RF's Financial News

Sunday, November 10, 2024

This Week in Barrons: 11.10.2024

This Week in Barrons: November 10, 2024:

To subscribe: https://rfsfinanicalnews.beehiiv.com/subscribe

Question: “Would you, Chair Powell, be willingly leave the FED if the President-elect asked you to step down?”

Answer: “No!”

[FYI – Being able to say ‘NO’ = is a very powerful position.]

R.I.P. Quincy Jones … Legendary music producer Quincy Jones, an influential figure in music for over seven decades – passed at the age of 91. He was born on Chicago’s South Side, and collaborated with a Who’s Who of iconic artists from Frank Sinatra to Michael Jackson. Quincy won 28 Grammy Awards, an Emmy, an honorary Oscar, and a Tony, placing him in the elite EGOT club. He produced one of the bestselling singles of all time in “We Are the World”, and one of the bestselling albums in Michael Jackson’s "Thriller."

The issue with making a movie version of your life … is not the casting, but rather the timeframe. Per Seth G: If you consume enough media, you may begin to believe that your life is carefully scripted and you simply go from climax to climax. However, our lives are more muddled, less scripted, and without a soundtrack. Our respective journeys change in ways that no one could have predicted. The difficulty in making the movie of your life – is writing the 90-minute screenplay.

If you’re distraught over the election … this Van Morrison tune could offer some solace … “They’ll be Days like this.”

The Market:

Humanoid robot artist Ai-da … just made history at Sotheby’s Auction House, with its portrait of computer science pioneer Alan Turning selling for $1.3m.

The election winner is … the deficit. Neither party has the cajones to shut off the spending. And that’s why gold and Bitcoin will go higher – together.

Satoshi Nakamoto could not have written a better script. The next U.S. President ran on the premise that they would protect bitcoin, create a regulatory environment that would serve as a tailwind, and that the U.S. would create a bitcoin strategic reserve. When the U.S. embraces bitcoin, other countries will be forced to follow. Combine this with energy deregulation producing lower prices and you could see bitcoin miners becoming an even more attractive opportunity. Tip #1: Watch MARA and RIOT.

A Week of Records:

The S&Ps crossed 6,000 and the DOW 44,000 – for the first time.
Bitcoin hit a new all-time high – crossing over $79,000.
The altcoin market cap crossed back above $1T.
Of the Mag-7: Amazon hit all-time highs, Nvidia replaced Apple as the most valuable company, and Tesla soared 29%.
S&P profits rose 8% YoY in Q3 vs. expectations of 3%.

[ Gain access to VaultCraft here… ]

InfoBits:

Novo‘s new obesity drug CagriSema… aims for a record 25% weight loss.

AOL’s “You’ve Got Mail” voice, Elwood Edwards … died at 74.

TGI Fridays files for Chapter 11 Bankruptcy … and now franchisees are worried that customers are going to rush to redeem $50m worth of unused gift cards that never expire. That will exceed TGIF’s available cash, sparking fears of a bank run on potato skins.

Boeing takes off … Boeing’s 33,000 production workers voted to end their seven-week strike yesterday, approving a 38% pay raise over four years and $12,000 in bonuses.

Pokémon has turned its online trading-card game … into a ‘Catch-em-All’ mobile app. In days, “Pokémon TCG Pocket” was downloaded 10m+ times, and it’s taking in $3m/day from add-on purchases == over +$1B this year alone.

The Australian Prime Minister announced a plan … to ban social media to all citizens under the age of 16.

Lyft will partner with 3 self-driving startups … to bring autonomous rides to Atlanta in 2025.

“Just drop the GPT – it’s cleaner” … ChatGPT acquired Chat.com, and immediately redirected their traffic to ChatGPT. FYI: If you’re suing OpenAI for stealing your content … a judge just dismissed a lawsuit by two news sites against OpenAI, ruling that the AI company's use of that sites' content did not result in any harm.

Tesla crossed the $1T market cap threshold … as investors are betting that a Trump presidency will benefit the automaker.

Crypto-Bytes:

Michigan is the first U.S. state to put its pension fund into Ethereum … putting up $11 million in Grayscale’s Ethereum ETFs.

Kraken is cutting 15% of its workforce … in a bid to streamline operations as it reaches for a leaner, faster organization.

With DJT winning the White House … consensus in the crypto-marketplace is: ‘Buy ‘em All’. DeFi is the biggest gainer, so think: AAVE, LINK, and UNI.

Uniswap (UNI) is arguably the most important DEX in crypto. It will climb higher for 2 reasons:
The new administration is pro-crypto and pro-DeFi.
Trump plans to give current SEC Chair Gensler the boot while also dropping the ocean of existing crypto-lawsuits.

Aave (AAVE) is the king of lending protocols … owning ~65% of the entire lending protocol market.
There’s a boatload of FUD falling off of lending, DEXs, and the DeFi space. There should be one heck of a ride coming up.

BlackRock's Bitcoin ETF (IBIT) … just surpassed its own Gold ETF (IAU) in net assets – hitting $33B in less than a year.

Tom Lee is back with his favorite prediction… Bitcoin to $100,000 in 2024 – due to regulatory clouds clearing-out and our FED being dovish.

[ Visit VaultCraft - here… ]

TW3 (That Was - The Week - That Was):

Tuesday: I’m not buying anything today, but I do like what I'm seeing in Cisco (CSCO). It was hot in the 90's, and has been forgotten as a tech leader. Most of the AI sites will be using CSCO routers and porting equipment, and that may be reflected in their 11/13 earnings.

Wednesday: The S&P is rising over 2% to 5,940, and the NAS is up over 1.6% to 20,674 – as Donald Trump is named the 47^th President of the United States. The power shift in Washington doesn’t end there as the GOP has also taken majority control of the Senate. Watch for strength in asset managers such as BX, BLK, KKR and in Small Caps (IWM +6%) as Trump has positioned himself as a pro-business candidate committed to easing regulation and M&A. Crypto is another winner this morning with Bitcoin up ~7% near $74,000. The reaction is a bit overblown with Goldman (GS) being up +$65, but time will tell.

Thursday: Stocks boomed to all-time-highs yesterday with the S&Ps closing up 2.5%. Crypto rallied, with bitcoin soaring past $76k to a fresh record. Today, investors have their eyes on the FED’s rate decision. Markets are giving our FED a 95% chance of a 25bps rate cut, and if that happens – equities will continue pressing higher. Watch Micron (MU) that has resistance at the $114 / $115 area, but if they can get past that – they could really run.

Morgan’s Moments…

AI labs Decart and Etched just launched Oasis … an AI model that generates playable video game environments in real-time – alongside a playable Minecraft-style demo. While text-to-video has grabbed headlines, Oasis represents something deeper – real-time interactive worlds generated entirely by AI. This could revolutionize how we think about game development and virtual environments, even potentially eliminating the need for traditional game engines.

Our FED lowered rates by 0.25%, and J. Powell said … “Conditions have generally eased, and the unemployment rate has moved up but remains low.” Powell acknowledged the weaker employment and stickier inflation of late, he indicated that our FED’s next move will remain data-dependent.

Next Week: Bonds Caught a Bid...

Bkgd: The inflation resurgence risk is credible given monetary easing, commodity upside, elevated inflation expectations, tight labor; all combined with prospective policies. Bond yields (interest rates) look to be ‘higher-for-longer’ as long-term nominal growth and inflation models point to a new higher range of US inflation due to increased deficit spending.

Euphoria hit markets as the election is over … The Dollar (DXY) foreshadowed the winner with its dramatic move higher, but the rest of the market was just as surprised as everyone else. What really carried the S&Ps was Tesla (TSLA). Tesla started the week flat on the year, and ended up almost 30% on a $1T market cap. Tesla shareholders gained ~$300B in market cap last week.

Volatility was ‘temporarily’ crushed … but long live volatility (VIX). The issue with Bonds (/ZB) still remains. Tip #2: If the 10-Year (TNX) can break above 4.5%, then the VIX will be back with a vengeance.

Bonds (/ZB) remain the action to watch … because they caught a bid this past week – and rates declined. My big question is: Will a bid remain under the bonds OR will they continue their selloff – pushing interest rates into ‘danger’ territory? Honestly, when I view bonds on a 3-year chart – they don’t give me a warm-n-fuzzy feeling.

SPX Expected Move (EM):

Last Week: $151.03 and we moved almost $300.
This Week: $81, and ‘I’ll take the over’.

TIPS:

Per Callum T:

1. Stocks went from DE-risking to RE-risking … as Crypto, Tech, & the Transports are showing speculative revival.

a. Tip #3: The QQQ’s may never see sub-$500 again.

b. Transports making an initial breakout out against the backdrop of an uptrend is quite bullish – and adds to the developing risk-on theme.

2. The “Sell in May – Return in November” mantra … means that the Santa Claus Rally starts NOW.

3. US large caps look Tired … while global / small / value stocks look Wired.

a. Tip #4: Rethink Mag-7 vs IWM (small caps) allocation.

4. Crypto didn’t need a correction in price … but rather a correction in time – in order to set the stage for their next leg higher.

a. Tip #5: +BTC, +ETH, +LINK, UNI, AAVE

HODL’s: (Hold-On for Dear Life)

13 to 17-Week Treasuries @ 4.85%
ICSH == iShares Ultra Short-Term Bond Active ETF
Physical Commodities = Gold @ $2,690/oz. & Silver @ $31.4/oz.
Bitcoin (BTC = $79,800 / in at $4,310)
Ethereum (ETH = 3,220 / in at $310)
HROW – Harrow Health = $52.5 / in at $12
INDA – India ETF ($54.4 / in at $50)
IBIT – Blackrock’s Spot Bitcoin ETF ($43.7 / in at $24)
ETHA – Blackrock’s Spot Ethereum ETF ($22 / in at $20)
GLD – Gold ETF ($248 / in at $212)
o Gold ETF: Jan ‘25: +$260 / -$265 CALL-Sp.

Options for Income: **RIOT – Riot Bitcoin Mining

- Bi-Weekly: BUY the Stock
- BUY Puts 1 Std. Dev. OTM for protection
- SELL Covered Calls ½ Std. Dev. OTM for income

Crypto ALTs == LINK, UNI, & AAVE

Please be safe out there!

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Sunday, November 3, 2024

This Week in Barrons: 11.3.2024

This Week in Barrons: November 3, 2024:

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“One of the greatest features of America … is that we have political contests. Once the decision is made, we must unite behind the person who is elected. I want Senator Kennedy and all of you to know, that he will have my wholehearted support and yours as well.” … Richard Nixon

Is everyday Halloween to somebody? There’s a big difference between carrying a stethoscope and being a doctor, and between wearing a clown suit and being a clown. Entrepreneurs with business cards, slick websites, and cool presentations continue to be confused – because that’s NOT the hard part. Per Seth G: If costumes put you in the right frame of mind, that’s great. But the hard part IS (and always was) turning vision into reality. That is the important part. If you’re avoiding the important parts – then you’re in trouble from the start.

“We won’t be fooled again…” but we will be. We continue to be fooled by: vaporware, false deadlines, fake budgets, unrealistic promises, con jobs, FOMO, and even ‘flat out’ lies. False hope delivers a benefit for the moment, while the reality we have to live with – doesn’t arrive for weeks or months. To eliminate getting fooled the next time, learn why you were fooled the last time.

Sayeth Macbeth (Per Priya N.) …

Do not let the negative voices of others – amplify your own.
Focus on the opportunities – not the distracting threats.
Every decision comes with: consequences and irreversibility.

[Per Jeff B: “Once you walk through a door and don’t like what you see, you can’t go back and un-see it.”]

The Market:

Friday’s October JOBS Report was a disaster … The headline number said that our economy added 12,000 jobs last month. The low number was blamed on 2 hurricanes and the Boeing strike. What they failed to say was that 368,000 ‘fake’ jobs were added by our government’s Birth/Death model. So factually, our economy actually LOST -356,000 jobs last month.

The Car Loan crisis is here … ~33% of Americans who financed their cars, now owe more on their loans (+$6,500 avg.) than what their vehicle is worth.

A new D.O.T. rule now guarantees ALL airline passengers refunds … when an airline fails to get you to your intended destination. “When an airline knows that all of the passengers on a canceled flight will get their money back, it gives them a different set of reasons to put in the investment, and the realistic scheduling that makes cancellations less likely to happen in the first place.”

The S&P500 dropped -1% in the month in October … breaking a 5-month streak of gains, yet still placing it up ~20% YTD. The cyclical bull market that began in October 2022 looks very much alive and well.

[ Gain access to 1440 here… ]

InfoBits:

The Magnificent 7 (including Nvidia and Tesla) … are expected to report an average earnings growth of 18% - which compares to less than 1% growth for the rest of the S&P 500.

Billionaires have donated ~$700m to political campaigns… which is ~20% of the total funds raised in the U.S. election.

Google will unveil its “Jarvis” AI agent in December … a tool capable of controlling web browsers to complete tasks like shopping, scheduling, and more.

Boeing’s voting on a new contract on Monday … fingers crossed.

Meta is developing its own AI-powered search engine… to power real-time information inside of its Meta AI conversations.

Stock market returns under both Biden and Trump… have been almost identical with the S&Ps returning ~14% per year.

BYD surpassed Tesla in total EVs sold for the first time ever … BYD (a Chinese company) is focused on consumer-model EVs priced as low as ~$9,800. Tesla’s cheapest model is $42,500 and climbing.

Luckin Coffee (China’s Starbucks) plans its U.S. launch next year … and is aiming to undercut its rivals by selling drinks for $2.

OpenAI and ChatGPT.com may crack Google’s search monopoly… before government regulators have the chance. ChatGPT.com announced a new search feature (for paid ChatGPT users) that integrates real-time web results inside of its chatbot area. [FYI – It’s amazing, and it has NO ads.]

Restaurants are now the #1 reason to go to the mall… overtaking shopping and Santa.

Ford has paused production of its F-150 Lightning EV truck… amid slowing demand. [FYI – I’m not surprised for the prices Ford is asking for its EVs.]

The new weight-loss drugs significantly reduce arthritis… and their pain reduction is on par with opioid treatments.

Apple is investing $1.1B into GlobalStar… in a bid to expand its satellite services for the iPhone.

Crypto-Bytes:

Bitcoin briefly hit $73,096 last week… just shy of its all-time high of $73,750 – recorded March, 2024.

Behold the Golden Cross … a bullish sign that occurs when the 50-day moving average crosses above the 200-day. It often signals a bullish trend shift, and acts as a catalyst for sideliners to jump back in.

Coinbase and Visa are joining forces… to let you fund your crypto account instantly with your Visa debit card. No more waiting for deposits to clear.

Our Treasury now sees Stablecoins as a new Liquidity Force …
o There are $120B in short-term Treasuries … now backing digital dollars. Our Treasury is eyeing stablecoin regulation that could treat them like money market funds.
o Tokenized Treasuries could settle transactions immediately … without any red tape. Our Treasury is considering how tokenization could upgrade its debt management practices.

Bitcoin Benchmarks:
o Jimmy Patronis, CFO for the state of Florida, advocated for bitcoin to be put on the state’s balance sheet.
o The Central Bank of Argentina opened an art exhibit featuring ASICs machines that were actively mining bitcoin. The first central bank to actively mine bitcoin.
o MSTR (MicroStrategy) announced their intention to raise $42B over the next 3 years to purchase more bitcoin.
o Blackrock’s bitcoin ETF just set a new record for single day inflows, and IBIT has seen the third largest inflows YTD of any ETF in history.

[ Visit StoneIsland - here… ]

https://www.stoneisland.com/en-us/?utm

TW3 (That Was - The Week - That Was):

Monday: Lithium miners are having a moment, as IONeer (IONR) won government approval for a new Nevada Lithium Mine. This is the first lithium project in the U.S. to win an approval to begin full scale production as a mine under the Biden administration. LITM and PLL are enjoying some attention. PLL making it over $13.15 – will pull me in.

Wednesday: The futures are looking higher, after impressive GOOGL earnings (due to strength in their cloud and in YouTube ad sales). The NAS marked its 11^th win in the last 13 trading days. Earnings tonight include: MSFT & META, and tomorrow is hi-lighted by AAPL & AMZN. The S&Ps continue to behave badly with 9 of the 11 sectors ending negative and decliners outpacing advancers by over 2:1. More economic data is on the horizon: Q3 GDP data, Q3 PCE inflation data, and Friday’s October Jobs Report. Gold is at an all-time-high, and market volatility continues to be elevated.

Friday: This morning looks like a standard dead-cat-bounce, and I'd be surprised if we get back all of what was lost yesterday. There is only today and Monday ahead of the election, and then the market (I believe) will got into a ‘pause mode’ for a few days. If we get a benign and clear election outcome – then all talk will turn to year-end rallies and existing bullish momentum likely carries it higher. So, I would advise playing it safe and keeping some cash-on-hand until at least Friday – when we have a cleaner view of the post-election direction.

Morgan’s Moments…

Silver vs Gold: With silver being one of the most manipulated commodities on earth, the paper contract to physical silver ratio has exploded to 408:1. Which means that each ounce of physical silver is now backed by 408 ounces of paper silver derivatives. With such an extreme paper-to-physical ratio, even the slightest shift in investor preferences toward physical silver could force a dramatic silver repricing. Demand for physical silver continues to surge, and customers continue to pay significant premiums for physical delivery. This suggests to me that confidence is eroding in paper silver derivatives.

Russia (for the first time) in its annual budget, plans to significantly bolster its silver holdings. The mention of silver represents the first time any central bank has explicitly included silver in its purchasing plans during the current bull PM market.

So, we have: (a) the most extended paper to silver ratio in history, (b) Sovereign nation(s) beginning to stock up on it, (c) the use of silver solar panels, and communication devices continuing to soar, and (d) all during a silver supply deficit. When these converge, we could see silver at $100 to $125 per ounce. If we hear of China stockpiling silver as a partner to their gold holdings, silver could gain $80 overnight. If you need a legitimate place to buy some physical silver, I've been doing business with cornerstonebullion.com since 2009. They’re just good people.

Next Week: Bonds are In Control…

BONDS (the $800B gorilla) are driving this marketplace by flexing their interest rate muscles. How did our FED cut interest rates, and all rates have done is move higher? Could we be witnessing a bond, forced-selling avalanche? What if the Bond Vigilantes do not like the election results?

Do we have an interest rate problem? Yes, for the past 2 months, our bonds have undergone some dramatic sell-side activity. As a consequence, interest rates (since our FED rate CUT) have moved higher from 3.6% to 4.4%. In fact, except for 2 small time periods – if you purchased Bonds anytime during the past 15 years, you’re losing money. Yes, those are unrealized losses – until you need the money and you’re forced to liquidate at pre-expiration prices. The moves and associated volumes inside the Bond market are scaring equities.

Bond Vigilantes vs the Election Results … On either side, what if Bonds don’t like the Democrat’s spending approach and/or the Republican tax cuts? Bonds are making their voice heard by threatening a massive sell off (huge interest rate increases) unless our government shows a plan for fiscal responsibility – including spending cuts. TIP #1: If Bonds continue to sell off (interest rates move markedly higher), then this market will have no choice but to sell off with them.

Is an AI unwind underway? MSFT, META, AAPL, and GOOGL all take a back seat to Nvidia when it comes to AI. As long as Nvidia remains higher – all’s right with the world. Nvidia is a $3T company with a 60% implied volatility. That is a scary amount of volatility associated with the second largest corporation in the world. TIP #2: If shareholders start to grumble about the lack of AI earnings, then NVDA will take a hit along with the P/E ratios (stock prices) of the Mag-7.

When does election volatility end? I believe that it’s the actions of the Bond market that will cause the S&Ps to move in one direction or another. Looking at the daily implied volatility associated with the S&Ps, it appears that next Friday is being given the highest probability for knowing the resolution of the election.