(AAPL) Archives - Page 13 of 111 - Mad Hedge Fund Trader

The Market Outlook for the Week Ahead, or Digestion Time

Before you even ask, I’ll give you the answer you’ve all been waiting for: It’s too late to sell and too early to buy.

Stocks may still have some digesting to do having soared by 27% in six months. Nobody wants to look like an idiot by buying a market top. As I have learned over the decades, investors fear looking stupid more than they fear losing money, especially if they are professionals.

Everyone knows the market is eventually going higher so they are not selling in any meaningful way unless they are short-term, algos, or day traders.

This means we may have a whole lot of nothing going on in the coming weeks or months.

That leaves us time to examine the most interesting trends going on in the markets right now, especially the new bull market in commodities. Believe it or not, we are still unwinding the long-term effects of Covid 19 and commodities have only recently come to the fore.

Remember Covid?

Since October, copper prices have risen by 22%, oil by 23%, gold by 34%, and uranium by a gobsmacking 83%. What’s causing this sudden new interest? It’s not a recovering Chinese economy, that’s for sure. Investors have been waiting for a bounce back in the Middle Kingdom seemingly forever. But China remains hobbled by the bitter fruit of a 40-year one-child policy and an ineffective government. History tells us that the United States does not make a great enemy.

So what’s driving the new demand? Remember Covid? Believe it or not, we are still unwinding the long-term effects of Covid 19 and commodities have only recently started to play catch up.

Commodities are unique in that they have such a long lead time to add new supply. It can take 5-10 years, to map out new sites, get government approvals, deliver heavy equipment, and mine, process, refine, and ship the final product.

In the meantime, enormous new demand has arisen. There have been 10 million EVs manufactured in recent years and each one needs 200 pounds of copper. AI means the electric power grid has to double in size quickly. Commodity markets are unable to meet the supply. Therefore, prices can only go up.

That enabled Freeport McMoRan (FCX), the world’s largest copper producer, to handily beat its earnings expectations, helped by higher production and easing costs. The mining giant said its quarterly production of copper rose to 1.1 billion pounds from 965 million pounds a year earlier, helped by a 49% jump in output from its Indonesia operations. (FCX) said it was working with the Indonesian government, which has put a ban on raw material exports, to obtain approvals to continue shipping copper concentrates and anode slimes. Its current license is set to expire in May. Buy (FCX) and (COPX) on dips.

Corporate raiders have taken notice.

Activist Elliot is taking a Run at Mining Giant Anglo American, accumulating a $1 billion stake. BHP, the largest iron ore miner, is also making a takeover bid here on the coattails of which Elliot is trying to ride. It just highlights the global interest in mining shares.

Anglo American plc is a British multinational mining company that is the world's largest producer of platinum, with around 40% of world output, as well as being a major producer of diamonds, copper, nickel, iron ore, polyhalite, and steelmaking coal. On a side note, copper hit a two-year high above $10,000 per metric tonne in the London Market last week.

Needless to say, the commodity boom could continue for another decade.

So far in April, we are up +4.24%. My 2024 year-to-date performance is at +13.61%. The S&P 500 (SPY) is up +6.50% so far in 2024. My trailing one-year return reached +32.40% versus +23.14% for the S&P 500.

That brings my 16-year total return to +690.24%. My average annualized return has recovered to +51.77%.

Some 63 of my 70 round trips were profitable in 2023. Some 25 of 33 trades have been profitable so far in 2024.

Tesla Delivers Worst Earnings in 12 Years, with a 9% revenue drop, but the stock rallies big as the disappointment was well telegraphed. Revenue declined from $23.33 billion a year earlier and from $25.17 billion in the fourth quarter. Net income dropped 55% to $1.13 billion, or 34 cents a share, from $2.51 billion, or 73 cents a share, a year ago. The drop in sales was even steeper than the company’s last decline in 2020, which was due to disrupted production during the Covid-19 pandemic. Tesla’s automotive revenue declined 13% year over year to $17.38 billion in the first three months of 2024. I’ll watch (TSLA) from the sidelines from now.

Personal Consumption Expenditures (PCE) Comes in Warm for March, up 2.8% YOY, the same as for February. Service prices led. But the numbers were not as hot as feared so both bonds and stocks rose.

Big Tech Crashes, with all of the Magnificent Seven breaking 50-day moving averages. (NVDA) alone gave up 10% on Friday. The next stop is the 200-day moving averages, which are far, far away. If those hold this is just a correction. If they don’t the bear market is back.

Biggest Treasury Bill Auction in History is a Huge Success, at $69 billion for a two-year paper with a 4.898% yield. That is almost a risk-free government-guaranteed 10% yield in two years. Another $70 billion of five-year notes go on sale today. Half of this is going to foreign investors and central banks. Faith in America and the US dollar remains strong. Who else’s bonds would you rather buy? Passage of the Ukraine aid bill was probably a help. Wait for (TLT) to bottom.

Visa Pops on Earnings Beat, continuing as the powerhouse that it has been for years. Reported at $4.7 billion, showing a 10% increase year-over-year, slightly above the estimate of $4.943 billion. Visa is a call option on the growth of the Internet. Buy (V) on dips.

Apple China Sales Dive, by 19% as Chinese switch to cheaper Huawei phones for nationalism reasons. It’s also another sign of a slow Chinese economy. China remains one of the company’s biggest markets, but business there has grown harder after Beijing escalated a ban on foreign devices in state-backed firms and government agencies. Avoid (AAPL) until the turnaround.

Alphabet Earnings Beat Delivers Monster 10% Move, recovering a $2 trillion market cap. It also announced its first-ever dividend and a $70 billion share back, the second largest after Apple. Buy (GOOGL) on dips.

March New Home Sales Jump, by 8.1% when only 1.1% is expected, to 693,000. The median price of a home sold fell to $430,700 as builders pulled back on incentives like those cherry cabinets. It’s an uphill slog with those 7.0% mortgage rates.

CDC Birth Data Fall to Lowest Level Since the Great Depression, 1.1 births per 1,000 people. That is well below the Great Depression levels. Only 3,664,292 new Americans were born in 2021. It means there will be a shortage of consumers in 20 years so be out of stock by then. The good news is that Covid deaths have fallen from 4,000 per day to only 19 a day since January 2020.

My Ten-Year View

When we come out the other side of the recession, we will be perfectly poised to launch into my new American Golden Age or the next Roaring Twenties. The economy decarbonizing and technology hyper accelerating, creating enormous investment opportunities. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old.

Dow 240,000 here we come!

On Monday, April 29, at 10:30 AM EST, the Dallas Fed Manufacturing Index is announced.

On Tuesday, April 30 at 9:00 AM, S&P Case Shiller National Home Price Index is released.

On Wednesday, May 1 at 2:00 PM, the ADP Private Employment Change report will be published

On Thursday, May 2 at 8:30 AM, the Weekly Jobless Claims are announced.

On Friday, May 3 at 8:30 AM, the April Nonfarm Payroll Report is announced. At 2:00 PM, the Baker Hughes Rig Count is printed.

As for me, I have wanted to visit Cuba for decades. But relations with the US have run hot and cold over the years and whenever I had the time and money to go, the was a chill on, sometimes an extreme one.

So when I arrived in Key West and learned they were offering Cuba tour packages, I jumped at the chance. Unfortunately, you need to book three months in advance so that option was out.

Then I thought, “Why not fly there myself?” After payment of some hefty fees, commissions, and some outright bribes, I scored a Cuban visa and an aging Britten-Norman Islander twin built in the UK some 40 years ago. It was perhaps the smallest twin I have ever flown, with two minuscule 270 horsepower engines.

Although it was only 90 miles to Cuba, I had to load up with full tanks. Cuban aviation fuel is often contaminated with sludge or water and is unsafe to use. Losing both engines over shark-infested waters doesn’t fit in with my retirement plan. So I needed enough 100LL avgas to make the round drip, which meant skipping breakfast to stay within my weight limitations.

It was a clear and balmy morning when I received my clearance for takeoff, the sky dotted with fluffy white cumulus clouds. Of course, I had to skirt the Bermuda Triangle to get there, but no worries.

Amazingly Cuban air traffic control spoke English. Soon, the green hills of Cuba appeared on the horizon, and I received the words I will never forget: “N686KW you are cleared for landing in Havana.” I haven’t felt like that since I last landed in Moscow.

Much to my surprise, I found other US aircraft there as I was parked near jets from Southwest and American Airlines. I was greeted by an immigration officer who escorted me into the country, putting my Spanish skills to the test.

I had some concerns that I might be arrested in case Russia put me on a wanted list due to my recent work in Ukraine. But my fears proved unwarranted. You see, you get paranoid in your old age. A private car, a French Citroen van, a driver, and a government guide were waiting for me outside the airport.

Suddenly, I found myself in a strange new world. A darkly tanned people wore tired polyester clothes. Everyone was rail thin and the only obese people I saw were foreign tourists. There was an incredible variety of vehicles on the road, including ancient cars from Russia, China, Poland, and Japan. Apparently, Chevrolet had a great year in Cuba in 1956 because no American cars have entered the country since then and they are everywhere.

We headed straight for Earnest Hemingway’s Cuban home, known as Finca Vigia, or “Lookout Farm” built in 1886 on a hilltop overlooking Havana. The building was falling apart and showed large cracks, but going inside I was transported in time back to 1960, when Hemingway left the property ahead of the Cuban Revolution.

Finca Vigia has been untouched since. The walls are covered with an assortment of hunting trophies from Africa, including springboks, cape buffalo, lions, and leopards. They were collections of African spears and gun cases. Mounted on the walls were paintings of bullfights in Spain, cartoons about Hemingway, and family photos.

Magazine racks were stuffed with the 1960 issues of Life, Look, and The Saturday Evening Post. The National Geographic issues looked positively prehistoric. And there were thousands of books. Anyone who read his books would recognize all of this.

Hem, as his friends called him, bought the property in 1940 for $8,000, living there with wife three for five years, the famed war correspondent Martha Gellhorn, and wife four, Time magazine reporter Mary Welsch, who became his widow.

After passing on a Che Guevara T-shirt in the gift shop, I enjoyed a glass of freshly squeezed sugar cane juice. Then I headed into Havana, escorted by my guide, Eliar. The trip turned into a Hemingway bar crawl. I visited the well-known La Floridita, which made Hem’s favorite Daiquiri, La Bodegita, which mixed the best mojito and had lunch at his favorite roof terrace restaurant.

Cuba has long been one of the worst-managed countries in the world, second only to North Korea, and I learned why after grilling my guide all day about economic conditions. It’s 11.2 million people earn a per capita of $11,255, with 71% living below the poverty line. The real figure is a third of that as there are now 300 pesos to the US dollar, not the fictitious 120 that the government pretends.

When the Soviet Union collapsed in 1992, generous subsidies ended and Cuba quickly lost 33% of its GDP. With some of the richest farmland in the world, it imports 80% of its food and is currently suffering a food crisis. Even the bottled water I drank came from Panama.

Oil accounts for 100% of its energy supply which mostly comes from Russia and is paid for with raw sugar. Cuba’s largest exports are tobacco, nickel, and zinc most of which are exported to China. China also provided $11 billion in loans which Cuba promptly defaulted on.

The country would have been much better off if only Fidel Castro had accepted an offer from the Washington Senators to play US major league baseball in the early 1950s. Cuba is officially one of the last communist countries in the world, with Russia and China abandoning it years ago. After reforms in the 1990s, what they now practice is an odd mixture of communism and capitalism, with the government and the private sector competing side by side.

With thousands fleeing the country every year the real estate market has collapsed. You can buy a two-bedroom apartment in Havana for $30,000. Flying over the countryside at low altitude you fund vast expanses of agricultural land undeveloped for want of machinery and parts. There is unused labor everywhere. Cuba should be one of the richest countries in the world with all those beaches. The tourism possibilities are enormous. But with a 60-year trade and investment ban from the US, nothing can happen.

American credit cards and cell phones don’t work, so I brought in $200 in ones. You can’t bring back to the US the country’s only two worthy exports, rum and cigars. But there are buskers everywhere and by the end of the trip, I ended up giving it all away in tips. I did OK with the food, but only ate overcooked meals in high-end restaurants. Salads were out of the question but drink all the local beer and rum you can.

I ended my trip with a tour of the enormous Revolution Square where Fidel Castro used to give four-hour speeches to one million. One area the government did not skimp on spending was on the massive ministry buildings that surround the square. It seems the image of a strong government, especially the police, is essential in a workers’ socialist paradise.

Then it was back to the airport where surprisingly I obtained immediate clearance for takeoff. No passport stamps, as the government wanted to leave no evidence of my visit in an American passport. I returned to Key West just in time to catch a magnificent sunset over the Gulf of Mexico. US customs recognized my face and waved me right through.

Damn! Should have picked up some of those $5 bottles of rum.

It's all just another day in the life of John Thomas.

At Hemingway’s Cuban Home

A Look Back into 1960

Where Hem Wrote “Old Man and the Sea”, Standing

Hemingway’s Office

I passed on Che

Meeting an Old Friend for a Round at Floridita

Mixing it up with the Locals

One of Cuba’s Only Exports

Looks Like Chevy had a Great Year in 1956

Good Luck and Good Trading,

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

April 15, 2024

Tech Letter

Mad Hedge Technology Letter
April 15, 2024
Fiat Lux

Featured Trade:

(APPLE RUNNING OUT OF TIME)
(AAPL)

Apple Running Out of Time

Tech Letter

At some point, Apple (AAPL) might realize that they won’t be able to find that “next big thing.”

That would be a death sentence.

I’ve been warning Apple shareholders for years that they are headed into a growth winter if they can’t find the next big thing to replace the iPhone.

The consensus was that Apple had time to figure it out.

When I say time, Apple management was quite relaxed about it because the iPhone had been making so much money for years.

Management didn’t think they had much to worry about for 5 to 7 years.

But that was then and things have changed.

Tech has advanced with lightning speed and has left Apple in the dust.

The iPhone numbers keep getting worse and Apple is still scratching their head.

The insurmountable lead they had in smartphones should have been used as a springboard into something even grander and more impressive.

Yet here we are over a decade later with Apple barely moving the needle such as changing the color of the lock screen and trying to pass over other minuscule changes as real upgrades.

Other tech behemoths migrating into artificial intelligence have made Apple look even more outdated in 2024.

Reports show Apple has been exploring a mobile robot that can follow users around their homes.

The iPhone company also has developed an advanced tabletop home device that uses robotics to move a display around.

It shelved an electric vehicle project in February, and a push into mixed-reality goggles is expected to take years to become a major moneymaker.

With robotics, Apple could gain a bigger foothold in consumers’ homes and capitalize on advances in artificial intelligence. But it’s not yet clear what approach it might take. Though the robotic smart display is much further along than the mobile bot, it has been added and removed from the company’s product roadmap over the years.

The iPhone accounted for 52% of the company’s $383.3 billion in sales last year leading to many calling the company the iPhone company.

A car had the potential to add hundreds of billions of dollars to Apple’s revenue.

If the work advances, Apple wouldn’t be the first tech giant to develop a home robot. Amazon.com Inc. introduced a model called Astro in 2021 that currently costs $1,600.

A silver lining to Apple’s failed car endeavor is that it provided the underpinnings for other initiatives. The neural engine — the company’s AI chip inside of iPhones and Macs — was originally developed for the car. The project also laid the groundwork for the Vision Pro because Apple investigated the use of virtual reality while driving.

Apple stock is slightly down from the end of 2021.

That’s disheartening news for many shareholders because this stock was the perennial gem that overdelivered on every metric including the share price which is what matters most.

Apple was once the cornerstone of the stock market, and that title has disappeared unceremoniously with its smartphone lead.

With earnings fast approaching, I expect a lackluster report from Apple at best.

Any rallying will be done on less bad news than first expected and many companies already know that is a game you cannot win.

Even worse, the price to find the “next big thing” has multiplied significantly from 10 years ago with the cost of labor, supply parts, and the regulatory mood has soured.

The longer this goes on, the more Apple will be forced to deliver a royal flush when least expected.

The probability of Apple taking back the mantle as the forerunner of tech is dissipating by the day, and I would avoid the stock in the short term.

There is a reason why the stock has slightly down over the past 365 days.

If the stock pops on the earnings, I would be inclined to sell the rally.

March 27, 2024

Tech Letter

Mad Hedge Technology Letter
March 27, 2024
Fiat Lux

Featured Trade:

(TAIWAN IS ON THE MAP)
(AAPL), (TSM)

Taiwan Is On The Map

Tech Letter

I know it’s not the sexiest choice but there is a chip company in Taiwan that readers need to look at.

This company has investments all over the world and is the leader in what they do.

They are also involved in AI which lately has been the ticket to riches.

Taiwan Semiconductor Manufacturing Company (TSM) may not seem like a glamorous AI stock, but it's as critical to the AI future.

To understand TSMC's role in AI, you need to understand how we get to end consumer-facing products like ChatGPT, Bard, and other generative AI applications.

For AI to be effective, it must be trained using lots of data -- quantities that must be stored in specialized data centers.

Data centers rely on graphic processing units (GPUs), which are essentially the brains of AI computing systems.

TSMC and the semiconductors it manufactures for its client companies are crucial in this process. These GPUs rely heavily on TSMC's best-in-class manufacturing processes.

This AI knock-on effect hasn't impacted TSMC's financials yet, but management said they expect sales of its AI-related semiconductors to grow at a compound annual rate of 50% for at least the next few years.

By 2027, AI-related semiconductors are expected to be responsible for a large part of the company's revenue.

TSMC will absolutely be additive to the AI ecosystem.

Let’s talk about their products.

TSMC's 3nm fabrication process accounted for 15% of the company's revenue in 2023.

Only one of TSMC's customers used it at the time:

Apple (AAPL).

The three-nanometer product is where it’s at.

Wasn’t it just a year or 2 ago we were at 7 nanometers?

As more customers adopt the manufacturing process, 3nm process nodes will account for a considerably larger share of TSMC's revenue.

This year TSMC's N3-series nodes — including N3B and N3E — will account for over 20% of the foundry's revenue in 2024.

Apple currently exclusively uses TSMC's N3B to make its A17 Pro system-on-chip (SoC) for smartphones, as well as the M3-series processors for iMac desktops and MacBook laptops.

AMD is preparing to launch its new Zen 5-based processors made on 3nm- and 4nm-class process technologies later this year.

Apple's new iPhone 16 series will be equipped with the A18-series processor, and the upcoming M4-series processors for Mac PCs will also be produced using TSMC's 3nm technology.

This marks the first time Intel has entrusted TSMC with the full range of chips for its mainstream consumer platform, the report notes.

This collaboration highlights TSMC's expanding role in serving Intel, which also happens to be the company's rival in the foundry market.

With three major customers using TSMC's 3nm family of process technologies, this company needs to be on readers’ radar.

More companies are expected to adopt TSMC's N3 nodes in 2025, including performance-enhanced N3P, and the report suggests 3nm will account for over 30% of TSMC earnings in 2025.

It’s easy to see with the mushrooming of business for TSMC, how they are a highly sought-after stock.

It also explains why the stock has been on a tear.

It was only just last May they were trading at $82 per share and fast forward to today at the stock sits at $136 per share.

Holding this stock long term has borne fruit and every big should be bought.

They will continue to be the best at what they do.

March 25, 2024

Tech Letter

Mad Hedge Technology Letter
March 25, 2024
Fiat Lux

Featured Trade:

(REGULATIONS REGULATE TECH)
(AAPL), (GOOGL), (META)

Regulations Regulate Tech

Tech Letter

I’m not saying the time is up for big tech.

The Magnificent 7 are still by and far great companies who print money.

They dominate in a way that was unfathomable just a generation ago.

Trillion-dollar companies are now commonplace in tech and we have pushed into valuations of over 2 and pushing towards $3 trillion.

Success like this easily could make them easy targets and that is what has become of them in Europe as Apple (AAPL), Google (GOOGL), and Meta (META) are in the firing line under the sweeping new Digital Markets Act tech legislation.

Apple has already been slapped on the wrist quite hard with a $2 billion fee after the European Commission said it found that Apple had applied restrictions on app developers that prevented them from informing iOS users about alternative and cheaper music subscription services available outside of the app.

In a third inquiry, the commission said it is investigating whether Apple has complied with its DMA obligations to ensure that users can easily uninstall apps on iOS and change default settings. The probe also focuses on whether Apple is actively prompting users with choices to allow them to change default services on iOS, such as for the web browser or search engine.

The fourth probe targets Alphabet, as the European Commission looks into whether the firm’s display of Google search results to choosing its own products over other services.

The fifth and final investigation focuses on Meta and its so-called pay and consent model. Last year, Meta introduced an ad-free subscription model for Facebook and Instagram in Europe. The commission is looking into whether offering the subscription model without ads or making users consent to terms and conditions for the free service is in violation of the DMA.

If any company is found to have infringed the DMA, the commission can impose fines of up to 10% of the tech firms’ total worldwide turnover. These penalties can increase to 20% in case of repeated infringement.

Preferring one’s own product from companies like Apple, Amazon, and Google is not a shocking phenomenon. Business can be a dirty game and self-selecting ones products because they own the platform they are sold on is almost common knowledge to the average consumers.

Organizational bodies like the European Commission have an incentive to fine American tech companies that do business in Europe.

Europe has no alternative apps and aren’t competitive in the tech space.

The desperate reach of European bureaucracy has decided to just steal the money in the form of tech fines instead.

One big takeaway that sticks out like a sore thumb is the clear trend to the low-hanging fruit being plucked.

The incremental dollar will be harder to earn for big tech as regulatory commissions around the world zone in on their anti-competitive practices.

I doubt that fines will get so big to the point that these tech firms will go bankrupt, but this could set the stage for a slew of earnings misses which could knock down the share prices.

I still believe these stocks are buys, but only after they are beaten down and repriced.

I wouldn’t go chasing here with regulatory issues rearing its ugly head and revenue forecasts disappointing.

If I had to choose one to avoid then it would be Apple.

March 25, 2024

Diary, Newsletter, Summary

Global Market Comments
March 25, 2024
Fiat Lux

Featured Trade:

(MARKET OUTLOOK FOR THE WEEK AHEAD, or THE BEST WEEK OF THE YEAR),
(PANW), (NVDA), (LNG), (UNG), (FCX), (TLT), (XOM), (AAPL), (GOOG), (MSTR), (BA), (FXY)

The Market Outlook for the Week Ahead, or The Best Week of the Year

Diary, Newsletter

You need to have a sense of humor and a strong dose of humility to work in this market. After predicting last week that the market would NOT crash but grind sideways, it then posted the next week of the year. Stocks are actually accelerating their move to the upside.

Of course, we got a big assist from Fed Governor Jay Powell who practically wrote in his own blood a promise that interest rates would be cut at least three times by the end of the year. That is quite a gesture, and all risk assets loved it, even the ones that have been asleep for a year, like gold (GLD) and silver (SLV).

Miraculously, this does happen and there has been a big one over the last two years that nobody knows about.

Cheniere Energy (LNG) shipped 640 tankers full of natural gas (UNG) to Europe last year and 630 in 2022. One tanker provides enough gas to heat one million homes for a month. You can do the math. In total, it has sent out 3,400 tankers since 2016, mostly to China.

When Russia invaded Ukraine in 2022, Europe was totally dependent on Vladimir Putin for gas. Any doubt about the Russian supply was ended when the Nordstream undersea pipeline was mysteriously blown up. A total cut-off would have been an economic disaster and caused the collapse of NATO.

Two years ago, it was believed that even if we could get the gas to Europe, there were no facilities to liquefy natural gas as it is shipped back into natural gas. Then 16 floating de-liquefaction plants showed up out of nowhere.

Natural gas demand has been soaring in the US as well. Over the past 20 years, coal has dropped from generating 50% of the US electric power supply to only 19% (the unused American share of the coal was sold to China). That has eliminated 500 million tons of carbon dioxide from entering the atmosphere.

If you noticed that the skies over American cities are getting clearer, this is the reason.

Much has been made over Biden’s “pause” of permitting for new natural gas facilities. The reality is that it will take four years to build the 16 new gas export facilities that have already been approved. By then, we’ll have a new president. All Biden did was throw a bone at the environmental wing of his party. Such are the ways of Washington.

By the way, the Republican Party now has an environmental wing too. Who knew? It’s all proof that if you live long enough, you see everything.

One of the reasons I have been in love with cybersecurity stocks like Palo Alto Networks (PANW) for the past decade is that hacking is the ultimate growth industry. It never goes out of style, is recession-proof, and is growing at an exponential rate.

It is also getting more sophisticated. The big hackers are franchising their business models, inviting in criminals with minimal computer knowledge, vastly increasing their numbers. They are attacking small vendors to large companies to get access to the big ones. They are also picking targets too poor to afford the big cybersecurity companies. The City of Oakland is a classic example, which was prevented from paying its teachers for six months. And now they have AI.

Spending on cybersecurity is expected to grow from $188 billion in 2023 to $215 billion this year, a gain of 14.36%. The number of data breaches has rocketed by 78% over the past two years. Buy (PANW) on dips, which we are seeing right now.

“We’re going to need a bigger GPU” to borrow a famous line from Stephen Spielberg’s blockbuster Jaws.

If you want a peak at the future, both of our own and NVIDIA stock, check out the company’s latest entry into the chip wars, the $50,000 Blackwell GPU, available in a few months. In layman’s terms, it offers four times the computing ability but requires only one-quarter of the electric power, which is increasingly becoming an AI issue. It also uses deep learning to write its own software.

The chip was introduced by CEO Jensen Huang at the Developers conference in San Jose, which I attended in a venue normally occupied by rock stars. Huang started the conference by warning he was not there to sing. But perform he did, accompanied by a group of dancing robots powered by AI.

And while NVIDIA’s sales have tripled over the past year, you ain’t seen anything yet. When I recommended (NVDA) for the millionth time at $400 a share last October, my long-term target was $1,000. It recently hit $975, now stands at $943, and shows no sign of abating. NVIDIA could well keep powering on until the actual release of the Blackwell chip.

As in Jaws, I sense a feeding frenzy coming and (NVDA) shorts are the bait.

In February we closed up +7.42%. So far in March, we are up +3.53%. My 2024 year-to-date performance is at +6.67%. The S&P 500 (SPY) is up +9.22% so far in 2024. My trailing one-year return reached +56.98% versus +52% for the S&P 500.

That brings my 16-year total return to +683.30%. My average annualized return has recovered to +51.57%.

Some 63 of my 70 round trips were profitable in 2023. Some 11 of 19 trades have been profitable so far in 2024.

I miniated no new longs last week, content to let my existing longs run in Freeport McMoRan (FCX), bonds (TLT), and ExxonMobile (XOM). I am 70% in cash given the elevated state of the market and am looking for new commodity and energy plays to pile into.

Fed Chair Jay Powell Promises Three Interest Rate Cuts of 25 basis points each, at his press conference on Wednesday. Powell said he did not see "cracks" in the labor market, which he described as "in good shape," noting that "the extreme imbalances that we saw in the early parts of the pandemic recovery have mostly been resolved." These are very pro-risk statements. Buy the dips in everything.

Fed to Dial Back Quantitative Tightening, or QT from the current $120 billion a month. It’s a huge plus for risk assets and explains why the most liquidity-driven ones like gold and silver had such a great day. Buy (GLD) and (SLV) on dips.

The Dept of Justice Goes After Apple on Antitrust, on its 61.3% share of the US smartphone market. It accused the iPhone maker of blocking rivals from accessing hardware and software features on its popular devices. Google’s (GOOG) Android actually has a bigger global market share at 70.3% with Apple at only 24%. This is another waste of time that will last ten years and go nowhere.

Bank of Japan to Cut Interest Rates as Early as April, bringing to an end a 34-year stimulus program that was a dismal failure. The Japanese yen (FXY) should rocket, but Japanese stocks not so much.

MicroStrategy (MSTR) Dives 18%, the largest owner of Bitcoin, on a crypto correction. MicroStrategy is the largest corporate owner of Bitcoin. (MSTR) just completed a massive borrowing to buy more crypto at the top. After SEC approval of ETFs and the imminent halving, what is left to drive crypto? Avoid (MSTR) which was blindsided by the last 90% crypto correction.

Existing Homes Sales Soar 9.7% in February to 4.38 million units, on a seasonally adjusted annualized basis. Inventory rose 5.9% year over year to 1.07 million homes for sale at the end of February. That represents a still low 2.9-month supply at the current sales pace. Higher demand continued to push the median price higher, up 5.7% from the year before to $384,500.

Home Prices Have Risen by 2.4 Times the Inflation Rate Since 1960. The cost of a typical house in the U.S. is nearly half a million dollars: the median price for a home in the U.S. is $412,778, according to Redfin data. That’s what successful demographic tailwinds leading to a chronic housing shortage get you.

Boeing is Leasing 36 Airbuses, to meet its own unfilled orders caused by production delays. Another panel fell off an airborne plane last week in Medford, OR. Looking for missing parts has become a regular part of every Boeing landing. This is an act of desperation. Avoid (BA)

My Ten-Year View

When we come out the other side of the recession, we will be perfectly poised to launch into my new American Golden Age or the next Roaring Twenties. The economy decarbonizing and technology hyper accelerating, creating enormous investment opportunities. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old.

Dow 240,000 here we come!

On Monday, March 25, at 7:00 AM EDT, the US Building Permits are announced.

On Tuesday, March 26 at 8:30 AM, S&P Case Shiller for February is released.

On Wednesday, March 27 at 11:00 AM, the MBA Mortgage Data is published

On Thursday, March 28 at 8:30 AM, the Weekly Jobless Claims are announced. The final read of the Q2 US GDP is also out.

On Friday, March 29 at 2:00 PM, Personal Income and Spending is out. The Baker Hughes Rig Count is printed.

As for me, as I am about to take off for Cuba to visit Finca Vigia (Lookout Farm), the home of Earnest Hemingway and Martha Gellhorn I thought I’d review my long history with this storied family. This is where he finished For Whom the Bells Toll, his epic novel about the Spanish Civil War.

My grandfather drove for the Italian Red Cross on the Alpine front during WWI, where Hemingway got his start, so we had a connection right there going back over 100 years.

Since I read Hemingway’s books in my mid-teens, I decided I wanted to be him and became a war correspondent. In those days, you traveled by ship a lot, leaving ample time to finish off his complete work.

I visited his homes in Key West and Ketchum Idaho. In 2023, he stayed at his Hotel Poste room in Cortina, Italy where he lived for five months during the 1950s. His Cuban residence was high on my list, now that Castro is gone.

I used to stay in the Hemingway Suite at the Ritz Hotel on Place Vendome in Paris where he lived during WWII. I had drinks at the Hemingway Bar downstairs where war correspondent Ernest shot a German colonel in the face at point-blank range. I still have the ashtrays.

Harry’s Bar in Venice, a Hemingway favorite, was a regular stopping-off point for me. I have those ashtrays too.

I even dated his granddaughter from his first wife, Hadley, the movie star Mariel Hemingway, before she got married, and when she was still being pursued by Robert de Niro and Woody Allen. Some genes skip generations and she was a dead ringer for her grandfather. She was the only Playboy centerfold I ever went out with. We still keep in touch.

So, I’ll spend the weekend watching Farewell to Arms….again, after I finish this newsletter.

Oh, and if you visit the Ritz Hotel today, you’ll find the ashtrays are now glued to the tables.