Global Market Comments
August 1, 2024
Fiat Lux
Featured Trade:
(WHY AMAZON IS THE MOST UNDERVALUED AI PLAY OUT THERE),
(AMZN), (NVDA), (GOOGL), (META), (AAPL), (MSFT), (WMT)
Tag Archive for: (WMT)
Mad Hedge Biotech and Healthcare Letter
July 30, 2024
Fiat Lux
Featured Trade:
(RETAIL THERAPY, MEET RETAIL RX)
(HUM), (WMT), (WBA), (UNH), (CVS), (TDOC)
In my years of covering the markets, from the trading floors of Tokyo to the halls of power in Washington, I've seen my fair share of unexpected partnerships.
But the recent tie-up between Walmart (WMT) and Humana (HUM) has me sitting up and paying attention.
That’s right. Walmart, the king of rollbacks and home of the $1 hot dog, has found a new tenant for the vacant spaces that used to house its healthcare business: Humana's CenterWell health clinics.
Humana, as you know, is one of the biggest players in the Medicare Advantage game, and is setting up shop in 23 Walmart Supercenters across Florida, Georgia, Missouri, and Texas.
And they're not just dipping their toes in the water – they're diving in headfirst, with plans to have these clinics up and running by the first half of 2025.
Now, I know what you're thinking. "John, why should I care about some dusty old retail giant like Walmart getting into bed with a health insurance company?"
Let me tell you why.
Humana's Q1 2024 earnings were nothing to sneeze at, with revenues growing 11% year-over-year to a whopping $29.6 billion.
And while the company did revise its full-year EPS guidance downward, it maintained its outlook for adjusted EPS and even revised its membership growth in MA plans upward.
This is a big deal, folks. Medicare Advantage plans have been the bread and butter of Humana's business model, underpinning the company's phenomenal share price gains from $25 per share in 2010 to over $550 in late 2022.
With the population aging faster than fine wine, the demand for senior-focused healthcare services will only grow.
But Humana isn't the only one benefiting from this partnership.
For Walmart, renting out these spaces to CenterWell allows them to recoup some of the infrastructure investments they made in building out their 51 Walmart Health clinics, which they recently shut down due to profitability challenges.
It's like finding a roommate to help pay the rent after your startup goes belly up.
But the healthcare industry is like a giant game of Jenga, with players constantly pulling out blocks and hoping the whole thing doesn't come crashing down.
Just look at Walgreens Boots Alliance (WBA), another retail giant that recently announced the closure of 150 of its in-store clinics due to profitability challenges. It's a stark reminder of how difficult it can be to make a buck in this business.
That's why Walmart's pivot to a partnership model with Humana is so intriguing.
By leasing out pre-equipped facilities to CenterWell, Walmart is essentially letting Humana handle the nitty-gritty of patient care while still maintaining a presence in the rapidly growing primary care industry.
It's like having your cake and eating it too, without having to worry about the pesky details of actually baking the cake.
As expected, Walmart and Humana aren't the only ones making moves in the healthcare space.
CVS Health (CVS) and UnitedHealth Group (UNH) are also betting big on primary care, with CVS acquiring Oak Street Health for $10.6 billion and UnitedHealth's Optum division going on an acquisition spree to expand its network of physicians and healthcare providers.
Then, there’s the meteoric rise of telehealth during the pandemic. Companies like Teladoc Health (TDOC) saw their revenues skyrocket as patients turned to virtual care in droves.
While growth has slowed down since the height of the pandemic, telehealth is still a force to be reckoned with and could potentially disrupt traditional brick-and-mortar clinics.
So, what does all this mean for us?
Well, if you're an investor looking to get in on the action, you've got plenty of options. From established players like Humana and UnitedHealth to up-and-comers like Oak Street Health and Teladoc, there's no shortage of companies vying for a piece of the healthcare pie.
With an aging population, rising healthcare costs, and a growing focus on preventative care and chronic disease management, the demand for innovative healthcare solutions is only going to increase in the coming years.
And who knows, maybe one day we'll all be getting our annual check-ups at the local Walmart, with a side of low-priced toilet paper and a jumbo bag of Cheetos.
Stranger things have happened in the wild world of healthcare.
Mad Hedge Biotech and Healthcare Letter
July 9, 2024
Fiat Lux
Featured Trade:
(PLAQUE TO THE FUTURE)
(LLY), (TSLA), (V), (WMT)
Mad Hedge Technology Letter
June 24, 2024
Fiat Lux
Featured Trade:
(E-COMMERCE PARTNERSHIPS WILL THRIVE)
(TGT), (SHOP), (WMT)
Target (TGT) is partnering with e-commerce specialist Shopify (SHOP) to expand its marketplace for third-party merchants.
This is a big deal so don’t diminish this news.
I honestly applaud this maneuver by Target, because it adds e-commerce footprint without paying a premium for it.
Everyone knows that everything is a total rip-off these days like adding an incremental addressable audience at a tech company.
Target has a lot to do to catch up with Amazon, but that’s the direction they should be headed in.
In the future, there is a highly likelihood that TGTs digital business will determine whether they succeed or fail as a tech company.
Everyone is going digital now. Adapt or die.
Shopify is a powerful back-end ecommerce foundation and integrating that with Target appears as a win-win decision moving forward.
We only need to look at competitor Walmart (WMT) which presides over a booming e-commerce business.
That is by decision as they launched a digital-first strategy and have made serious inroads into picking up e-commerce market share.
This partnership also on boards Target into a whole load of new products that they could only dream of selling and the process was rather painful.
Target Plus operates on an invite-only basis for merchants and currently offers more than 2 million items through more than 1,200 sellers.
Online marketplaces can also be launch pads for profitable advertising businesses, with merchants paying for prominent placement in front of shoppers.
Target more than doubled the number of sellers and products on its marketplace over the past year.
The company plans to maintain its invite-only model and continue vetting sellers on the platform.
Curating the selection — for example, allowing only one vendor to offer any given item — is a strategy that will let Target stand out.
Target’s partner, Shopify, makes software that helps vendors quickly set up online stores and process payments.
The company says it works with millions of merchants in about 175 countries. Globally, shoppers will spend $282 billion this year on stores managed with Shopify software. That’s more than double Target’s projected sales for the year.
We are at the late stage of the tech cycle that has been long in the tooth.
It’s not a shocker at this point for tech models to be petering out and management looking for that extra juice to kick-start revenue growth for however long the rest of the business cycle lasts.
Clearly, debt financing isn’t an option these days and I do believe this is a time when management showed their worth as conditions have been extraordinarily tight for the last 2 years.
There is also no guarantee that business conditions will reverse and go back into that pre-pandemic goldilocks phase.
The jury is still out but higher interest rates could be in the mix for the foreseeable future.
Therefore, it is clever by TGT and SHOP to strike up a partnership in which TGT expands their offerings and SHOP merchants get a crack at a new audience.
These opportunities are limited in fashion, but tech in 2024 isn’t about an unlimited addressable audience.
Tech in 2024 is more about efficiency and staying lean because the past 2 years have really been about cutting the bloat.
Target obviously has the more upside in this relationship and I expect them to add other partners that can move the needle.
TGTs share price has been flat for the past 6 months and migrating further into a digital strategy could be the formula to nudge that share price back into high gear.
The stock price is now at $150 per share and I do believe TGT has the chance to grind higher closer to $200 per share by year-end.
Global Market Comments
December 15, 2023
Fiat Lux
Featured Trade:
(DECEMBER 13 BIWEEKLY STRATEGY WEBINAR Q&A),
(BYDDF), (TSLA), (NEM), (UNG), (WMT), (TGT), (GOLD), (TLT), (JNK), (HYG)
Below please find subscribers’ Q&A for the December 13 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Silicon Valley, CA.
Q: I think it's a good time to buy gold, do you agree? If so, what are your top picks for a long-term hold?
A: I was looking at some very long-term gold charts, and gold tends to have really hot and really cold decades, and we're just finishing a cold decade. In fact, the price of gold today is roughly where it was 12 years ago—it hasn't moved in 12 years. But if you look at the decade before that, it went up ten times from $200 to $2,000, so we're about to enter another hot decade. It may not go up 10X, but 5X is realistic. That would take us up from $2,000 to $10,000, and I think we could see $3,000 as early as 2025.
The best plays are always the gold miners. And my two favorite picks there are Barrick Gold (GOLD) and Newmont Mining (NEM). If you want to be even more aggressive than that, the underlying miners tend to go up at four times the rate of the gold metal. I can also go with junior minors who probably are losing money now, but if gold goes up to $5,000, they'll make money. Those are hugely leveraged, high-risk plays.
Q: Is it time to sell Tesla (TSLA) stock on all long-term accounts?
A: It is not. If you truly are long-term, I think Tesla goes to $10,000 eventually, but we are in the middle of a price war. Price wars are not when you want to be involved in the stock, so I wouldn't be adding to Tesla positions here—I want to see what the final bottom looks like, when the price wars end the prices start to go up, and we'll get that with an economic recovery next year.
Q: Who are Tesla's prime competitors?
A: I would say it's BYD CO., INC. (BYDDF) in China. BYD, which I visited in China 12 years ago, is actually out selling Tesla in China, and they have the ability to produce a super cheap car. They have a $25,000 car in Europe right now, and the fear is that they will make a $15,000 car, and then flood the United States with it. I doubt that will happen; they've never been able to reach American quality and safety standards, and that's why you don't see Chinese cars here. You do see them in other countries like Australia, Hong Kong, and parts of Africa; and they're currently making a big push in Europe, which certainly has all the German car producers worried. Competition is out there and does pose a risk to Tesla, but I think long-term Tesla still wins anyway. By the way, I hasten to mention there are no American competitors to Tesla. Tesla is so far ahead that the big three will never ever catch up and eventually just be reduced to selling Teslas on license.
Q: Where do you think the bottom in oil is?
A: The consensus in the market right now is $62 a barrel. That's about another $6 or $8 lower than here, and then I think we really do bottom out. Then you want to start piling into oil producers like ExxonMobil (XOM), which we had a position in last week, and Occidental Petroleum (OXY), which is the number one pick by Berkshire Hathaway. So those are two good names to go with. What drives these and all other commodities in the future? The answer is a recovering economy. Let's assume we drop from 5.2% last quarter to maybe 2% this quarter—we will accelerate to 5% next quarter, and that's what takes all of your commodity plays upward.
Q: Would you buy retailers here like Walmart (WMT) or Target (TGT)?
A: No. The time to buy retailers is in the run-up to Christmas. I don't know about you, but I'm finished with all my Christmas shopping! You want to buy in the run-up to Christmas shopping, not when it's peaking. Target on the other hand has done really well, and on a massive cost-cutting effort.
Q: When do you think is the first interest rate cut?
A: Since the market has a consensus of May, with some people saying March, I'll go for June. I think this Fed wants to torture us a little bit more and delay any interest rate cuts, but markets will discount that anyway. So it all sets up a great backdrop to buy stocks now, because markets discount things six months in advance, and six months from now is May. That's why we've had the ballistic moves that we've seen in stocks.
Q: Whatever happened to the natural gas trade United States Natural Gas Fund (UNG)?
A: The problem with all these commodity trades is that they are all in one way or another dependent on the weather, and we are having a warm winter, so you can't fool Mother Nature. Not only is it warm here, but it's warm in China, and in Europe. I think they have this thing called…global warming? It makes you ask yourself if you even want to be near an energy trade during a time of global warming, which is accelerating. So anyway, we had a nice profit on this in October—it completely went away. The (UNG) ETF went from $8 all the way down to $4.50, so we'll just have to wait for the cold weather and for (UNG) to ramp up. If it doesn’t happen soon, we may not have a rally this year in natural gas. Pray for snow!
Q: Is junk the best to buy in bonds?
A: It's the best risk-reward ratio; it has a yield roughly 50% higher than TLT with only slightly more risk. The default ratio on junk bonds is actually quite low. And in fact, before you buy (JNK) (SPDR Bloomberg High Yield Bond ETF) or (HYG) (iShares iBoxx $ High Yield Corporate Bond ETF), go to the website and look at their largest holdings and you’ll see what I mean, it's all airlines and cruise lines which had to load up on debt during the pandemic but are doing great right now.
Q: How can the market still rally if it's time to sell and take profit?
A: We get a round of profit-taking at some point, and there's your entry point. Right now, no professional trader is buying anything right now, they're just holding back and seeing when they take profits. And the way traders think is they don't want to trade anymore until they get paid! The year end is ending shortly and the risk-reward favors taking profits and then sitting on the profits. Guess what I'm doing? I'm taking profits and sitting on the profits because traders have bonuses that tend to get paid in January.
Q: On the (TLT) put trade, should one get out once it hits $95?
A: Yes, I always stop out when we hit the nearest strike on a call spread or a put spread. That's a good discipline to have. 90% of the time, if you hold on to expiration, you make the maximum profit in these, but that 10% of the time it's a total write-off, so you get to choose. I try to keep the volatility of the Mad Hedge service low so I always stop out quickly—easier to dig yourself out of a small hole than a big one.
Q: How do you think the next two government shutdowns in January and February will affect the market? Is this a buying opportunity?
A: Absolutely, yes, it is a buying opportunity. Shutdowns tend to be short, but you may get a lot of political turmoil, especially in the House. After the Long Island by-election to replace the disgraced George Santos the Republican majority is likely to shrink to only two seats. The House could fire another speaker, for example. We're kind of in unprecedented territory here in terms of the US government, but at any stock market decline, you would be a big buyer. That's how to play it. If people want to puke out on what's happening in Washington—thank you very much, I'll take your stock.
Q: Are we still bullish on the Barack Gold (GOLD) LEAPS?
A: Absolutely, especially if you have the 2025 expiration. There is an easy double or triple here.
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, click on GLOBAL TRADING DISPATCH, then 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
At BYD in China 2011
Global Market Comments
August 15, 2023
Fiat Lux
Featured Trades:
(THE TOP SIX CHINESE RETALIATION TARGETS),
(AAPL), (GM), (WMT), (TGT), (BA), (SBUX), (CAT),
(AND MY PREDICTION IS….)
CLICK HERE to download today's position sheet.
When Elon Musk personally invited me to tour his Gigafactory in Sparks, Nevada, I thought, “How could I pass on this?” He had read my recent report on Tesla and thought the more I know about Tesla the better.
I couldn’t agree more.
As I approached the remote facility 20 miles east of Reno, I spotted a herd of wild Mustangs on the red volcanic hills above. I thought it was a great metaphor for our rapidly evolving transportation system, from horse to all-electric in 100 years.
There are no signs to the Gigafactory until you approach the main gate. I had to find it with my GPS after inputting longitude and latitude. When you upset the apple cart for the global energy system, you make a lot of enemies. Once in, no cameras are allowed.
What I found inside what much what I saw at the original Fremont, CA factory 15 years ago: an army of robots building machines. The factory is in effect a machine that makes machines….by the millions. Occasionally, a worker would swan past with an oil can in his hand and squirt some lubricant into an important joint, then swan away.
If you want a view of the future, this is it.
Elon does nothing small.
The present factory occupies about 2 million square feet, or about 33 football fields. Some 60% of the world’s lithium-ion batteries come out of this one place right now, which are devoted to Tesla Model 3’s and Powerwalls, of which I own six. Japan’s Panasonic, which has the contract to supply the batteries, occupies a substantial part of the factory space.
When completed, it will occupy 6 million square feet, making it the world’s largest building. The planet’s greatest solar array sits on top, making the entire facility energy neutral when combined with local windmills. The plant is fully automated and runs 24/7. There are still a few of those pesky humans around to perform complex tasks which robots can’t do….yet.
The State of Nevada just granted Tesla a ten-year tax holiday to start the second phase, which will employ another 5,000. Whole cities are being carved out of the virgin desert to accommodate them, so the entire city of Reno is rapidly marching east. Burger Kings, Taco Bells, Subways, and Chinese and Mexican restaurants are popping up in the middle of nowhere.
It's all coming into place to assure that Tesla meets its 1.8 million vehicle target for 2023, up 40% from 2022. The last time someone had a technology lead this great was in 1913 when Henry Ford launched assembly lines that mass-produced Model T’s for the first time. He offered them for $400 each and doubled his workers’ pay to $5 a day to buy them. This gave Ford a 75% share of the US car market for two decades.
Elon Musk will achieve the same.
Which all raises a much larger issue.
The future is happening far faster than anyone realizes.
Tesla is just the tip of the iceberg in an AI/automation trend that is rapidly taking over the world. The net effect will be to double or triple the value of the companies that embrace these trends and wipe out those that don’t. ALL companies are AI plays. This is a large part of my Dow 240,000 in a decade prediction.
Microsoft brought out its office in 1990 and it instantly made ALL companies more valuable as they adopted it. The Dow Average soared by 20 times from $600 to $12,000. The same thing is going on now with AI.
If it worked before it will work again. A 20-fold return from here takes the Dow Average from $34,000 to $680,000, except it will happen much more quickly as technology is hyper-accelerating. Dow 240,000 looks like a chipshot.
If you think this is some kind of George Lucas THX 1138 prediction, think again. These are headlines I saw in the last week.
FedEx (FDX) is firing 86,000 drivers, to be replaced by robots. Uber (UBER) is replacing its 5 million drivers with autonomous drivers to increase reliability and cut costs. Dentists adopting AI to read X-rays are catching the 12% of cavities they miss, increasing fillings and increasing profits.
I often get asked for great AI plays in the market and there are no direct ones. But in five years, companies like Microsoft’s (MSFT) ChatGPT and Alphabet’s (GOOGL) DeepMind Technologies will be spun off and sold at enormous multiples to the public, creating a frenzy.
I’ve seen it all before.
What does doubling or tripling the value of surviving companies do to the economy? It reliquefies the financial system with immense corporate cash flows. All asset classes will rocket in value, including stocks, bonds, commodities, precious metals, energy, and real estate.
While the 2010s had endless quantitative easing and zero interest rates, the 2020s will have AI and robots. Except that this time we won’t have to rely on government handouts to get there.
Suddenly, Dow 240,000 looks cheap.
I just thought you’d like to know.
My big bet-the-ranch long in banks and brokers paid off huge. My 2023 year-to-date performance is now at an incredible +49.57%. The S&P 500 (SPY) is up only a miniscule +8.42% so far in 2023. My trailing one-year return maintains a sky-high +106.31% versus -8.03% for the S&P 500.
That brings my 15-year total return to +646.76%, some 2.73 times the S&P 500 (SPY) over the same period. My average annualized return has blasted up to +48.51%, another new high.
I executed four trades last week. I used the spectacular earnings beat at (JPM) to take profits and rolled that money into Boeing (BA), which had just been trashed. I also took profits on my expiring April bond long (TLT) and rolled it into a May bond long. I will run my remaining expiring April long positions in (TSLA), (BAC), (C), (IBKR), (MS), (and FCX) into the Friday, April 21 expiration.
Inflation Takes a Dive, dropping to a 5.6% YOY rate, the ninth consecutive month of decline. I think we will fall to 3%-4% by yearend, prompting the Fed to lower interest rates. That will spark a new bull market and another leg up for residential real estate. It all more fodder for the bull case. Given what the Fed has been facing, a mild recession would be a huge win.
Fed Minutes Fear Banking Crisis May Lead to a Mild Recession, killing off today’s nascent rally. It will also hobble job growth and lead to sharp declines in interest rates in 2024. Markets now see a 75% probability of a 25-basis point rate hike on May 3.
FedEx Looking to Fire All Drivers, moving to autonomously driven delivery vehicles. It may take 20 years but it’s in the works. (FDX) has already cut 12,000 jobs since June in an effort to maintain profitability and surpass rival (UPS). In 2022, (FDX) took in $93.5 billion in revenues delivering 3 billion packages, 9 for each American. I received more than my share.
PC Sales Drop 29% YOY, in Q1, adding more ammunition to the recession camp. Apple Macs led the charge to the downside with a heart-thumping 40% decline. The news slugged (AAPL). Only 56.9 million PCs we sold during the last quarter. Even with heavy discounting inventories remain high. Amazing, isn’t it?
Tesla Cuts Prices Again, knocking $3,000 off the Model 3 and $5,000 for the Model X. That sets the cat among the pigeons with traditional car companies desperately trying to catch up. Tesla is simply passing on the 50% drop in lithium prices this year. If they flush competitors out of business in the meantime so much the better. Ford has ordered designers to cut the number of parts by 80%, which Tesla did 14 years ago. (F) and (GM) are just too slow to react, even when the writing is on the wall.
$1.5 Trillion in Commercial Real Estate Debt coming due is a Threat to all asset classes. Refi’s are coming due that will double or triple interest rates from the zero-rate era and many won’t qualify. The sector is already being hammered by the “stay-at-home” work trend, with big tech firms virtually vacating whole office building in San Francisco. Regional banks may no longer have the capital to roll over at any prices given recent massive deposit withdrawals. Avoid commercial real estate REITS.
Banks Shares Explode to the Upside. JP Morgan announced blockbuster earnings, taking the stock up a ballistic $11, or 8.6%. Revenues came in at $39.34 billion versus an expected $36.19 billion. Adjusted EPS was $4.32 a share versus an expected $3.41. It is the biggest gap up in share prices on an earnings announcement in 20 years. As a result, we are just short of the maximum profit in our long (JPM), with the shares up an eye-popping 21% from the nearest strike price.
PPI Gives Another Deflation Hint, dropping a shocking 0.5% in March to only a 2.7% YOY rate. That’s a big drop from 4.9% in February. It’s the lowest inflation indicator in two years. Stocks loved the news, jumping $383. Low inflation, and therefore sharp interest rate cuts are coming within reach.
Boeing Goes Back in the Penalty Box, with a recurring bulkhead problem halting 737 MAX production. The stock dumped 8%. Buy (BA) on the dip. They’ll fix it. The company has a massive order backlog of 4,000 planes and will crush it on the earnings. The 737 MAX will shortly be flying again, the company’s largest selling product. With the airline business booming a global aircraft shortage has emerged. The end of the trade wars with China will bring a resurgence of orders there. And Boeing just surpassed Airbus in aircraft deliveries in Q1
Weekly Jobless Claims Jump 11,000 to 239,000, showing that the Fed’s harsh medicine is starting to work. It’s all consistent with a stock market that may start to roll over soon.
Private Sector Payrolls Slow to 145,000, according to ADP, a substantial drop from the previous month. Financials took the big hit with a loss of 51,000 jobs, followed by Business Services at 46,000. Leisure & Hospitality leads again with a 98,000 gain. It is more evidence of the economic slowdown the FED has been attempting to engineer for the past year.
My Ten-Year View
When we come out the other side of the recession, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. The economy decarbonizing and technology hyper accelerating, creating enormous investment opportunities. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old.
Dow 240,000 here we come!
On Monday, April 17 at 7:30 AM EST, the New York State Manufacturing Index is out.
On Tuesday, April 18 at 6:00 AM, the US Building Permits are announced.
On Wednesday, April 19 at 11:00 AM, the Fed Beige Book is printed.
On Thursday, April 20 at 8:30 AM, the Weekly Jobless Claims are announced. Existing Home Sales are out.
On Friday, April 21 at 8:30 AM, the Global Composite Flash PMI is released. We also get the April options expiration at the 4:00 PM stock market close.
As for me, I don’t get invited to help design new nuclear weapons systems very often. So when the order came from Washington to report to Los Alamos, New Mexico, I was on the next plane.
When the Cold War ended in 1992, the United States judiciously stepped in and bought the collapsing Soviet Union’s entire uranium and plutonium supply.
For good measure, my client George Soros provided a $50 million grant to hire every Soviet nuclear engineer. The fear then was that starving scientists would go to work for Libya, North Korea, or Pakistan, which all had active nuclear programs. There ended up here instead.
That provided the fuel to run all US nuclear power plants and warships for 20 years. That fuel has now run out and chances of a resupply from Russia are zero. The Department of Defense attempted to reopen our last plutonium factory in Amarillo, Texas, a legacy of the Johnson administration.
But the facilities were deemed too old and out of date, and it is cheaper to build a new factory from scratch anyway. What better place to do so than Los Alamos, which has the greatest concentration of nuclear expertise in the world.
Before they started, they launched a nationwide search for those who were still alive and had nuclear expertise the last time we made our own plutonium, and they came up with….me?
Los Alamos is a funny sort of place. It sits at 7,320 feet on a mesa on the edge of an ancient volcano so if things go wrong, they won’t blow up the rest of the state. The homes are mid-century modern built when defense budgets were essentially unlimited. As a prime target in a nuclear war, there are said to be miles of secret underground tunnels hacked out of solid rock.
You need to bring a Geiger counter to garage sales because sometimes interesting items are work castaways. A friend almost bought a cool coffee table which turned out to be part of an old cyclotron. And for a town designing the instruments to bring on the possible end of the world, it seems to have an abnormal number of churches. They’re everywhere.
I have hundreds of stories from the old nuclear days passed down from those who worked for J. Robert Oppenheimer and General Leslie Groves, who ran the Manhattan Project in the early 1940s. They were young mathematicians, physicists, and engineers at the time, in their 20’s and 30’s, who later became my university professors. The A-bomb was the most important event of their lives.
Unfortunately, I couldn’t relay this precious unwritten history to anyone without a security clearance. So, it stayed buried with me for a half century, until now. Suddenly, I had an entire room of young scientists who were fair game, and it was fun relaying stories, they hung on my every word. It was like being a Revolutionary War buff and out of the blue you meet someone who knew George Washington.
Some 1,200 engineers will be hired for the first phase of the new plutonium plant, which I got a chance to see. That will create challenges for a town of 13,000 where existing housing shortages already force interns and graduate students to live in tents. It gets cold at night and dropped to 13 degrees F when I was there.
As a reward for my efforts, I was allowed to visit the Trinity site at the White Sands Missile Test Range, the first visitor to do so in many years. This is where the first atomic bomb was exploded on July 16, 1945. The 20-kiloton explosion set off burglar alarms for 200 miles and was double to ten times the expected yield.
Enormous targets hundreds of yards away were thrown about like toys (they are still there). Half the scientists thought the bomb might ignite the atmosphere and destroy the world but they went ahead anyway because so much money had been spent, 3% of the US GDP for four years. Of the original 100-foot tower, only a tiny stump of concrete is left (picture below).
With the other visitors, there was a carnival atmosphere as people worked so hard to get there. My Army escort never left me out of their sight. Some 78 years after the explosion, the background radiation was ten times normal, so I couldn’t stay more than an hour.
Needless to say, that makes uranium plays like Cameco (CCJ), NextGen Energy (NXE), Uranium Energy (UEC), and Energy Fuels (UUUU) great long-term plays, as prices will almost certainly rise and all of which look cheap. US government demand for uranium and yellow cake, its commercial byproduct, is going to be huge. Uranium is also being touted as a carbon-free energy source needed to replace oil.
I know the numbers, but I can’t tell you as they are classified. Otherwise, I’d have to kill you and you might not renew your subscription to Mad Hedge Fund Trader.
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
At Ground Zero in 1945
What’s Left of a Trinity Target 200 Yards Out
Playing With My Geiger Counter
Atomic Bomb No.3 Which was Never Used
What’s Left from the Original Test
