Global Market Comments
August 7, 2023
Fiat Lux
Featured Trades:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or TAKING IT IN THE SHORTS),
(TLT)
CLICK HERE to download today's position sheet.
Tag Archive for: (TLT)
I am writing this to you from the British Airways first class lounge at Rome’s Leonardo da Vinci airport. I arrived here early to avoid the hordes of travelers certain to follow.
At the entrance to the departure area, there is a 20-foot-high bronze statue of the great artist and scientist holding a model of his 15th century imaginative helicopter design. He never built it, but I have seen modern-day life-sized copies.
You’re really taking your life in your hands taking a taxi in Rome. The only law seems to be qui audet, vincit, or who dares, wins (the motto of the British Special Air Service).
I know the 140 on the odometer was only in kilometers so I shouldn’t worry. What concerned me was that we were being passed by other cars doing at least 180.
Tighten that seat belt!
One disturbing practice of Italian drivers is that they never commit to a lane. They drive on the center line until they see a gap in the traffic then they go for it.
There’s nothing like coming home, only to be slapped in the face by a wet kipper. That was delivered by a black swan in the form of the Fitch downgrade of US debt from AAA to AA+ which shaved a shocking seven points off the (TLT) in a week.
The (TLT) held up valiantly in the face of the surprise red-hot Q2 GDP figure of 2.4%, indicating that a soft landing was a done deal. But once the Fitch report was out, it was all over but the crying. The (TLT) now looks like it could double bottom at the October 2022 low of $90.
I thought it was a huge overreaction. Fitch was only mirroring Standard & Poor’s identical downgrade in 2011, the last time a default was in the cards. The US economy and its debt remain the strongest in the world.
But with Republican members of Congress threatening a debt default at every opportunity, what was Fitch supposed to tell its customers? Any lender who threatens not to pay gets downgraded, the US Treasury, you, and even me. The real question is why it took so long. Take your trading loss on the (TLT) out of your next campaign donation.
You never argue with Mr. Market, who is always right. What the selloff does is set up the LEAPS of the century, the (TLT) 2025 $90-$95 vertical bull call spread with a certain 100% profit built in. However, given last week’s experience, I’d rather be late in this trade than early.
We now have the curious situation with the Mad Hedge AI Market Timing Index stock at an extremely overbought level of 80 for two months, the result of a non-stop melt-up in big technology stocks. The begging question now is how far we pull back before an explosive yearend rally ensues. That will be your last entry point for stocks in 2023.
So far in August, we are down -4.70%. My 2023 year-to-date performance is still at an eye-popping +60.80%. The S&P 500 (SPY) is up +17.80% so far in 2023. My trailing one-year return reached +91.08% versus +11.46% for the S&P 500.
That brings my 15-year total return to +657.99%. My average annualized return has fallen back to +48.15%, another new high, some 2.48 times the S&P 500 over the same period.
Some 41 of my 46 trades this year have been profitable.
I really took it in the shorts stopping out of my long position in the (TLT), losing 4.00%, my second largest loss of 2023. Reversion to the mean is a bitch. Every time I break my own risk control rules, I come to regret it. I could have stopped out the day before with only a 1.73% loss. The one consolation is that I went into this correction 90% in cash. I bet the rest didn’t.
See, even old dogs can make mistakes.
The Nonfarm Payroll Drops to 187,000, a one-year low, less than expectations. The Headline Unemployment Rate returned to 3.5%, a 50-year low. The soft-landing scenario lives! That’s supposed to be impossible in the face of 5.25% interest rates. Average hourly earnings grew at a restrained 3.6% annual rate. Half of the new jobs were in health care. At the rate we are aging, that is no surprise.
JOLTS and Layoffs Drop, indicating a slight weakening in labor demand, an important Fed goal. JOLTS fell from 9.62 to 9.58 million in May, a two-year low, while layoffs dipped from 1.55 million to 1.53 million. This is despite red-hot GDP growth.
Panic Buying of Hedge Fund Shorts, drove the markets in July, with many throwing in the towel on bearish bets. This “smart money” has been chasing the market since it bottomed in October. The most extreme buying, like we saw last week, is often the sign of a short-term market top.
US Home Construction Rockets, up 0.5% in June, in an attempt to meet the insatiable demand for new homes. They can’t build them fast enough even though prices are rising fast.
US Debt Downgraded from AAA to AA+ by the well-known Fitch rating agency for only the second time in history. Bonds (TLT) took it on the nose. The January 6 attack on the capitol and standoff over the debt ceiling crisis were cited as the reasons. US bonds are still the safest and most liquid investment in the world when held to expiration.
Uber Announces First Ever Profit on a quarterly basis and $1 billion in free cash flow. The company has emerged as the preeminent ride-sharing company. The shares dropped 5% on a “sell the news” move on top of a double since May. Buy (UBER) on a much bigger dip.
AMD Beats Even as PC Market Slows in Q2 earnings, with revenues down 18% YOY, better than expected. H2 is expected to be hot as data center demand grows thanks to exploding AI demand.
SEC Bans Coinbase from Trading, except in Bitcoin itself. The Federal agency regards all NFTs as unregistered securities. The move is a body blow to the NFT market, which I always regarded as a scam and knocked 25% off the value of (COIN). Avoid (COIN) like Covid 3.0.
Apple Reports Earnings Decline, down 1.4% in its Q3, and expects the same in Q4. iPhone sales took a steep dive, the longest slowdown in its history and knocked 3.2% off of the Teflon stock. Weak foreign currencies also delivered a hit for the most global of companies. But revenues beat at an astonishing $81.8 billion, thanks to rising service sales. Buy (AAPL) on a bigger dip, which was up 47% so far in 2023.
Amazon Soars on Earnings Beat, nearly double Wall Street estimates as its massive bet on AI pays off big time. Aggressive cost-cutting helped. (AMZN) has laid off 100,000 in the past ear, replaced by machines. Amazon Web Services (AWS), the 800-pound gorilla in the sector, also prospered. Buy (AMZN) on dips.
Airbus Delivers an Incredible 381 Aircraft, in the first seven months of 2023 as the global plane shortage worsens. The European consortium booked 60 new orders in July alone. Buy Boeing (BA) on dips, up 105% from the October low.
Airbnb is Looking Good on the back of a massive increase in international travel. In some cities like Tokyo, you can’t even find an Airbnb rental. At a restaurant I visited in Florence last week, 100% of the customers were American, mostly from the east coast. Local regulations banning short-term rentals are also crimping supply. Buy (ABNB) on dips, already up 50% since May alone.
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, August 7 at 9:00 AM EST, the Used Car Prices are out, a recent big swing factor in the inflation calculation.
On Tuesday, August 8 at 8:30 AM, the NFIB Business Optimism Index is released.
On Wednesday, August 9 at 2:30 PM, the Crude Oil Stocks are published.
On Thursday, August 10 at 8:30 AM, the Weekly Jobless Claims are announced. The Consumer Price Index for July is printed, the principal inflation indicator.
On Friday, August 11 at 2:30 PM, the Producer Price Index is published. At 2:00 PM, the Baker Hughes Rig Count is printed.
As for me, one of the great shortcomings of San Francisco is that we only have a theater district with two venues and it is in the Tenderloin, the worst neighborhood in the city, an area beset with homeless, drug addicts, and prostitution.
I was walking to a parking lot after a show one evening when I passed a doorway. Three men were violently attacking a blond woman. Never one to miss a good fight, I dove in, knocking two unconscious in 15 seconds (thank you Higaona Sensei!). Unfortunately, number three jumped to my side, pulled a knife, and stabbed me.
The attacker and the woman ran off, leaving me bleeding in a doorway. I drove over the Golden Gate Bridge to Marin General Hospital, bleeding all over the front seat of my car, where they sewed me up nicely and put me on some strong drugs.
The doctor said, “You shouldn’t be doing this at your age.”
I responded that “good Samaritans are always rewarded, even if the work is its own reward.”
Fortunately, I still had my Motorola Flip Phone with me, so I called Singapore from my hospital bed for a market update. I liked what I saw and bought 100 futures contracts on Japan’s Nikkei 225. This was back in 1999 when anything you touched went straight up.
Then, I passed out.
An hour later, I woke up, called Singapore again and bought another 100 futures contracts, not remembering the earlier buy. This went on all night long.
The next morning, I was awoken by a call from my staff who excitedly told me that the overnight position sheets had just come in and I had made 40% on the day.
Was there some mistake?
Then I got a somewhat tense call from my broker. I had a margin call. I had also exceeded the exchange limits for a single contract and owned the equivalent of $200 million worth of Nikkei. I told them to sell everything I had at market and go 100% cash.
That was exactly what they wanted to hear.
That left me up 60% on the year and it was only May.
I then called all of the investors in my hedge fund. I told them the good news, that I wouldn’t be doing any more trades for the fund until I received my performance bonus the following January and was taking off on a long vacation. With a 2%/20% payout in those days, that meant I was owed 14% of the underlying assets of the fund at a very elevated valuation.
They said, "That’s great, have fun. By the way, how did you do it?"
I answered, “Great drug selection.” No questions were asked.
Then I launched on the mother of all spending sprees.
I flew to Germany and picked up a new Mercedes S600 V12 Sedan at the factory in Stuttgart for $160,000. I then immediately road-tested it on the Autobahn at 130 mph. I made it to Switzerland in only two hours. After all, my old car needed a new seat.
Next, I bought all new furniture for the entire house, each kid selecting their own unique style.
Then, I took the family to Las Vegas where we stayed in the “Rain Man Suite” at the Bellagio Hotel for $10,000 a night, where both the 1988 Rain Man and 2009 The Hangover were filmed.
I bought everyone in the family black wool Armani suits, plus a couple of Brionis for myself at $8,000 a pop. For good measure, I chartered a helicopter for a tour of the Grand Canyon the next day.
At the end of the year, I sold my hedge fund based on the incredible strength of my recent performance for an enormous premium. I then left the stock market to explore a new natural gas drilling technology I had heard about called “fracking”.
Four months later, the Dotcom Crash ensued in earnest.
I still have the scar on my right side, and it always itches just before it rains, which is now almost never. But it was worth it, every inch of it.
It’s all true, every word of it and I’ll swear to it on a stack of bibles.
Stay Healthy,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Global Market Comments
July 6, 2023
Fiat Lux
Featured Trades:
(TUESDAY, AUGUST 1, 2023 FLORENCE, ITALY GLOBAL STRATEGY LUNCHEON)
(PLAYING THE SHORT SIDE WITH VERTICAL BEAR PUT SPREADS)
(TLT)
CLICK HERE to download today's position sheet.
Global Market Comments
June 29, 2023
Fiat Lux
Featured Trades:
(SATURDAY, AUGUST 5, 2023 ROME, ITALY STRATEGY LUNCHEON)
(MY 2022 LEAPS TRACK RECORD),
(FCX), (PANW), (RIVN), (NVDA), (BRKB), (JPM), (MS), (VRTX), (TLT), (GOLD), (SLV), (TSLA)
CLICK HERE to download today's position sheet.
Recently, I have been touting a 2022 track record of +84.63%.
I have a confession to make.
I lied.
In actual fact, my performance was far higher than that. In reality, I generated a multiple of that +84.63% figure.
That is because my published performance is only for my front-month short-term trade alerts. It does not include the LEAPS recommendations (Long Term Equity Anticipation Securities) issued in 2022, the details of which I include below.
LEAPS have the identical structure as a front month vertical bull call debit spread. The only difference is that while front-month call spreads have expiration dates of less than 30 days, LEAPS go out to 18-30 months.
LEAPS also have strike prices far out of-the-money instead of deep in-the-money, giving you infinitely more upside leverage. LEAPS are actually synthetic futures contracts on the underlying stock.
Of the 12 LEAPS executed in 2022, eight made money and four lost. But the successful trades win big, up to 1,260% in the case of NVDIA (NVDA). With the losers, you only write off the money you put up.
And you still have 18 months until expiration for my four losers, ample time for them to turn around and make money. In the case of my biggest loser for Rivian (RIVN), Tesla launched an unprecedented EV price way shortly after I added this position. Never take on Tesla in a price war. Black swans happen.
Of course, timing is everything in this business. I only add LEAPS during major market selloffs as the leverage is so great, over 20X in some cases, of which there were four in 2022.
If you would like to receive more extensive coverage of my LEAPS service, please sign up for the Mad Hedge Concierge Service where you can excess a separate website devoted entirely to LEAPS. Be aware that the Concierge Service is by application only, has a limited number of places, and there is usually a waiting list.
Given the numbers below, it is easy to understand why most professional full-time traders only invest their personal retirement funds in LEAPS.
To learn more about the Mad Hedge Concierge Service, please contact customer support at support@madhedgefundtrader.com
2022 LEAPS Track Record
Date Position Cost Price Profit
9/27/2022 (FCX) January 2025 $42-$45 Call spread LEAPS $0.65 $1.26 94%
9/28/2022 (PANW) January 2025 $306.67-$313.33 Call spread LEAPS $0.80 $4.42 453%
9/28/2022 (RIVN) January 2025 $75-$80 Call spread LEAPS $0.50 $0.06 -88%
9/29/2022 (NVDA) January 2025 $270-$280 Call spread LEAPS $0.50 $6.80 1,260%
9/30/2022 (BRK/B) January 2025 $420-$430 Call spread LEAPS $1.00 $1.95 95%
10/3/2022 (JPM) January 2025 $175-$180 Call spread LEAPS $0.50 $0.89 78%
10/4/2022 (MS) January 2025 $130-$135 Call spread LEAPS $0.50 $0.24 -52%
10/12/2022 (VRTX) January 2025 $430-$440 Call spread LEAPS $1.50 $2.76 84%
11/9/2022 (TLT) January 2024 $95-$100 Call spread LEAPS $2.30 $3.51 53%
11/10/2022 (GOLD) January 2025 $27-$30 Call spread LEAPS $0.25 $0.18 -28%
11/28/2022 (SLV) January 2025 $25-$26 Call spread LEAPS $0.50 $0.22 -56%
12/19/2022 (TSLA) January 2025 $290-$300 Call spread LEAPS $1.50 $2.94 96%
Good luck and good trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
The Sweet Taste of LEAPS
Global Market Comments
June 22, 2023
Fiat Lux
Featured Trades:
(TESTIMONIAL)
(WHAT EVER HAPPENED TO THE GREAT DEPRESSION DEBT?)
($TNX), (TLT), (TBT)
CLICK HERE to download today's position sheet.
Global Market Comments
June 21, 2023
Fiat Lux
Featured Trades:
(WEDNESDAY, JULY 19, 2023 LONDON GLOBAL STRATEGY LUNCHEON)
(THE BUY AND FORGET PORTFOLIO),
(SPY), (IXUS), (EEM), (VNQ), (TLT), (TIP)
CLICK HERE to download today's position sheet.
All traders and portfolio managers with experience approaching a half-century, like myself and a handful of close friends, agree on one thing.
Someday, you will be wrong.
I don’t mean just a little bit wrong, I mean disastrously wrong. A real humdinger, even a life-threatening experience. Even wrong up the wazoo.
In fact, most old salts, even the best performing ones, suffer at least a couple of 50% losses of their total assets, and at least one 75% hit, at least once in their lives.
We’ve all been there.
The 1973 oil crisis. The 1987 stock market crash, when the Dow Average gave up a withering 22% in a single day (I tried to place an order to buy stock at the close and the clerk burst into tears and dissolved into a puddle on the floor).
The Dotcom crash. And of course, the granddaddy of them all, the Great Crash of 2008, which you all remember with the greatest discomfort.
Even my mentor, Warren Buffet, has admitted to taking three 50% hits in his lifetime and lived to tell about it.
The trick is to keep these misfortunes from wiping you out so completely that you can never make a comeback.
Better yet, don’t get into trouble in the first place. And I’ll tell you exactly how to do that right now.
One of the great pleasures of running the Mad Hedge Fund Trader is that I get to speak to thousands of interesting people every year. Believe me, there are all kinds.
I have found kids straight out of school who take to trading like a fish to water. Their instincts are incredible. They figure out the harsh realities of the market decades before I ever did.
When they ask me questions, I think, “Damn! Why didn’t I think of that?”
I have seen several of these gifted, natural born traders use the Mad Hedge Fund Trader turn pennies into millions over unbelievably short times.
You see, they have the trader gene.
Sadly, I also run into the opposite extreme. With some people you could have George Soros sitting on their left, Paul Tudor Jones on their right, both guiding their hands on the mouse to execute trades, and they are still going to still lose money.
These are not stupid people.
I have met many with Harvard MBAs, advanced degrees from MIT, and even Phi Beta Kappa’s, and it doesn’t do them a whit of good on the trading front. They just don’t have trading in them.
In other words, they lack the trading gene.
When I stumble across these people, I tell them to quit trading, end the self-abuse, and preserve whatever wealth they have left. I then order them to buy what I call my “Buy and Forget Portfolio.”
This is a collection of only six investments, which I have assembled over the decades that will be profitable in almost all circumstances. In good years it will grow generously. In bad years it will be down marginally. Over the long term, it will do extremely well.
Here it is:
The Mad Hedge Buy and Forget Portfolio
20% domestic US stocks (SPY)
20% international stocks (IXUS)
10% emerging stock markets (EEM)
20% Real Estate Investment Trusts (VNQ)
15% long term US Treasury Bonds (TLT)
15% Treasury Inflation Protected Securities (TIP)
Notice that half the money is in equities and the remainder in fixed income securities.
If you initiated this portfolio in 1997, the year that TIPS first became available to the public, you would have earned an average annualized compounded return of 7.86% through the end of 2014, assuming reinvestment of dividends and interest.
During the bear market of 2000-2002, when the S&P 500 dropped 50%, this portfolio never suffered a loss of more than -4.7%. During the Great Crash of 2008, it fell -31%, versus -37% for the (SPY), and then very quickly bounced back.
Most long-only investors would have killed for returns like these.
So the bottom line is this. Expect a 4% drawdown every decade, a 31% hickey twice a century, and one of those twice-a-century events is only eight years behind us. That is not a bad proposition.
The heavy stock weighting can be easily explained by the fact that historically, stocks have outperformed bonds by a large margin.
For long periods of time, such as much of the 19th century, the Great Depression, and now, chronic structural deflation meant that bonds paid very little in interest.
Stocks also have the advantage in that during periods of inflation they can pass rising costs on to consumers via price hikes.
Guess what? We are just going into an inflationary period.
For the past 200 years, stocks have therefore delivered a compounded average annualized return of 8.3%.
Just to give you an example of how valuable the stock advantage can be, $1 invested in 1802 would be worth $8.8 million today.
This is why Oracle of Omaha Warren Buffet constantly sings the praises of compounding and dividend reinvestment and is why he rarely sells anything. In fact, his authorized biography is entitled Snowball (a great read, by the way).
The beauty of the Buy and Forget Portfolio is that the six elements counterbalance each other in all market circumstances. When stocks go up, bonds usually go down, and vice versa.
They both go the wrong way only for very short periods, such as in 2008 and always snap back.
And remember inflation, that long-forgotten thing where prices actually go up? It will make a return someday. And there is no better time to buy TIPS than during the deflationary surge that we are enduring now. TIPS prices are cheap.
Such is the beauty of diversification.
The great thing about the Buy and Forget Portfolio is that you can literally buy and forget about it. You won’t lose sleep at night, you could care less about what they say on CNBC, and don’t have to hide those embarrassing brokerage statements from your spouse.
The only thing you have to do is to rebalance it once a year to restore each component to its original weighting. More often than that and you run up big commission and tax bills.
Remember, you are trying to buy your own yacht, not your broker’s.
This will free you up to focus on the more important things in life.
Will Daenerys Targaryen gain her rightful place on the throne of the Seven Kingdoms in The Game of Thrones? Will Don Draper get his well-deserved comeuppance in the final season of Mad Men? Can the widow, Lady Mary, ever find true love again in the next season of Downton Abbey?
Of course, knowing all of this, some bad traders will continue to trade. For some, it is like an addition. They just have to win, whatever the cost. For others, it's like buying lottery tickets. Some just love the adrenaline and the thrill of the chase, even if it costs them money.
Whatever the reason, they continue trading until they run out of money. Then they will try to borrow your money to trade.
Could this be you?
All I can do is wish them the best.
Leave the trading to the masochists, like me.
Leave the Trading to the Masochists
Global Market Comments
June 20, 2023
Fiat Lux
Featured Trades:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or TIME TO CHANGE STRATEGY),
(SPY), (TLT), (UNG), (FCX), (TSLA), (AMGN)
CLICK HERE to download today's position sheet.
All good things must come to an end.
Mad Hedge has made fortunes for thousands of followers over the last 15 years with its aggressive options spread strategy, which profits mightily from falling market volatility ($VIX). That is what is happening in the market 95% of the time.
However, it doesn’t make sense when the ($VIX) drops below $20, and that may now continue to be the case for a prolonged period of time.
However, just as one window closes, another opens.
While low volatility makes options spreads no longer attractive, it makes two-year LEAPS the bargain of the century. With volatility this low, you essentially get the second year for free. That is more than adequate time to go into any recession that may or may not happen and then come back out the other side at max profit.
If the underlying stock suddenly rockets, which is often the case with my recommendations, you can collect 90% of the maximum potential profit in a two-year LEAPS within months, if not weeks.
Better yet, while we used to make 15%-20% on front month options spreads, which benefited from accelerated time decay, the profit on two-year LEAPS can run from 100% to 500%. One client bagged a 5,000%, or 50X profit on an NVIDIA (NVDA) LEAPS he strapped on last October.
He doesn’t work anymore.
The timing for this strategy adjustment is perfect. We have just entered a new bull market for stocks that could run for another decade. With the exception of the “Magnificent Seven,” most US stocks are now just above their bear market bottoms. What better time to increase your leverage tenfold.
I won’t be adding LEAPS to my daily position sheet or P&L. They will remain a front-month trading tool. So the millions you are about to make will just have to remain our little secret. Concierge members will get access to a dedicated website that will keep a running total of all Mad Hedge LEAPS issued.
All good strategies must come to an end. Market conditions change or the copycats and wannabees squeeze the life out of them. I have seen too many good traders go out of business clinging to strategies that worked yesterday, but not today. They were hauled away in straight jackets, kicking and screaming because they lost all their money.
The stock market is like working in a hurricane. If you don’t learn how to bend with the wind, you snap and end up in a pile of debris.
When the ($VIX) gets back above $20, or better yet $30, and the Mad Hedge Market Timing Index plunges down to the $20’s, I’ll be back fully loaded with front month options spreads by the dozens.
Good luck.
So far in June, we are up +0.47%. My 2023 year-to-date performance is still at an eye-popping +62.52%. The S&P 500 (SPY) is up only a miniscule +12.63% so far in 2023. My trailing one-year return reached +101.75% versus +24.19% for the S&P 500.
That brings my 15-year total return to +659.71%. My average annualized return has blasted up to +48.86%, another new high, some 2.54 times the S&P 500 over the same period.
Some 42 of my 46 trades this year have been profitable. Only 23 of my last 24 consecutive trade alerts have been profitable.
I executed no trades last week. Concierge members received a LEAPS trade alert on Crown Castle International (CCI), which regular subscribers should receive shortly. My longs in Tesla (TSLA) and Freeport McMoRan (FCX) expired at max profit, which I easily ran into the June 16 option expiration this week. I now have a very rare 100% cash position due to the lack of high-return, low-risk short-term trades.
A Mad Hedge Market Timing Index at 82 is not exactly encouraging me to bet the ranch. Don’t rush to buy the top.
On another matter, I am proud to say that every Mad Hedge service saw positions expire at their maximum profit at the June 16 quadruple witching options expiration.
Global Trading Dispatch rang the cash register with Tesla (TSLA) and Freeport McMoRan (FCX). The Mad Hedge Technology Letter coined it with Apple (AAPL). The Mad Hedge Biotech & Health Care Letter printed money with Amgen (AMGN). Jacquie’s Post pleased followers with a profit in the (TLT). Finally, Mad Hedge AI, launched only on Monday, saw the shares for its initial trade alert for (UNG) jump a breathtaking 15% in four days.
I must be doing something right.
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!
Tesla Model Y Became World’s Top Selling Car in Q1, the first EV to do so. Some 267,200 Y’s were shifted, edging out Toyota’s Corolla by 10,800 units, which led the field for decades. Elon Musk’s price-cutting volume play is working to the competition’s chagrin. The Model Y is on track to top one million sales this year. Buy (TSLA) on dips
Tesla Drops Model 3 Price to $33,000, net of $7,500 federal EV tax credit. That helped it become the world’s top-selling car. Late to the market EV makers are getting killed, hemorrhaging cash. That took the shares up to a new 2023 high of $231. Keep buying (TSLA) on dips.
Apple Launches $3,497 Vision Pro Headset, in a run at Meta (META) in the virtual headset world. It’s the company’s first new product launch since the Apple Watch in 2014 coining yet another new revenue stream. Apple shares hit a new all-time high on the news. Buy (AAPL) on dips.
Weekly Jobless Claims Jump to 261,000, an increase of 28,000, as the deflationary effects of high-interest rates take hold.
Europe Enters a Recession, with a -0.1% GDP print in Q1. Sharp rises in Euro interest rates get the blame.
General Motors Adopts Tesla’s Charging System, essentially giving a near monopoly to Elon Musk. (GM) is joining Ford’s (F) capitulation from two weeks ago. This should grow into a $20 billion a year profit item for Tesla. All of my outrageous forecasts are coming true. Buy (TSLA) on dips.
US to Send Another $2 Billion Worth of Advanced Missiles to Ukraine. The package includes advanced Raytheon (RTX) Himars and Lockheed (LMT) Patriot 3 missiles. Buy both (RTX) and (LMT) on dips as both missiles now have order backlogs extending for years.
Coinbase Gets Crushed after the SEC throws the book at them. The government agency is intent on destroying the entire crypto infrastructure. Get your money out if you can. Avoid (COIN) on pain of death.
Volatility Index ($VIX) Hits 3 ½ Year Low, at $14.26. Complacency with the S&P 500 is running rampant, which always ends in tears. The level implies a maximum up-and-down range of only 8.2% for 30 days.
Airline Profits to Double in 2023, as service sharply deteriorates with revenge travel accelerating. Looks for this summer to be a perfect travel storm.
On Monday, June 19 is the first-ever Juneteenth National Holiday celebrating the freedom of the slaves in Texas, the last state to do so. Markets are closed.
On Tuesday, June 20 at 8:30 PM EST, US Building Permits for May are announced.
On Wednesday, June 21 at 10:00 AM, Fed Chairman Powell testifies in front of Congress.
On Thursday, June 22 at 8:30 AM, the Weekly Jobless Claims are announced.
On Friday, June 23 at 9:45 AM the S&P Global Flash PMI is printed.
At 2:00 PM the Baker Hughes Rig Count is printed.
As for me, with the shocking re-emergence of Nazis on America's political scene, memories are flooding back to me of some of the most amazing experiences in my life. I thought we were done with these guys I have been warning my long-term readers for years now that this story was coming. The right time is now here to write it.
I know the Nazis well.
During the civil rights movement of the 1960s, I frequently hitchhiked through the Deep South to learn what was actually happening.
It was not usual for me to catch a nighttime ride with a neo-Nazi on his way to a cross burning at a nearby Ku Klux Klan meeting, always with an uneducated blue-collar worker who needed a haircut.
In fact, being a card-carrying white kid, I was often invited to come along.
I had a stock answer: "No thanks, I'm going to another Klan meeting further down the road."
That opened my driver up to expound at length on his movement's bizarre philosophy.
What I heard was chilling. Suffice it to say, I learned to talk the talk.
During 1968 and 1969, I worked in West Berlin at the Sarotti Chocolate factory in order to perfect my German. On the first day at work, they let you eat all you want for free.
After that, you got so sick that you never wanted to touch the stuff again. Some 50 years later and I still can’t eat their chocolate with sweetened alcohol on the inside.
My co-worker there was named Jendro, who had been captured by the Russians at Stalingrad and was one of the 5% of prisoners who made it home alive in 1955. His stories were incredible and my problems pale in comparison.
Answering an ad on a local bulletin board, I found myself living with a Nazi family near the company's Tempelhof factory.
There was one thing about Nazis you needed to know during the 1960s: They absolutely loved Americans.
After all, it was we who saved them from certain annihilation by the teeming Bolshevik hoards from the east.
The American postwar occupation, while unpopular, was gentle by comparison. It turned out that everyone loved Hershey bars. Americans became very good at looking the other way when Germain families were trying to buy food on the black market. That’s why Reichsmarks wasn’t devalued until 1948.
As a result, I got free room and board for two summers at the expense of having to listen to some very politically incorrect theories about race. I remember the hot homemade apple strudel like it was yesterday.
Let me tell you another thing about Nazis. Once a Nazi, always a Nazi. Just because they lost the war didn't mean they dropped their extreme beliefs.
Fast-forward 30 years, and I was a wealthy hedge fund manager with money to burn, looking for adventure with a history bent during the 1990s.
I was mountain climbing in the Bavarian Alps with a friend, not far from Garmisch-Partenkirchen, when I learned that Leni Riefenstahl lived nearby, then in her 90s.
Attending the USC film school decades earlier, I knew that Riefenstahl was a legend in the filmmaking community.
She produced such icons as Olympia, about the 1932 Berlin Olympics, and The Triumph of the Will, about the Nuremburg Nazi rallies. It is said that Donald Trump borrowed many of these techniques during his successful 2016 presidential run.
It was rumored that Riefenstahl was also the one-time girlfriend of Adolph Hitler.
I needed a ruse to meet her since surviving members of the Third Reich tend to be very private people, so I tracked down one of her black and white photos of Nubian warriors, which she took during her rehabilitation period in the 1960s.
It was my plan to get her to sign it.
Some well-placed intermediaries managed to pull off a meeting with the notoriously reclusive Riefenstahl, and I managed to score a half-hour tea.
I presented the African photograph, and she seemed grateful that I was interested in her work. She signed it quickly with a flourish.
I then gently grilled her on what it was like to live in Germany in the 1930s. What I learned was fascinating.
But when I asked about her relationship with The Fuhrer, she flashed, "That is nothing but Zionist propaganda."
Spoken like a true Nazi.
The interview ended abruptly.
I took my signed photograph home, framed it, and hung it on my office wall for a few years. Then I donated it to a silent auction at my kids' high school.
Nobody bid on it.
The photo ended up in storage at my home, and when it was time to make space, it went to Goodwill.
I obtained a nice high appraisal for the work of art and then took a generous tax deduction for the donation, of course.
It is now more than a half-century since my first contact with the Nazis, and all of the WWII veterans are gone. Talking about it to kids today, you might as well be discussing the Revolutionary War.
By the way, the torchlight parade we saw in Charlottesville, VA in 2017 was obviously lifted from The Triumph of the Will, except that they didn't use tiki poolside torches in Germany in the 1930s.
Good Luck and Good Trading
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Leni Riefenstahl
Olympia
