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Tesla Tales

When a guest asked me to name a clear ten bagger stock for the coming decade at the Mad Hedge Technology Letter, I didn’t hesitate. It was Tesla (TSLA).

At long last, investors are perking up and taking notice of the Fremont, California based electric car manufacturer whose shares have been trapped in a highly volatile three-year trading range.

Tesla was the top-performing stock in the market over the last five months, soaring some 96% from $178 to $356.

Of course, ramping up production to over 360,000 units this year has given Tesla new respectability. Elon Musk pulled this off by building a huge tent in the Tesla Fremont parking lot and constructing a third assembly line, all in three short weeks.

He also used workers to replace the German Kuka and Japanese Fanuc robots which had a bad habit of breaking down during peak production. Output instantly leaped by 50%. It was one of the most aggressive and brilliant moves in business history.

Total production of Tesla’s since the 2010 inception of Model S-1 manufacturing will reach 1 million by January 2020.

They are also encouraged by the appointment of Larry Ellison to the board of directors, a new supervising adult and Musk friend. The short answer is that they will go up a lot, certainly after they break through the old $394 high.

I was one of the first buyers of Tesla shares at $16 ½ in the aftermath of its IPO debacle during the Great Recession. I bought one of the first Tesla Model S-1’s, chassis no. 125, in 2011.

I’ve toured the Fremont factory countless times and have even taken a couple apart after I totaled them. Suffice it to say that I know which end of a Tesla to hold upwards.

So it’s time for all of us to become more familiar with this vehicle that is 20 years from the future. I have been driving the latest Model X with every possible upgrade for the past year, which included the hardware for the point-to-point autopilot that will be activated in two years.

What I learned was amazing.

While the media focus is overwhelmingly on the 1,100-pound liquid-cooled lithium-ion battery, it is fact one of the least important aspects of Elon Musk’s vision.

The car has 80% fewer parts than any other modern vehicle. That enables Tesla to cut production costs to the extent that it can afford to install a $10,000 battery in every Model 100D shipped.

And here’s the interesting part. Since I started driving electric cars 11 years ago with the Nissan Leaf, the battery cost has cratered from $1,000 to $120 per kilowatt-hour. With the completion of the second Gigafactory in Sparks, NV, that cost will drop well below $100/kWh. That’s what will make Tesla’s low-end Tesla 3 to become profitable….and go global.

I am constantly learning new things about these elegant, well thought out machines. When I picked up my last one, the configuration was all wrong. No problem. After 30 minutes in the shop, it came back to the specifications I ordered.

It was then I realized that all the options and upgrades are modular and can be snapped, fitted, or screwed on in minutes. That greatly simplified production, distribution, and versatility.

The downside is that Tesla is expanding so fast that the man who sold it to me knew virtually nothing about the car, being a former Mercedes salesman, and REGISTERED THE CAR IN THE WRONG STATE. But then it’s tough to find any good people today in this full-employment economy.

Ever the scientist, I designed a series of grueling experiments to put my “X” through during my Christmas vacation at Lake Tahoe.

I was able to make the 200 miles from the San Francisco Bay Area to Lake Tahoe on a single charge, a vertical climb of 7,200 feet. Better to stop at the Safeway in Truckee, CA which offers 16 superchargers, do your grocery shopping, and get a top-up.

Having flown small aircraft across the Atlantic, I am somewhat sensitive to range considerations. I once flew a Cessna 340 from Newfoundland to Iceland. Over Greenland, the wind shifted from a 50 miles tailwind to a 50 miles headwind, but we didn’t know it because GPS was not yet available to civilians. I ended up landing in Reykjavik with 15 minutes of fuel. An Icelandic Air Force helicopter escorted me the last 20 miles as a precaution.

And by the way, it is impossible to put on an orange survival floatation suite while you’re flying a plane. But I diverge.

I drove from the Tesla Supercharger station at the Atlantis Hotel & Casino in Reno, NV to my home in Incline Village, a distance of 30 miles. That meant crossing the Mount Rose Pass, a climb of 5,000 feet at zero degrees Fahrenheit. The “X” burned through 80 miles of range. The black ice was a killer, and I passed three accidents.

However, when I made the return trip, the vehicle used only 20 miles of range. That’s because each of the four wheels is a dynamo that recharges the battery on any decline. The car is in effect gravity-powered.

There has also been a lot of media fascination with the autopilot. Because of the three fatal crashes, its use has been cut back by Tesla to one minute at a time. You have to grip the wheel to reactivate it to prove you haven’t fallen asleep. After a while, your fingers get sore. Still, it’s useful to make phone calls or search Slacker for new music while you're driving. And the car certainly drives better than I can late at night after a bottle of fine cabernet.

Still, Bay Area police are arresting Tesla drivers found dozing at the wheel driving 70 mph. Maybe it’s those punishing Silicon Valley hours that’s doing it.

Far more useful is the radar-controlled cruise control. The car will automatically slow down when it catches up with the car in front. The problem is that at my advanced age, I can’t remember if I’m on autopilot or cruise control. I only find out when the car starts to drift over into the next lane.

A foot of fresh powder at Tahoe allowed me to test out the four-wheel-drive traction. It did fine driving up steep Sierra mountains. The all-season Pirelli Scorpion tires lived up to their billing, neatly handling an inch of clear ice on a 15-degree slope.

I learned a lot about electric cars, in general, hanging out at the ChargePoint station at the Diamond Peak Ski Resort where they offer free charging. Virtually all other competing cars only have an 80-mile range for the same price despite what their advertising says. A lot of businesses are now offering this service to lure high-end clientele, but you need a ChargePoint membership card to access the charging system.

Tahoe was a great place to test out the cold weather capability of the X where temperatures frequently can drop below zero degrees Fahrenheit at night. If you start the car cold in the morning, you’ll lose 50% of your range right off the bat.

However, if you pre-heat your car 20 minutes ahead of time by activating a handy iPhone app the loss only drops to 20% of the 295 miles range. It’s best to trickle charge the car all night at 20 watts/hour.

Playing with the 12-sensor radar is fun, whizzing past cars and trucks on the display as you pass them. It recognized my tail hitch mounted ski rack as a tailgating motorcycle. Apparently, algorithms don’t know everything….yet.

And here’s Tesla’s dirty little secret. All of the Model X’s and S’s have the same identical battery back. The ranges for the cheaper 60 and 70 kWh models are only software limited. That’s how Tesla instantly extended the range of every vehicle in Florida by 50 miles with a single command from headquarters with the onset of Hurricane Michael.

We’ll all be learning a lot more about Tesla soon. The $37,000 stripped-down Tesla 3’s are now for sale at the same price but three times the range and vastly more manufacturing experience than other electric vehicles. Sometimes they offer free charging for life.

That's when Tesla’s will truly take over the roads.

November 18, 2019

Diary, Newsletter, Summary

Global Market Comments
November 18, 2019
Fiat Lux

Featured Trade:

(MARKET OUTLOOK FOR THE WEEK AHEAD, or THE MELT UP IS ON)
(SPY), (AAPL), (UBER), (SCHW), (BA), (TSLA), (DIS), (NFLX), (TLT)

The Market Outlook for the Week Ahead, or The Melt Up is On

Diary, Newsletter

All of a sudden, and without warning, a buying panic has ensued in the stock market, breaking it out of a tedious two-year range.

The many concerns that kept investors out of stocks, like the trade war, interest rates, and a global economic slowdown, were shaken off like water off the back of a wet dog.

I could see all this coming. Even with my Mad Hedge Market Timing Index at 86, and trading as high as 91, screaming “SELL” I have been ignoring it. It usually has to spend 2-4 weeks at these elevated levels to make a real top anyway. Hedge fund compatriots who were sucked into selling too early by their own inferior in-house algorithms have been stopping out in great pain.

I’ll tell you the people who are really screwed by this move. Those who watched the economic data deteriorate all year, cut their equity allocations to the bone, and only started chasing the market upward once it broke new ground. It is a strategy that can only end in tears.

We here at Mad Hedge Fund Trader did a lot better. Followers of Global Trading Dispatch missed the breakout but bought every major dive of 2019. With double a good year’s performance in hand, we have no need to chase.

The newer Mad Hedge Technology Letter and Mad Hedge Biotech and Healthcare Letter have continued to go long pedal to the metal bringing in double-digit gains for all. Above all, we took profit on no less than four positions on Friday.

Can the market grind higher? Absolutely, yes. The world is awash in cash looking for any kind of return, and US stocks, with a (SPY) 1.81% dividend, are among the world’s highest yielding. In fact, the move could continue until the end of the year.

When will I come back in? After we get a substantial dip. Disciplines are useless unless you stick to them. In the meantime, while stocks are going crazy, there is fertile ground to harvest in other asset classes. I bought bonds (TLT) at the bottom last week and they are already performing nicely.

If you remember, I sold short, and then bought oil (USO) in September, taking advantage of a spate of volatility there. Such is the advantage of an all-asset class strategy I have been preaching and teaching for the past 12 years.

There will be no interest rate cuts in 2020, says Fed chairman Jay Powell, reading in between the lines. To do so would undermine our ability to get out of the next recession. We are still way below the 2.0% inflation target in this deflationary world.

The de-inversion of the yield curve is clearly driving stocks, with long term interest rates at last higher than short term ones. The markets are backing the recession out of the forecast. “Fear of missing out” is replacing just fear.

Consumer Prices rose faster than expected as tariffs feed into prices, up 0.4% in October. It’s going to take a lot more than that to move the needle on inflation. The YOY rate climbed to 1.8%. Also, US Producer Prices jumped, up 0.4% in October, a six-month high. It’s going to take a lot more than this to start ringing the inflation bell.

Weekly Jobless Claims soared by 14,000 to 225,000. It’s the first big jump in many months. Is the employment top in? Is this the end of the beginning or the beginning of the end?

Charles Schwab (SCHW) trading accounts soared 31%, in the wake of the commission cut to zero. What happens when you lower the price? You sell more of them. It’s a classic law of supply and demand.

Uber founder dumped stocks, as Travis Kalanick unloads $700 million worth of shares. He’s not selling because he can’t think of new ways to spend the money. It’s not exactly a “BUY” recommendation, is it? Avoid (UBER) like the plague.

Apple hit a new all-time high at $264, on three broker upgrades, with the high end reaching $290. The market capitalization tops $1.2 trillion, making it the world’s largest publicly-traded company. It looks like I’m going to have to increase my own target from a conservative $200. I made this prediction when the newsletter started a decade ago and the share traded under $20. People said I was nuts, except Steve Jobs.

The Tesla Model 3 returns to “reliable” list, from Consumer Reports. They had been taken off due to pieces falling off new cars and failing transmissions exactly at the 44,000-mile mark. It was all covered by warranty, of course. Looks like Elon is figuring out how to put these things together and stay that way. It follows an onslaught of good news about the company that has wiped out the shorts. Who is last on the quality list now? Cadillac. Buy (TSLA) on dips.

US short interest falls 1.6%, to 16.8 billion shares, as hedge funds scramble to limit losses. It’s got to be at least half the current net buying.

Disney launched its streaming service, Disney Plus, at $6.99 a month. The site crashed from overwhelming demand. It’s a problem I wish I had. Netflix (NFLX) won’t go under but their growth will be clearly impaired. Let the streaming wars begin! Buy (DIS) on dips.

US Productivity plunged sharply, down 0.3% in Q3. It’s completely a result of the trade war-induced freeze on capital spending by US businesses this year. It means we’re eating out seed corn to grow.

This was a week for the Mad Hedge Trader Alert Service to stay level. With only one position left, a bargain long in (TLT), not much else was going to happen. My long position in Boeing (BA) expired on Friday at its maximum profit point.

By the way, running out of positions at a market top is a good thing.

My Global Trading Dispatch performance held steady at +349.38% for the past ten years, pennies short of an all-time high. My 2019 year-to-date leveled out at +48.68%. So far in November, we are down a miniscule -0.31%. My ten-year average annualized profit held steady at +35.17%.

With my Mad Hedge Market Timing Index sitting around the sky-high 86 level, it is firmly in “SELL” territory and at a three-year high. The markets have been up in a straight line for 2 ½ months.

The coming week is pretty non-eventful of the data front after last week’s fireworks. Maybe the stock market will be non-eventful as well.

On Monday, November 18 at 11:00 AM, the US NAHB Housing Market Index for November is out.

On Tuesday, November 19 at 9:30 AM, US Housing Starts for October are released.

On Wednesday, November 20 at 2:00 PM, the Fed’s FOMC Minutes for their October meeting are published.

On Thursday, November 7, at 8:30 AM, Weekly Jobless Claims come out. At 11:00 AM the October Existing Home Sales are announced.

On Friday, November 8 at 11:00 AM, the University of Michigan Consumer Sentiment is out.

The Baker Hughes Rig Count follows at 2:00 PM.

As for me, I am going to see the latest Harry Potter play on Saturday, Harry Potter and the Cursed Child. It’s a reward for two kids who got straight A’s on their report cards. They seem to be strangely good at math. Maybe the apple doesn’t fall far from the tree.

Good luck and good trading.

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

November 15, 2019

Diary, Newsletter, Summary

Global Market Comments
November 15, 2019
Fiat Lux

Featured Trade:

(NOVEMBER 13 BIWEEKLY STRATEGY WEBINAR Q&A),
(FCX), (TSLA), (FXI), (SPY), (AAPL), (M), (BA), (TLT)

November 13 Biweekly Strategy Webinar Q&A

Diary, Newsletter

Below please find subscribers’ Q&A for the Mad Hedge Fund Trader November 13 Global Strategy Webinar broadcast from Silicon Valley, CA with my guest and co-host Bill Davis of the Mad Day Trader. Keep those questions coming!

Q: Has the multiyear decline in commodities ended, such as for Freeport McMoRan (FCX)?

A: Yes, for the short term. However, we will almost certainly have another recession scare—or even election scare—sometime next year. That will cause a retest of the recent lows in commodities. The volatility will continue, but the long-term trend is up. The next recession will likely be so short that people will start discounting the recovery now. If you’re only looking for a 2-quarter recession and have a long-term view of your stocks, you probably want to use any kind of dips to buy now. A lot of the recent buying in Tesla (TESLA), by the way, has been of that nature.

Q: Will the US eventually drop all tariffs on Chinese imports (FXI), or do you see the US raising them?

A: I think eventually they will solve the trade war next year, right in front of the election—maybe June/July/August—so that Trump has something to run on. It’s too early to solve it now for political purposes. The whole trade war was essentially designed to depress the economy and then bring in Trump as the savior right before the election, and that has all tariffs disappearing sometime next year. By the way, some of the buying in the market now is discounting the end to the uncertainty of the trade war. So, either that or it ends when Trump leaves office—in either case, that’s 15 months off. Many big institutions think in timeframes much longer than that.

Q: Can the US consumer bring us through the holiday season to have equities (SPY) finish at all-time highs?

A: Yes, they can; I thought we might get a dip to trade off of in Oct/Nov, but we haven't gotten it. It’s looking more and more like a melt-up into year-end, even though it’s a slow-motion melt-up of 50 or 100 points a day.

Q: Will Apple (AAPL) keep going up every day forever?

A: No, don’t forget that Apple can have 40% pullbacks at any time without warning. Usually, they happen with new product launches. I would think we’re getting overextended here. If we somehow get a 10% or 20% pullback in Apple next year, I’d be jumping back into that for the product launch next September when we’ll likely hit $200, which has been my target for Apple for a very long time.

Q: Is it time to make a short term buy of beaten-down retail names like Macy’s (M)?

A: No, I am a person who trades with the long-term trend at all times. Most people are not agile or smart enough to do counter-trend trades and make money, and the risk/reward is also terrible—you make a mistake, you get killed on those. I think this company’s having a going-out-of-business sale, unless we enter a major increase in economic growth in this country, which is nowhere in the cards. If anything, I’m looking for a sharp rally to sell into. Macy’s might want to test that 200-day moving average up there at $20 at some point; that would be a great selling place. But no, we don’t want to touch the retailers right here, and retailers have been very kind to us this year on the short side.

Q: Do you see the United States US Treasury Bond Fund (TLT) as a safe-haven buy at today’s prices, or are bonds overpriced?

A: I think we’re getting the safe-haven bid as a hedge against stocks selling off. Wildly overbought Mad Hedge Market Timing Indexes are also great places to buy bonds because when you finally get the correction in the stock market, money piles into bonds, and you want to be buying the (TLT) before it does that.

Q: Is Boeing (BA) a short for the next 6 months?

A: No, I think the short play on Boeing is over. If we do get another run down to $325, take it as a gift and load the boat. I think the next major move in Boeing is to $400. Buy the dips.

Q: Do you think the Fed will cut one more time before the year is over, or will they hold off?

A: They will hold off—Powell said as much in this morning’s speech. He really said that not only will there be no more cuts this year, but next year as well, because we are essentially eating our seed corn when it comes to the next recession if we do cut rate because that means there will be no tools with which to get out of the recession.

Q: Are you seeing stocks rising to the end of the year, into the first of next year? If so, will there be a pullback during November before a final rise?

A: Yes we are seeing stocks rise to the end of the year; and you would think we will see some kind of pullback, but we have so much liquidity chasing so few stocks now, any pullbacks may be limited.

Q: (TLT) is called the iShares Barclay 20+ year bond fund. In your trade alerts, you talk about 10-year yields. How are the 10-year yields linked to the (TLT)?

A: There isn't a liquid 10-year bond ETF. There are ETFs but they’re fairly illiquid, so I put everyone into the 20-year (TLT) purely for liquidity reasons.

Q: What about going outright long on the (TLT)?

A: That’s not a bad option; the only problem with outright longs is you make no money if we grind sideways for a while, whereas with the options trade, you get in all the time decay. And we only did the December's, which have about 27 days left in them in trading time.

Q: Tesla just announced it will open a Berlin factory—what does this mean for Tesla and the share providers?

A: Well, it creates the means by which Tesla can increase its production from 400,000 cars this year to 5,000,000 cars a year in 10 years. And it’s just one other factory; expect more to come. Interestingly, their first choice was actually Great Britain, but Brexit scared them out of there.

Q: Do you think Silicon Valley should be a judge on political advertising?

A: I think Silicon Valley should not allow publication of obviously false content which they do now. That’s something the mainstream media are not allowed to do or they will get fined by the Federal Communications Commission. That ban does not apply to social media companies like Facebook (FB) and Twitter (TWTR) but should be as they are vastly more powerful than conventional media. Without it, you'll continue to see massive amounts of false information put out on the Internet. I can see the fake info clearly, but most can’t. I saw a statistic yesterday saying that roughly 50% of all information you read on the internet is false.

Good Luck and Good Trading
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

November 13, 2019

Tech Letter

Mad Hedge Technology Letter
November 13, 2019
Fiat Lux

Featured Trade:

(WHY YOUR NEXT TAXI RIDE COULD BE BY AIR),
(UBER), (TSLA), (GOOGL)

Why Your Next Taxi Ride Could Be By Air

Tech Letter

San Francisco is 49.2 square miles of pure innovation – at least historically.

The most creative solutions to the world’s most complex problems have been generated from this diminutive peninsula that juts out into the Pacific Ocean.

But when it comes to transportation, and by that, I mean the public transportation efficiently operated in most European and Asian cities like Seoul, Korea and Frankfurt, Germany, San Francisco epically fails at delivering an adequate system to the masses.

Instead, the stopgap solution gave us Uber (UBER), the rideshare company, and the fall out is more cars clogging up a bigger portion of the roadways and bridges.

And then there is Tesla (TSLA), whose enigmatic CEO loves to tell investors that electric is the panacea to the world’s economy.

Is Silicon Valley that far off from solving the conundrum of smooth public transportation by applying technology?

The solution might be percolating in Wessling, Germany by a company named Lilium who developed the Lilium Jet, an electrically powered commuter aircraft capable of vertical taking off and landing (VTOL) flight.

Moving forward, it’s black and white that the answer is 3D and not 2D.

Lilium was founded in 2015 by four engineers and PhD students at the Technical University of Munich.

In 2017, The Lilium Eagle, an unmanned two-seat proof of concept model, performed its initial flight at the airfield Mindelheim-Mattsies near Munich, Germany.

The successful test led the company to launch the 5-seat Lilium Jet and they hope by 2025, to roll out a full-fledged aerial taxi service.

Co-Founder and CEO Daniel Wiegand swears that within five years, a fleet of them could offer a 10-minute trip from Manhattan to Kennedy International Airport for $70.

Expectations that aerial taxis will be a reality in the coming years are quickly skyrocketing.

Companies like Lilium are researching, testing, and laying the groundwork for wider production and hankering for support from government officials.

At least 20 companies have skin in the game, which Morgan Stanley estimates will become a $850 billion market by 2040.

Larry Page, the billionaire co-founder of Google (GOOGL), is financially buttressing Kitty Hawk, a Palo Alto company run by the first engineers on Google’s autonomous car.

Uber is developing an air taxi service, with plans to operate by 2023, but I highly doubt that investors would give the go ahead if the cash burn overwhelms them.

The Federal Aviation Administration (FAA) is another tripwire that could knock the 2025 schedule off kilter and their notorious bureaucratic ways do not infuse certainty into the project.

Can Lilium build a platform that is broadly accessible and efficient?

That answer will be unpacked in the next few years.

The aerial vehicle has a carbon fiber body, 36-foot wingspan, and is battery powered, providing a range of 186 miles and a top speed of nearly 190 mph.

Inside the oblong-shaped cabin, posh seats await four passengers and a pilot.

The aircraft can take off and land vertically like a helicopter and is even quieter than a helicopter.

Once scaled out, production costs will run in the several hundred thousand dollars for each aircraft-making profitability realistic.

There will be lower maintenance costs because there are fewer mechanical components, and rides should cost less than Uber.

If rolled out on a mass scale, cityscapes will be revolutionized.

San Francisco and California effectively could bypass proper land public transport and skip straight to aerial vehicles as taxis.

Lilium’s plane has packed 36 smaller engines in its rotating wings that act as thrusters for takeoffs, landings, and subtle movements forward and back. Encasing the engines in the wings reduces friction and noise.

Lilium’s performance is currently unmatched but its secretive nature of the technology means it’s hard to quantify where they are now in the development.

With the funneling of capital to solve global transportation issues, aerial aspects will definitely be intertwined into the solution.

The race is on to capture the first-mover advantage and my bet it will be Lilium.

November 12, 2019

Diary, Newsletter, Summary

Global Market Comments
November 12, 2019
Fiat Lux

Featured Trade:

(HOW TO GET A FREE TESLA), (TSLA),
(TESTIMONIAL)

November 4, 2019

Diary, Newsletter, Summary

Global Market Comments
November 4, 2019
Fiat Lux

Featured Trade:

(MARKET OUTLOOK FOR THE WEEK AHEAD, or WELCOME TO THE SUMMIT)
(GM), (BA), (MSFT), (SPY), (TLT), (TSLA), (AMZN)

The Market Outlook for the Week Ahead, or Welcome to the Summit

Diary, Newsletter

In 1976, I joined the American Bicentennial expedition to climb Mount Everest led by my friend and mentor, Jim Whitaker. Since I was a late addition, there was no oxygen budget for me which, in those days, was very heavy and expensive.

Still, I was encouraged to climb as far as I could without it, which turned out to be up to Base Camp II at 21,600 feet. At that altitude, you couldn’t light a cigarette as the matches went out too quickly. There just wasn’t enough oxygen.

Out of 700 men on the team, including 600 barefoot Nepalese porters, only two made it to the top. By the time I made it back to Katmandu 150 miles away, I had lost 50 pounds, taking my weight down to a scarecrow 125.

You can see the metaphor coming already.

Here I am at my screen looking at 27,500 in the Dow Average and not only am I gasping for oxygen, I am ready to pass out. My Mad Hedge Market Timing Index hit a new high for 2019 at an acrophobic 85. All of this is happening in the face of slowly eroding fundamentals and a global economic slowdown.
Could the market go higher? You betcha! At least a couple percent more by yearend. Market bottoms are easy to identify when valuations hit decade lows. Market tops are impossible to gauge because greed is unquantifiable and knows no bounds.

I’ll give you a perfect example. The US and Japan signed the Plaza Accord in 1985 calling a doubling of the value of the yen against the dollar and the eventual transportation of half of Japan’s auto production capacity to the US. We all knew this would eventually destroy the Japanese economy. Yet the Nikkei Average rose for five more years until it finally crashed.

Of course, the impetus for all of this are artificially low-interest rates, which dropped 25 basis points again last week for the third time this year.

There were with two dissents, while the December rate cut futures fall to 20%. If we get Japanese levels of interest rates, we might get a Japanese type 30-year stagnant economy.

US Q3 GDP came in at 1.9% in its most recent report, better than expected, but we are still in a serious downtrend. The economy is most likely running at a lowly 1.5% rate now. Weakness is a sure thing, now the government has run out of money for special projects. Don’t count on more with a Democratic house. It’s not the bed of roses I was promised.

However, if there is trouble, you won’t see it in the employment data. The October Nonfarm Payroll Report surprised to the upside, at 128,000. Many expected much worse in the aftermath of the GM (GM) strike and Boeing (BA) grounding.

The headline Unemployment Rate ticked up 0.1% to 3.6%. The big gains were in Hospitality and Leisure, up a stunning 61,000, Health Care & Social Assistance, up 31,000, and Professional and Business Services, up 22,000. Manufacturing lost 36,000 jobs, a ten-year high. 20,000 temporary jobs were lost from the 2020 census wind down.

August and September were revised up by an unbelievable 95,000. The market loves these numbers.

Tesla shocked, bringing in a profit for only the third time in company history, and causing the stock to soar $55. The 100,000-unit production target within yearend looks within reach. Most importantly they opened up a new supercharger station in Incline Village, Nevada!

Tesla is now America’s most valuable car maker, beating (GM). The ideological Exxon-financed shorts have been destroyed once and for all. Buy (TSLA) on dips. There’s still a ten bagger in this one.

Amazon put out a gloomy Christmas forecast on the back of a disappointing earnings report, crushing the shares by 7%. Looks like the trade war might cause a recession next year. Q3 revenues were great, up 24% to an eye-popping $70 billion.

Good thing I took profits on the last option expiration. Poor Jeff Bezos, the abandoned son of an alcoholic circus clown, dropped $7 billion in net worth on Thursday. Buy (AMZN) on the dips.

The safest stock in the market, Microsoft (MSFT), says it’s all about the cloud. Azure revenues grew a stunning 59% in Q3. (MSFT) is now up 37% on the year. Keep buying every dip, if we ever get another one.

The Chicago PMI crashed, plunging from to 43.2, a four-year low. This horrific number was last seen during the recession scare of 2015. New orders have virtually disappeared, or order backlogs have vaporized. Inventories are soaring. This is the worst economic report this year and will cause a lot of economists’ hair to catch on fire.

This was a week for the Mad Hedge Trader Alert Service to stay level at an all-time high. With only two positions left, in Boeing (BA) and Tesla (TSLA), not much else was going to happen.

My Global Trading Dispatch reached new pinnacle of +350.03% for the past ten years and my 2019 year-to-date accelerated to +49.89%. The notoriously volatile month of October finished at +12.23%. My ten-year average annualized profit held steady at +35.29%.

The coming week is pretty non eventful of the data front after last week’s fireworks. Maybe the stock market will be non-eventful as well.

On Monday, November 4 at 8:00 AM, US Factory Orders for September are out. Uber (UBER) and Under Armor (UAA) report.

On Tuesday, November 5 at 8:00 AM, the October ISM Nonmanufacturing Index is published. US API Crude Oil Stocks are released at 2:30 PM EST. Peloton (PTON) reports.

On Wednesday, November 6, we get a raft of Fed speakers unrestrained by any impending meetings. QUALCOM (QCOM) and Humana (HUM) report.

On Thursday, November 7, there are a heavy duty series of bond auctions. Walt Disney (DIS) and Zoetis (ZTS) Report.

On Friday, November 8 at 8:00 AM, the University of Michigan Consumer Sentiment Indicator is learned.

The Baker Hughes Rig Count follows at 2:00 PM.

As for me, I am heading for Santa Cruz, California for the weekend to get out of the smoke and do some serious backpacking. I might even try to squeeze in a surfing lesson there. I’ll never give up.

By the way, several guests at the Tahoe conference remarked on the prominent scar on the side of my nose. That was caused by an ice ax that plunged straight through it in a fall while climbing Mount Rainer in 1967. Who patched it up and got me back down to the bottom? My friend Jim Whitaker.

Good luck and good trading.

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

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Mount Everest 1976