There is no limit to my desire to get an early and accurate read on the US economy, which at the end of the day is what dictates the future of all of our trades and investments.
I flew over one of my favorite leading economic indicators only last weekend at the controls of a vintage Cessna 172.
Honda (HMC) and Nissan (NSANY) import millions of cars each year through their Benicia, California facilities, where they are loaded onto thousands of rail cars for shipment to points inland as far as Chicago.
In 2009, when the US car market shrank to an annualized 8.5 million units, I flew over the site and it was choked with thousands of cars parked bumper to bumper, rusting in the blazing sun, bereft of buyers.
Then, “cash for clunkers” hit (remember that?).
The lots were emptied in a matter of weeks, with mile-long trains lumbering inland, only stopping to add extra engines to get over the High Sierras at Donner Pass.
The stock market took off like a rocket, with the auto companies leading.
I flew over the site last weekend, and guess what?
The lots are empty.
U.S. new vehicle sales, including retail and non-retail transactions, are estimated to reach 1,354,600 units in August, a 15.4% jump from a year earlier, according to the joint report by J.D. Power and GlobalData. Consumers are estimated to spend $47.8 billion on new vehicles, the highest on record for the month of August, and 10.5% higher than last year, the report said.
Japanese cars are suddenly selling so fast that vehicles are being sold even before they land on the dock.
It is all further evidence that my increasingly optimistic view on the US economy is correct, that multiple crises this year are fully discounted, and that the stock market is poised for new highs.
The conventional auto industry should lead to the upside, as it has already done, led by General Motors (GM) and Ford (F). But the move may not happen until the second half of 2024 when the market’s love affair with big tech stocks reaches the point of temporary exhaustion.
As for Tesla (TSLA), better to buy the car than the stock at these depressed prices. Once the EV price wars end, the stock should double again to new all-time highs.
This is a big deal because the auto industry directly and indirectly accounts for about 10% of the total US economy.
It is also the largest manufacturing employer, with the legacy Big Three accounting for 6 million jobs, 4.87% of the 124 million US total.
Not only do you have to include the big four automakers, but you also must include the vast number of parts suppliers, advertisers, and the national dealer networks.
Since so many car purchases are financed with loans, it turns out that the industry is a great play on falling interest rates.
There are $1.6 trillion in subprime auto loans on lenders’ books now.
If you don’t believe me, check out the resale market price of your wheels at Kelly Blue Book (click here for the site)
You will see they have recently risen steadily in value.
It is all further evidence of the hard data/soft data conundrum, which I have written about extensively in the past.
Look no further than Consumer Sentiment, which has held up remarkably well for the past three consecutive months.
Sorry the photo below is a little crooked, but it's tough holding a camera in one hand and a plane's stick with the other, while flying through the never-ending turbulence of the San Francisco Bay’s Carquinez Straight.
Air traffic control at nearby Travis Air Force Base usually has a heart attack when I conduct my research in this way, with a few joyriding C-130s having more than one near miss in recent years.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/10/Honda-Car-Lot.jpg181603Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2023-11-24 09:06:002023-11-24 12:08:16My Updated Personal Leading Economic Indicator
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.
Removing the Chief Accounting Officer and delaying earnings on the day of earnings is a massive red flag for EV start-up Fisker (FSR).
Fisker said in a filing that it “determined that it has material weaknesses in the company’s internal control over financial reporting.”
Hiring the wrong person for one of the most important jobs at the company only to realize on the day of an earnings report is more than bad optics, and it certainly means there is probably a lot worse going on under the hood.
The blood bath in FSR shares continues today with the stock cratering over 2% which is on the heels of a 21% drop on Tuesday.
Fisker CFO Geeta Gupta-Fisker said the company is cutting its 2023 production guidance to a range of 13,000-17,000 units to enable the company’s “global delivery and logistics platform to scale” and not sit on inventory. Fisker’s challenges with delivery resulted in 4,725 vehicles produced, but only 1,097 delivered.
FSR has continued to over-promise and deliver which creates a toxic recipe for lower stock prices.
After peaking at over $28 per share in the summer of 2021, the stock has done nothing but slide into the abyss.
CEO Henrik Fisker said customers were waiting a long time for their vehicles and were getting “annoyed.”
Fisker’s production forecast stood at 20,000-23,000 units, which itself was reduced from a prior forecast of 32,000-36,000 in May, and again from 42,400 earlier this year.
It’s only time until the EV company starts reducing its forecasts even more and this constant expectation of changing expectations is due to bad management.
FSR lost $91 million in the past quarter and only has a tick above half a billion in cash.
Doing some basic math, it means that FSR will burn through their existing cash in 5 quarters if they lose around the same amount of cash each quarter moving forward. If this happens, they will need to tap the corporate debt market and pay extortionate rates of something between 17% and 20% considering they have a high chance of filing for bankruptcy.
Readers should keep in mind that FSR doesn’t sell a cheap car.
It’s quite expensive which will make it even harder to scale.
That’s bad news for a start-up that only delivers about 1,000 cars per quarter.
Performance and management seem like they aren’t up to snuff and on paper, the company isn’t hitting the metrics it needs to be taken seriously by investors.
From a pricing point of view, Fisker made pricing adjustments for its lone Ocean SUV, cutting its top trim Ocean Extreme by $7,500 to $61,499.
Ultimately, I see FSR’s competitive position, or lack thereof exacerbating as we move forward.
I don’t see how they catch up with the heavyweights as it relates to many critical factors in running a successful EV firm.
Low-interest rates or something similar to them will not be back for a long time and perhaps never.
This new rate environment doesn’t favor the start-ups the ones that already “made it” in a low-rate environment of the past.
FSR makes a good car, but not to the point where buyers will pass up other cheaper options.
If FSR is struggling to deliver more than 1,000 cars per quarter, it bodes ill for repeat purchases after so many buyers are waiting for cars that should have already been delivered.
Management not understanding the logistics of the situation is hard to fathom in 2023.
They might want to pick up the phone and call around to see what is going on.
If a buyer spends more than $70,000 for an EV from an untested brand like FSR, better get the car there on time.
There is a reason why Tesla (TSLA) just caught a bid and shares went up 18% and the stock has doubled this year and it’s not because they have trouble delivering 1,000 cars.
I’ll take a hard pass on FSR for right now.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2023-11-15 14:02:012023-11-15 15:52:20Considering Investment in Fisker Then Read This
And if you lose your job to AI in five years you will be one of the lucky ones.
It’s possible that your job is already gone, they just haven’t told you yet.
The shocking conclusion I am getting from dozens of research fronts is that artificial intelligence and automation are accelerating far faster than anyone realizes.
It is all extraordinarily disruptive.
This will cause corporate profits to rocket and share prices to soar but at the price of higher nationwide political instability.
A big leap took place at the beginning of the year when suddenly it appeared that everything got a lot smarter.
My local Safeway has started using self-checkout scanners to enable customers to avoid the long lines still operated by humans.
I hate them because I can never get them to scan pineapples correctly.
Soon, Amazon (AMZN) opened a supermarket in Seattle where there is no checkout stand at all. You simply just pick up whatever products you want, and it will scan them all on the way out to the parking lot.
Once the software is perfected (it is self-learning), and the consumers are educated, 5 million checkout clerks will be joining the unemployment lines.
Uber has been testing self-driving taxis in Phoenix, AZ, with sometimes humorous results. It seems that other human-driven cars like crashing into them. There has been one fatality so far when the human safety driver was caught texting.
When they figure this out, probably in two years, 180,000 taxi drivers and 600,000 Uber and Lyft drivers will have to hit the road.
Some 3 million truck drivers will be right behind them.
Notice that I am only a couple of paragraphs into this peace and already 8,780,000 jobs are about to imminently disappear out of a total of 150 million in the US.
Two decades from now, only vintage car collectors or the very poor will be driving their cars if Tesla (TSLA) has anything to do with it.
I let my Model X drive me around most of the time. It has reaction time, night vision, and a 360-degree radar system that are far better than my 71-year-old senses.
However, all new Teslas now come equipped with the hardware to use it. They are all only one surprise overnight software upgrade away from the future.
And it's not just the low-end high school dropout jobs that are being thrown in the dustbin of history.
Automation is now rapidly moving up the value chain.
A rising share of online news is machine-generated and is targeting you based on your browsing history. You just didn’t know it.
It was a major influence in the last election.
Blackrock (BLK), the largest fund manager in the country, has announced that it is laying off dozens of stock analysts and turning to algorithms to manage its vast $8.6 trillion in assets under management.
As the April 15 tax deadline relentlessly approaches, you are probably totally unaware that an algorithm prepared your return, particularly if you use a low-end service like H & R Block (HRB) or Intuit’s (INTU) TurboTax.
Because of the simultaneous convergence of multiple technologies, half of all current jobs will likely disappear over the next 20 years.
If this sounds alarming, don’t worry.
We’ve been through all of this before.
From 1900 to 1950 farmers fell from 40% to 2% of the labor force. The food output of that 2% has tripled over the last 60 years, thanks to improved seed varieties and farming methods.
The remaining 38% didn’t starve.
They retrained for the emerging growth industries of the day, automobiles, aircraft, and radio.
But there had to be a lot of pain along the way.
More recently, some 30% of all job descriptions listed on the Department of Labor website today didn’t exist 20 years ago.
Yes, disruption happens fast.
And here’s where it gets personal.
Since I implemented an AI-driven, self-learning Mad Hedge Market Timing algorithm to assist me in my own Trade Alert service six months ago, MY PERFORMANCE HAS ROCKETED, FROM A 21% ANNUAL RATE TO 51%!
As a result, YOU have been crying all the way to the bank!
The proof is all in the numbers (see chart below).
Those trading without the tailwind of algorithms today suddenly find the world a very surprising and confusing place.
They lose money too.
The investment implications of all of this are nothing less than mind-boggling.
Wages are almost always the largest cost for any business, especially the labor-intensive ones like retailing, fast food, and restaurants.
Reduce your largest expense by 90% or more, and the drop through to the bottom line will be enormous.
Stock markets have already noticed.
Maybe this is why price-earnings multiples are trading at a multi-decade high of 19.5X.
Perhaps, the markets know something that we mere humans don’t?
It also is the largest budgetary item in any government-supplied service.
I bet that half of the country’s 7 million teaching jobs will be gone in a decade, taken over by much cheaper online programs.
Today, my kids do their homework on their iPhones, complete class projects on Google Docs, and get a report card that is updated and emailed to me daily.
They’re probably to last generation to ever go to a physical school.
(That’s life. Just as the cost of driving them to school every day becomes free, they don’t have to go anymore).
You can always adopt a “King Canute” strategy and order the tide not to rise.
Or, you can rapidly adapt, as I did.
The choice is yours.
https://www.madhedgefundtrader.com/wp-content/uploads/2018/03/12-month-story-2-1-e1521668829556.jpg349580MHFTRhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMHFTR2023-11-14 09:02:152023-11-14 12:13:57Why You Will Lose Your Job in the Next Five Years, and What to do About it
Last week saw the best week for stocks in two years. As I expected, big tech led the charge and will continue to do so well into next year. Bonds (TLT) stabilized.
It looks like Mad Hedge followers will get to ring the cash register one more time in 2023!
However, we face a couple of speed bumps this coming week. On Tuesday, we get the Consumer Price Index which will tell us if inflation is well and truly dead….or not. On Wednesday, we get the Producer Price Index. And then on Friday, the US government shuts down for lack of funding.
Oops!
There have been some 92 government shutdowns in the last 50 years. Since then, the Dow Average has rocketed by 60 times.
So, I am not worried about the long-term effect on your retirement portfolio. When voters see the gravy train from Washington cut off, not to mention Social Security checks, military pay, and air traffic controller salaries, Congressmen can suddenly become very agreeable.
The short term is another story.
If House recalcitrance triggers a 500 or 1,000-point swan dive in stocks, you want to pile into the big tech leaders I have been begging you to buy for the past three weeks and fill your boots. And while 2023 was a hell of a year to make money in stocks (Mad Hedge has made only 73% so far in 2023, a three-year low), 2024 is looking much, much better.
Think falling inflation, stabilizing wages, fading interest rates, recovering profits, expanding price earnings multiples, and soaring stocks and bonds. The traditional 60/40 portfolio will come back with a vengeance.
I caught up with my old friend Ron Barron the other day, who I talked into buying Tesla shares in 2014. He got in late, at about $100 a share, or 25 times my own original split-adjusted $2.50 cost. But when you’re running big money as Ron, you can’t afford to buy the kind of wild insane risks that buying Tesla in 2010 entailed.
I can.
Ron is now the largest outside shareholder in both Tesla (TSLA) and SpaceX. Tesla is so far ahead of the competition that he expects to hold the shares for the rest of his life. Ford Motors (F) now loses $36,000 for each EV it sells, while Tesla earns a profit of $8,000, down from $15,000 a year ago.
Ford spends $7 billion to build a new factory which generates a miniscule $15 million, or 0.2%. Tesla earns 114% profit on every $7 billion factory it builds.
It's no contest.
During the 1950s, Detroit went all out to earn short-term profits by outsourcing its supply chain. Virtually every one of those third-party companies went bankrupt, irreparably harming their business models. Tesla makes virtually all of its parts in-house, including the Panasonic batteries.
Tesla is learning 100 million miles of data per day from its fleet of 6 million cars. No one else has anything close to this. In 18 months, (TSLA) will have the world’s largest computing ability, which Elon Musk refers to as “Dojo” (karate school in Japanese), which Morgan Stanley estimates will add $500 million to the value of the company.
There are 1.5 billion internal combustion engines in the world that need to be replaced. The present replacement rate is only 80 million cars a year and only 10% of these are EVs. Eventually, 100% will be EVs. Detroit carmakers don’t want to sell EVs because they require no service whereas local dealers make all their money. EVs require no service beyond changing tires every two years,
And while President Biden recently suggested that the UAW targets Tesla for unionization, they don’t have a chance. Tesla workers are by far the highest-paid auto workers in the world with the best benefits. They also own stock, many at my own $2.50 adjusted share cost. Elon was sitting pretty during the recent 46-day UAW nationwide walkout.
Buying Tesla today does not mean you are investing in the achievements of the past, which are formidable. It means that you are buying the new Cybertruck which is rolling out now and offers a new platform with many new technological leaps forward.
More importantly, you are betting on the new $25,000 Model 2 due out in 2025, where Tesla plans to build 5 million a year. Then the EV competition will well and truly be gone.
That makes my $1,000 a share target then $10,000 look extremely modest.
Don’t kid yourself. Tesla can still add to the 35.6% decline it has suffered since July 17. We could go as low as $150, a 50% hickey. This is the most volatile major stock in the market. It always goes down more than you think. But if we do, you want to take a second mortgage out on your home and put it all into Tesla. It’s going up 67 times from there.
I just thought you’d like to know.
So far in November, we are up +7.32%. My 2023 year-to-date performance is still at an eye-popping +73.49%.The S&P 500 (SPY) is up +7.89%so far in 2023. My trailing one-year return reached +74.44% versus +15.78% for the S&P 500.
That brings my 15-year total return to +670.78%. My average annualized return has rocketed to a new all-time high at +51.26%,another new high, some 2.58 times the S&P 500over the same period.
Some 57 of my 62 trades this year have been profitable.
I went pedal to the metal last week, taking profits on my last three November positions in (TLT), (BRK/B), and (NVDA) that maxed out profits and piling in new December longs in (MSFT), (NLY), (BRK/B), (TLT), (CCJ), (CRM). That’s how you hit new all-time highs every day.
Berkshire Hathaway Knocks it Out of the Park, with a 41% gain in operating earnings from companies like BNSF Railroad, Geico, and Precision Castparts. But Warren Buffet was noted more for what he didn’t own than what he did. He unloaded $5 billion worth of global stocks in Q3, taking his cash position up to a record $157 billion. He can now earn a staggering $8.6 billion in interest in the coming year. He explains that stocks never really got cheap this year and high rates were just too attractive. Keep buying (BRK/B) on dips.
China EV Maker BYD is Building its First European Car Factory, in a clear threat to European car makers. They picked Hungary, one of the lowest-waged countries on the continent. BYD (BYDFF) which I recommended back in 2012 after visiting the factory in China is now the largest EV maker there knocking out 250,000 units this year. Is Tesla worried?
Investors Poured $5 Billion into Bond ETFs in October. Institutional investors were happy with the 5.0% yield last month and if they rose, they would simply buy more. It’s another sign that the bottom for all fixed-income prices is at hand. Buy (TLT), (JNK), and (NLY).
China Lends $1.34 Trillion for Belt and Road Initiative, from 2000 to 2001 to dominate Asian and African infrastructure. Good luck getting it back and good luck foreclosing. In the meantime, China suffered its first-ever deficit in foreign direct investment as the West de-risks from the Middle Kingdom.
Oil Hits a four-month low at $75 a Barrel, down 4% as the shine comes off the energy sector. The Gaza boost is gone. Fears of a global economic slowdown are mounting. China’s exports have fallen for six consecutive months, the world’s largest importer. Biden is back in the oil business, provided a floor bid from the Strategic Petroleum Reserve at $79.
Most 2023 Stock Gains Happened in 8 Days, up some 14% since January 1. If you are a day trader, you most likely missed all of this. This is despite stocks going up 113 days versus 102 down days. Making matters more difficult is that only seven stocks accounted for most of the increase. Talk about a narrow market!
A Soft Landing is Now More Likely, says Bank of America CEO Moynihan. Inflation is falling and could lead to Fed interest rate cuts in H2 2024. Stocks and bonds will love it.
NVIDIA is Designing Dumbed Down Chips for China, to bypass government sanctions. It’s an opportunity to recover some lost market share. Keep buying (NVDA) on dips, up 20% in two weeks. It has an impassable moat.
Weekly Jobless Claims dropped from 3,000 to 217,000. It’s still unusually low. Hiring slowed in October as the economy slowed.
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, November 13, bond markets are closed for Veterans Day. I will be leading the local parade wearing my new Medal from the Ukraine Army.
On Tuesday, November 14 at 2:30 PM EST,the Core Inflation Rate is released.
On Wednesday, November 15 at 8:30 AM, the Producer Price Index is published.
On Thursday, November 16 at 8:30 AM, the Weekly Jobless Claims are announced.
On Friday, November 17 at 2:30 PM the US Building Permits are published. At 2:00 PM the Baker Hughes Rig Count is printed.
As for me, few Americans know that 80% of all US air strikes during the Vietnam War originated in Thailand. At their peak in 1969, more US troops were serving in Thailand than in South Vietnam itself.
I was one of those troops.
When I reported to my handlers at the Ubon Airbase in northern Thailand for my next mission, they had nothing for me. They were waiting for the enemy to make their next move before launching a counteroffensive. They told me to take a week off.
The entertainment options in northern Thailand in those days were somewhat limited. Phuket and the pristine beaches of southern Thailand where people vacation today were then overrun by cutthroat pirates preying on boat people who would kill you for your boots.
Life was cheap in Asia in those days, especially your life. Any trip there would be a one-way ticket.
There were the fleshpots of Bangkok and Chang Mai. But I would likely contract some dreadful disease there. I wasn’t really into drugs, figuring whatever my future was, it required a brain. Besides, some people’s idea of a good time there was throwing a hand grenade into a crowded disco. So, I, ever the history buff, decided to go look for The Bridge Over the River Kwai.
Men of my generation knew the movie well, about a company of British soldiers who were the prisoners of bestial Japanese. At the end of the movie, all the key characters die as the bridge is blown up.
I wasn’t expecting much, maybe some interesting wreckage. I knew that the truth in Hollywood was just a starting point. After that, they did whatever they had to do to make a buck.
The fall of Singapore was one of the great Allied disasters at the beginning of WWII. Japanese on bicycles chased Rolls Royce armored cars and tanks the length of the Thai Peninsula. Two British battleships, the Repulse and the Prince of Wales, were sunk due to the lack of air cover with a great loss of life. When the Japanese arrived at Singapore, the defending heavy guns were useless as they pointed out to sea.
Some 130,000 men surrendered, including those captured in Malaysia. There were also 686 American POWs, the survivors of US Navy ships sunk early in the war. Most were shipped north by train to work as slave labor on the Burma Railway.
The Japanese considered the line strategically essential for their invasion of Burma. By building a 258-mile railway connecting Bangkok and Rangoon they could skip a sea voyage of 2,000 miles in waters increasingly dominated by American submarines.
Some 12,000 Allied troops died of malaria, beriberi, cholera, dysentery, or starvation, along with 90,000 impressed Southeast Asian workers. That earned the line the fitting name: “Death Railway.”
The Burma Railway was one of the greatest engineering accomplishments in human history, ranking alongside the Pyramids of Egypt. It required the construction of 600 bridges and viaducts.It crossed countless rivers and climbed steep mountain ranges. The work was all done in 100-degree temperatures with high humidity in clouds of mosquitoes. And it was all done in 18 months.
One of those captured was my good friend James Clavell, who spent the war at Changi Prison, now the location of Singapore International Airport. Every time I land there, it gives me the creeps.
Clavell wrote up his experiences in the best-selling book and movie King Rat. He followed up with the Taipan series set in 19th-century Hong Kong. We lunched daily at the Foreign Correspondents Club of Japan when he researched another book, Shogun, which became a top TV series for NBC.
So I navigated the Thai railway system to find remote Kanchanaburi Province where the famous bridge was said to be located.
My initial surprise was that the bridge was still standing, not destroyed as it was in the film. It was not a bridge made of wood but concrete and steel trestles. Still, you could see the scars of Allied bombing on the foundations, who tried many times to destroy the bridge from the air.
That day, the Bridge Over the River Kwai was a quiet, tranquil, peaceful place. Farmers wearing traditional conical hats made of palm leaves and bamboo strips called “ngob’s,” crossed to bring topical fruits and vegetables to market. A few water buffalo loped across the narrow tracks. The river Kwai gurgled below.
Once a day, a train drove north towards remote locations near the Burmese border where a bloody rebellion by the indigenous Shan people was underway.
The wars seemed so far away.
The only memorial to the war was a decrepit turn-of-the-century English steam engine badly in need of repair. There were no tourists anywhere.
So I started walking.
After I crossed the bridge, it wasn’t long before I was deep in the jungle. The ghosts of the past were ever present, and I swear I heard voices. I walked a few hundred yards off the line and the detritus of the war was everywhere: abandoned tools, rusted-out helmets, and yes, human bones. I didn’t linger because the snakes here didn’t just bite and poison you, they swallowed you whole.
After the war, the Allies used Japanese prisoners to remove the dead for burial in a nearby cemetery, only identified by their dog tags. Most of the “coolies” or Southeast Asian workers were left where they fell.
Today, only 50 miles of the original Death Railway remain in use. The rest proved impossible to maintain, because of shoddy construction, and the encroaching jungle.
There has been talk over the years of rebuilding the Burma Railway and connecting the rest of Southeast Asia to India and Europe. But with Burma, today known as Myanmar, a pariah state, any progress is unlikely.
Maybe the Chinese will undertake it someday.
Every Christmas vacation, when my family has lots of free time, I sit the kids down to watch The Bridge Over the River Kwai. I just wanted to pass on some of my experiences, teach them a little history, and remember my old friend Clavell.
Good Luck and Good Trading
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Walking the Bridge Over the River Kwai in 1976
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