RF's Financial News

RF's Financial News

Sunday, December 31, 2023

This Week in Barrons: December 31st, 2023


Sam, I Am: OpenAI’s ChatGPT was undoubtedly the foremost AI company that captured consumers’ mindshare.  We can almost track: “Before-ChatGPT” and “After-ChatGPT.”  We were also privy to what happens when a nonprofit sitting on a gold mine – is run by your standard, ruthless tech CEO (Sam Altman) with the support of a major investor (Microsoft).  When the dust cleared, Sam was still standing – and the board that initially fired him – alas – were not.  Follow the money.


Fear of Failure:  We’ve evolved into a species that is scared of change.  Our understanding is limited, our time is scarce, innovation can be a threat, and the status quo feels comfortable.  Per Seth G: A decade from now, the things we’re doing currently will be viewed as dangerous, foolish, and/or selfish.  Remember, it’s NOT that any particular habit or technology is dangerous.  It’s that giving the benefit of the doubt to the status quo – may be a mistake.


Leverage:  It’s almost impossible to remove a screw with your bare hands, but easy with a screwdriver.  The handle of the screwdriver demonstrates the power of leverage.  If others are succeeding at something that you’re finding difficult, maybe it’s because they’re using the right screwdriver.  Looking for the right tool is the first step in finding it.


Hamish M: “AI will commoditize content creation.  But content isn't culture.  The value of culture will skyrocket in the AI age.”



The Market:

 


2 elements that should lead any adult decision…  and they’re not money, housing, or even the weather.  They are: 

-       #1 WHO:  Are the people that this place attracts, the kind of people that I respect and would be honored to spend time with?

-       #2 CULTURE:  Is the culture here one that pushes and nurtures me to become more like the kind of person I want to be?



InfoBits:


-       To be fair:  

o   A) It was the Camry that hit the Cybertruck – at an ‘unknown speed’.  

o   B) The Toyota Camry entered the roadway, crossed over the double yellow lines, and into the Cybertruck’s northbound lane of SR-35.  

o   C) Everyone inside the Cybertruck walked away from the accident.  The inhabitants of the Toyota Camry were not so lucky.


-      California Pizza Hut franchises… will lay off 1,200 in-house delivery drivers in February ahead of a new state law boosting the fast-food minimum wage to $20/hr. 


-      Global mergers and acquisitions hit a ten-year low in 2023… as higher interest rates and a weaker deal appetite kept a lid on the market.  The last time global M&A activity was this low – was due to the Eurozone Crisis.



Crypto-Bytes:


-       VanEck bitcoin ad:


-      MicroStrategy’s massive bitcoin acquisition…  of an additional 14,620 BTC for an average price of $42,110/BTC – brings their total holdings to a staggering 189,150 BTC.  This shows strong, institutional, cryptocurrency confidence despite its recent price volatility.


-      Binance founder CZ’s wealth skyrocketed in 2023…  by $25B making him the 35th richest person in the world.  Despite pleading guilty to U.S. criminal charges and stepping down as CEO, CZ’s wealth has soared and reflects the broader trend in the crypto market.



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



Per Anthony P:  My expectation is for the Fed to cut interest rates in the first half of the year, followed by a full return to quantitative easing by year end.  The U.S. will return to printing money, and we are all underestimating how much our government will need to print.  If the government needs more money, then there will be more money in the system.  And when a lot more money is chasing the same amount of financial assets, asset prices must explode higher.  That type of tailwind should get investors even more excited about pouring capital into financial markets.  The areas where I see the highest returns are:

1.   Bitcoin should appreciate hundreds of percent from here, but I would be cautious about the 10x predictions that some are making. 

2.   Altcoins should be the biggest winner across all financial markets – ETH and LINK come to mind.  The further out you go on the risk curve of the “riskiest” asset class (crypto), the more you should be paid for the risk you take.

3.   Bitcoin mining stocks (MARA and RIOT) and MicroStrategy, will continue to outperform pure bitcoin exposure on the way up – and on the way down.   

4.   The major tech stocks will do well during this period, but the real area of opportunity is found in companies that have confused the market. Tesla is an example.  The market believes they are a car company, but they are more akin to the most advanced AI and robotics company. 

5.   There will be big money made by people betting against the world’s weakest fiat currencies.

6.   And lastly, bonds are going to continue to be the ‘intellectual’s’ choice for safe investing, but they will ultimately be big money losers.  Buying long-term bonds in a money-printing environment usually means you failed the IQ test.



AMA (Ask Me Anything…)


Is there a surprise, tech competitor out there?  OpenAI.  Jony Ive poached the lead iPhone designer to work on an OpenAI hardware device.  Tang Tan (Apple’s lead designer for the iPhone and Apple Watch) is stepping down to join LoveFrom - Jony Ive’s hardware design firm.  Tang along with 20 former Apple employees have joined LoveFrom – as Jony assembles an “Avengers-like team” to work with Sam Altman on creating the next era of hardware devices running on OpenAI’s cutting-edge software.



Next Week:  Markets are Definitely Ripe…


2024 Market Forecasts go from roses (Fundstrat) to the apocalypse (JPM).  There is an incredibly high probability that the 2024 S&Ps will underperform.  The average brokerage firm is predicting two-percent 2024 growth in the S&Ps.


Our market is priced to FED perfection.  Currently the market is pricing in an 87% probability of a FED rate cut in March of 2024.  In May of 2024, markets are 100% pricing in a FED rate cut.  And in December of 2024, markets are pricing in a total of seven 25bps rate cuts (down -1.75%) to a final FED 2024 rate of between 3.25 and 3.5%.  Tip #1: Unfortunately, our TNX (the 10-Year T-Bill) has already priced-in 1.2% of those 1.75% (2024) rate cuts.  If our FED even hints (in January) that they will NOT be cutting rates as fast as the market believes – we will have market-mayhem on our hands.  The way to position yourself for that situation is to:

-       Tip #2: SELL the March 15 $105 / $110 TLT CALL Spread, and 

-       BUY the March 15 $92 / $87 TLT PUT Spread.


Bonds vs Bitcoin vs Metals…  

-       Tip #3: I’m looking for Bonds (/ZB) to sell-off from $124 down to $115.

-       As our FED begins to cut rates later in 2024, the dollar will begin to rise.

-       The fate of WHEN Bitcoin - currently resides in the political hands of the SEC.

-       Metals will continue to rally in 2024, and I would be a buyer if GOLD if it dips below $2,000/oz.



TIPS:


HODL’s: (Hold On for Dear Life)

-       13-Week Treasuries @ 5.3%

-       PHYSICAL COMMODITIES = Gold @ $2071/oz. & Silver @ $24.0/oz.

-       **Bitcoin (BTC = $42,400 / in at $4,310)                 

-       **Ethereum (ETH = $2,310 / in at $310)                  

-       **MARA – Marathon Digital = ($23 / in at $12)       

-       **ChainLink (LINK = $15.4 / in at $7.78)                 

-       **RIOT – Riot Platforms = ($15.2 / in at $12.5)       

-       **COIN – Coinbase = ($172 / in at $125)                 

-       UEC – Uranium Energy Corp ($6.4 / in at $4.8)      

-       AAPL – Apple = ($192 / in at $181)                         


** Crypto-Currency aware


Follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.


Please be safe out there!


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