantic 30-40% moves in the semis. That will continue, and then it will spread out to the rest of big tech (which it’s already done), and eventually, we get to the industrials and commodities in the second half of 2024 when the big economic growth returns. So that is the script for the coming year.

Q: Will the upcoming Fed interest rate cuts crash the dollar, and which emerging currency should I buy?

A: Yes and yes. It will crush the dollar–we could be entering a new decade of a falling U.S. dollar. The number one currency to buy is the Australian dollar (FXA). It has the most leverage for a global economic recovery. And you can see when we get to the currency section of today’s webinar that the currencies are already starting to move. Whatever currency has falling interest rates is always the weakest, and the U.S. dollar is about to become just that.

Q: What’s the deal with casino stocks lately like Wynn Resorts (WYNN) and MGM Resorts International (MGM)?

A: These companies took on massive amounts of debt during the pandemic to stay in business, so they are now highly sensitive to interest rates. If you look at the collapse of these stocks in the last four months, it is almost perfectly in sync with rising interest rates, and that’s why the stocks performed so poorly. By the way, the same is true for all the cruise companies like Royal Caribbean (RCL), and Carnival (CCL). The flip side of that is when interest rates start to go down these stocks do great, and they are falling interest rate plays, so you probably should be buying the casinos, the cruise lines, and the hotel stocks here because they are all suffering from massive debt loads, the cost of which is about to decline sharply.

Q: Should we roll up the expiration of LEAPS to 2026?

A: Probably not a bad idea, because we may get weakness in commodities for the next several months before we enter a massive new bull market. If you have the 2025, you’ll probably make money on that, but to be ultra-safe you could roll it forward to 2026. We know there’s a global copper shortage developing because of EVs, but right now EV sales are slow, so you don’t want to be piling onto the leverage plays on that too soon. That’s also why I am not in Tesla (TSLA) for the Moment.

Q: What will happen if the Fed cuts interest rates and there’s no recession? Won’t prices of everything from houses to butter go wild?

A: They won’t go wild, but they will go up at a 2% inflation rate, which is what the Fed wants. And house prices, which have been flat for the last year, will rise. And they may rise greater than the inflation rate of 2%; they may rise more like 5%. Falling interest rates mean falling mortgages; we’ve already seen mortgage rates drop from 8 to 7.4%. It's one of the sharpest drops in history, and more drops bring more first-time home buyers into the market. And don’t forget that the Fed could also raise interest rates down the road. If the economy gets too hot again, they may raise again, but I think we’ll see a lot of cuts first.

Q: Do you think financial stocks will go up or fall with potential rate decreases?

A: Banks always go up during falling interest rates because their cost of funds goes down and the default rate on their loans also goes down, so they get a hockey stick effect on earnings; that’s why you’re seeing such monster moves in stocks like JP Morgan (JPM) and the brokers (SCHW) as well as the money managers like BlackRock (BLK).

Q: Does the bull market keep going since unemployment still hasn’t made a dent, meaning consumers are fueling the rise in stocks?

A: Yes, consumer spending is still doing well. People seem to be getting the money from somewhere and it seems to be rising wages. But I expect wage gains to drop by half; people will still get wage increases, but not the peak levels that the UAW got in their deal with Detroit. Is a Goldilocks economy that is setting up, and the economy keeps growing We never do get a recession, and all risk assets rise as a result. That is the outlook!

Q: Bullish on Berkshire Hathaway (BRK/B)?

A: I completely agree, it’s one of the best-run companies in the world. 93-year-old Warren Buffet and 99-year-old Charlie Munger have delivered double the performance of the S&P 500 over the last three years.

Q: When does the IPO market come back to life, and which industries will benefit the most?

A: AI and Technology will benefit the most. There are several AI companies in the wings waiting to go public, and they will be the first out the door with the highest multiples, and then the IPO business will broaden out from there.

Q: Will a worsening Chinese property market blow up the U.S. Stock rally or is it just a fake risk I shouldn’t worry about?

A: The Chinese (FXI) real estate market is detached from the global economy. There is no international implication, and it’s also typical of emerging markets to overbuild and then have a financial collapse. Nobody I know has suffered anything in China in a long time, and if anything, they’re liquidating what little they have left. It doesn’t affect us at all. It’s interesting reading about it in the newspapers, and that’s about it.

Q: What are some stocks we should consider day trading these days?

A: None. Most people who try day trading lose money doing it; some people pull it off but they have many years of experience. Algorithms from big brokers have essentially taken over the day trading business with high-frequency trading. You do better on a one-month view, which I do on my front-month options. Most 2023 Stock Gains Happened in only eight days, up some 14% since January 1, and only seven stocks accounted for most of the increase. If you are a day trader, you most likely missed all of this because most of the moves were on gap openings.

Q: Home builders (XHB) have just had a great run, is this an area too short?

A: “Short” is a term you need to remove from your language! You don’t want to short a big bull move like this. If anything, wait until May when the summer seasonals start to favor short positions, and it depends on how high the market runs up until then. Don’t ever think about shorting the very beginning of a new bull market in stocks–not for housing, not for anything! And the outlook for housing over the long term looks fantastic; there’s still an overwhelming supply and demand in favor of the home builders. Some 85 million new Millennials need to buy first-time homes.

To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), then click on WEBINARS, and all the webinars from the last 12 years are there in all their glory.

Good Luck and Stay Healthy,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

2023 Kherson Ukraine – Ha Ha Missed Me! It was a dud.

November 17, 2023 - Quote of the Day

Diary, Newsletter, Quote of the Day

"The factory of the future will have only two employees: a man and a dog. The man will be there to feed the dog. The dog will be there to keep the many from touching the equipment," said organizational consultant, Warren Bennis.

Trade Alert - (PANW) November 16, 2023 - BUY

Tech Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

November 16, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
November 16, 2023
Fiat Lux

Featured Trade:

(A GENE GENIE AGAINST CHOLESTEROL)

(VERV), (CRSP), (BEAM), (NVO), (AMGN), (REGN)

A Gene Genie Against Cholesterol

Biotech Letter

CRISPR technology, long heralded as a game-changer in genomics, stands on the brink of a major leap forward. For years, its potential has simmered, but now, it's poised to ignite, promising scientific breakthroughs and significant investment opportunities.

Several pioneering companies employing CRISPR for editing human genomes are at the forefront of this revolution. Their goal? To treat, and potentially cure, a range of genetic diseases. The approaches are twofold: ex vivo, where genes are edited outside the body, and in vivo, with modifications made directly within the body.

Investing in CRISPR gene-editing stocks, however, is not for the faint-hearted. These stocks are characterized by high risk and volatility, demanding a specific investor profile: one that is aggressive and comfortable with risk. For such investors, a company worth considering is Verve Therapeutics (VERV).

Verve stands out, partly due to its relatively modest size with a market capitalization of $732 million. This contrasts sharply with industry peers like CRISPR Therapeutics (CRSP) and Beam Therapeutics (BEAM), valued at $4.47 billion and over $2 billion, respectively. The reason behind Verve's smaller scale is its developmental stage, which lags behind its counterparts.

Established in 2018, Verve has been hailed as a potential leader in next-generation gene therapy, particularly base editing.

You can think of base editing as using a fine-tipped pen to precisely change just one letter in the DNA sequence, without cutting the DNA strand.

In our DNA, there are four "letters" (bases) – A, T, C, and G. Base editing lets scientists directly convert one letter to another (like changing an 'A' to a 'G') without cutting the DNA. This is like fixing a typo in a sentence by carefully erasing one letter and writing in the correct one.

This method is often more precise than CRISPR and less likely to introduce errors because it doesn't involve cutting the DNA strand.

Verve has capitalized on this technology, in-licensed from base-editing pioneer Beam Therapeutics. The company's flagship candidate, VERVE-101, targets heterozygous familial hypercholesterolemia (HeFH), a rare cholesterol disorder.

Needless to say, the stakes are high. The HeFH market is projected to balloon to nearly $60 billion by 2033, positioning VERVE-101 as a potential one-time functional cure and a standard of care in this lucrative market.

Recently, Verve announced that there was a substantial reduction in patients' high cholesterol levels in the first human test of base editing. Despite this, the stock experienced a sharp 41% drop, possibly a misinterpretation of the positive news in an unfriendly biotech market.

The data presented showed Verve's treatment leading to a 40%-55% decrease in harmful LDL cholesterol levels in patients with genetically high cholesterol levels. Verve's approach targets and inactivates the defective gene responsible for high cholesterol levels.

The treatment, however, faced challenges. Two of the Verve-101 trial participants suffered heart attacks, one of which was fatal.

It's crucial to note that the trial specifically included older patients with advanced heart disease, who were already at a heightened risk for cardiac events. The overall safety measures in the study were satisfactory, though, so the FDA has since authorized an expansion of the Phase 1 trial.

Notably, Eli Lilly (LLY) reviewed the trial's results before deciding to buy an option to partner on the Verve treatment. Lilly's decision on teaming up on the cholesterol treatment is expected next year, following the completion of Phase 1 trials.

Additionally, Verve plans to initiate trials for another base-edited therapy, VERVE-102, in the first half of 2024, potentially offering enhanced patient outcomes.

Verve’s trial results match that seen with established medications such as Novartis' Leqvio (NVS), Amgen's Repatha (AMGN), and Regeneron Pharmaceuticals' Praluent (REGN), which are all approved long-term drug therapies.

However, despite the availability of statins and new treatments, a significant portion of these patients fail to maintain healthy cholesterol levels due to cost, treatment adherence issues, or inconsistent healthcare access.

This is where the biotech company’s solution shines. Verve's ultimate goal is to develop a one-and-done treatment to lower cholesterol in the 50 million adults at risk for cardiovascular disease.

While Verve remains a preclinical-stage biotech, its prospects are promising. Its market cap, though modest compared to the commercial opportunity of a functional cure for HeFH, hints at significant growth potential.

With Lilly's track record in developing drugs for underserved conditions, Verve emerges as a compelling investment for those with a high tolerance for risk and an eye on future biotech breakthroughs. I suggest you put this stock on your watchlist.

November 16, 2023

Diary, Newsletter, Summary

Global Market Comments
November 16, 2023
Fiat Lux

SPECIAL STEM CELL ISSUE

Featured Trade:
(THE STEM CELLS IN YOUR INVESTMENT FUTURE)
(TMO), (REGN)

The Stem Cells in Your Investment Future

Diary, Newsletter, Research

I’ll do anything to postpone aging, as regular readers of this letter already know.

So when my doctor told me that she could extend the life of my knees by ten years with a stem cell injection, I was all for it.

You better pay attention too.

Stem cells, along with CRISPR gene editing (CRSP), are two hyper-accelerating medical technologies that promise to cure your ills, extend your life, and make you fabulously rich along the way.

Have I got your attention?

When my doc confirmed that she was already getting spectacular results from her other elderly patients, such as the dramatic regrowth of knee cartilage, it was like pushing on an open door.

Yes, these are the famous well-worn 71-year-old knees you have heard so much about over the past 15 years that hike and snowshoe 2,000 miles a year with a 50-pound backpack.

My doc is not lightweight. She is the orthopedic surgeon for the US Ski Team at Lake Tahoe, which is why I sought her out in the first place.

As a UCLA-trained biochemist, I have known about stem cells for most of my life. They only left the realm of science fiction two decades ago.

Early sources of stem cells relied on stillborn human fetuses, creating a religious and political firestorm that led to severe restrictions, a funding drought, or outright bans.

During the 2000’s, California was almost the only state that permitted stem cell research.

Since then, the technology has developed to the point where it can be easily harvested throughout the human body.

Easy, except when the source is the bone marrow in your backbone.

“You may feel a slight twinge,” said my doctor, as she flushed the air out of a gigantic horse needle the width of a straw. “I only have to hammer this needle into your hip bone 20 or 25 times to get the marrow I need.”

This was NOT in the glossy brochure I had been provided.

I said, “Don’t worry, Marines are immune to pain.”

“Does that work?” she asked.

“No, not really,” I replied, grimacing. “But it sounds good.”

I felt every single blow and tried to imagine myself on a faraway tropical island. It turned out to be 55 blows. I counted.

Once she obtained the 10cc she needed, she popped it into a small centrifuge to separate the stem cells (clear) from the red blood cells (red).

She then used an ultrasound machine to inject my stem cells at the exact right spot in both of my knees.

Being the true journalist that I am, I took pictures throughout the entire procedure with my iPhone 15 (see below).

The problem with advanced, experimental treatments is that they are not covered by your health insurance. Still, I thought $2,000 for ten years of extra life for both knees was a bargain.

Stem cells are undifferentiated cells that can transform into specialized cells such as the heart, neurons, liver, lung, skin, and so on, and can also divide to produce more stem cells.

You can think of stem cells as chemical factories generating vital growth factors that can help to reduce inflammation, fight autoimmune diseases, increase muscle mass, repair joints, and even revitalize skin and grow hair.

Goodbye, Rogaine!

When you are young, you have oodles of these cells, which is why kids so rarely die from dread diseases.

However, as you age, your exposure to too much sunlight at the beach, too many chemicals in the food and water you eat and drink, and natural background radiation degrades your DNA and reduces your stem cell supply.

Supplies of stem cells diminish as much as 100 to 10,000-fold in different tissues and organs. Welcome to old age, and eventually death.

The procedure I underwent is called Autologous Adult Stem Cells Treatment.

The great thing about it is that since you are using your cells, the risk of rejection or infection is minimal. And they are free!

This approach has become the must-go treatment for the wealthy seeking to repair aging, sagging parts of their bodies.

They are often sold with vacation packages in exotic third-world countries where regulation and medical malpractice suits are nonexistent.

The fact that the treatments are now becoming widely available in the US testifies to their effectiveness.

Do any search on stem cell treatments, rejuvenation, or life extension and you will find hundreds and hundreds of private clinics offering to do so for high prices.

California leads the nation with 109 clinics (including 18 in Beverly Hills alone), followed by New York and Texas.

Just follow the money.

The market is now on fire and is expected to reach $270 billion by 2025.

As a result, several breakthroughs in longevity are just around the corner.

The industry is now branching out into fields considered unimaginable just a few years ago. I’ll cover some of the highlights.

Imagine using your stem cells to repair not only your knees but any other organ. This is already being done in the lab with animal trials.

In Japan, they are growing human eyes from scratch, including lenses and corneas.

At Stanford, stem cells are bringing dramatic improvements in stroke victims.

At USC they are deployed to bring rapid repairs to those with severe spinal cord injuries.

Several private firms have sprung up to facilitate the banking of your stem cells through cryogenic freezing, such as Lifebank. Just harvest them when you are young for future use.

Better yet, get born to wealthy parents who will pay to have your birth placenta and umbilical cord frozen, the two richest sources of stem cells known.

The key term to search for your investment strategy is Mesenchymal Stem Cells, the major stem cells for cell therapy, or MSCs.

These cells can differentiate into vital cells that can be used to cure autoimmune disease, cardiovascular disease, liver disease, and cancer.

There are now several hundred clinical trials involving these cells underway.

A more adventurous strategy is to buy the stem cells of others and have them injected into yourself, a procedure known as parabiosis.

A company in Monterey, CA named Ambrosia is doing exactly this for $8,000 a patient. The goal here is to reverse aging across every major organ system.

Of course, I think there’s got to be a trade here.

Not so fast.

Almost all stem cell efforts are now confined to the research labs of major universities or are buried inside large biotech and drug companies.

A few researchers have spun off to set up their own private companies with substantial venture capital backing.

That said, there are a few peripheral listed plays.

Celgene is one of my favorites and is an early entrant in the field. They are using placenta-derived cells to cure a whole host of diseases, which you can find listed on their site at http://www.celgene.com/research-development/rd-locations/celgene-cellular-therapeutics/cell-therapy/

Thermo Fischer Scientific (TMO) provides a range of tools and supplies scientists need to pursue stem cell research (click here for their site at https://www.thermofisher.com/us/en/home.html

Regeneron (REGN) uses stem cells to pursue a broad range of serious medical conditions, including ophthalmology, cancer, rheumatoid arthritis, asthma, atopic dermatitis, pain, and infectious diseases. Visit their site at
https://www.regeneron.com

The problem with the entire biotech sector is that it can take a long time to deliver new drugs and procedures to market. So these may be next year's investments, instead of next week's ones.

And how are my knees doing? I knew you would ask.

A little swelling in my knees went away in a day. I sat funny for a few more days, thanks to my bone marrow extraction.

It will take about six months before any real growth in new cartilage in my knees can be measured with an MRI scan, which I have scheduled. So far, the results have been great.

But you know what?

My knees have not hurt an iota, despite my regular tortuous exercise regime. And I think that, right there, is a win.

If it works, my doctor wants to extract fat cells from my middle, known as Adipose Cells, and inject their stem cells, into my knees.

Talk about killing two birds with one stone!