Archive

Tame PPI Boosts Stocks.

Data from the Labor Department showed the Producer Price Index rose 3.3% on an annual basis in December 2024, compared with the 3.4% rise expected by economists polled by Reuters. On a monthly basis, the index rose 0.2%.

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Biden Tanks Chip Stocks with New AI Rules,

which will almost certainly get undone in a week. On Monday, the Commerce Department outlined new rules that impose caps on how many advanced artificial intelligence chips can be exported to certain countries, along with additional licensing requirements for AI technology. The move prompted a low opening for stocks from which it quickly recovered.

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Amazon is Getting Ready for Another Run.

Strong earnings and continuing excitement about artificial intelligence will help Amazon stock move back into the green. The e-commerce and cloud company to beat estimates when it reports its fourth-quarter results—analysts are expecting a profit of $1.48 a share on sales of $187.3 billion, according to data from FactSet. Buy (AMZN) on dips.

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China in Talks to Sell TikTok to Elon Musk,

to avoid a court-ordered shut down in the US. TikTok's U.S. operations could either be sold through a competitive process or an arrangement by the government, the report said, suggesting that the future of the app is no longer solely in ByteDance's control.

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$4 Trillion in Asset Management Disrupted by Los Angeles Fires,

with some relocating office space and supporting staff members who have lost their homes. The LA area is home to large industry players like Capital Group, TCW Group and hedge funds Oaktree Capital and Ares Management.

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Los Angeles Fires to Cost $150 Billion,

with only $30 billion covered by insurance. Inflation will rise as the cost of construction labor and materials soar. Tradesmen around the country are packing their trucks and heading west to snare work at double the normal rate. There is no trade here as the new home builder are not involved, who are set up to only build mass-produced track homes. Yet another black swan for 2025. Watch this video on YouTube.

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Edison International Says Fires Not its Fault,

the parent of Southern California Edison, the local utility for Los Angeles. But the market shaved 29% or $9 billion on its market cap anyway. There may be a BUY setting up here for a high yield 5.10% dividend and 16 multiple. Buy (EIX). The southern California economy is about to boom.

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Bonds Hit 14-Month Lows at a 4.80% Yield,

as fixed-income dumping continues across the board. “Higher Rates for longer” don’t fit in here anywhere. But there may be a BUY setting up for (TLT) at 5.0%.

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Cleveland Cliffs Ramps up its Bid for US Steel,

bringing in Nucor as a partner. Cleveland-Cliffs would purchase U.S. Steel in an all-cash deal, with an offer in the high $30s per share. It would then sell U.S. Steel's Big River Steel subsidiary to Nucor.

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The Trump Bump is Gone,

stock markets giving up all their post-election gains. Technology was especially hard hit, with lead stock NVIDIA down 15%. It seems that people finally examined the implications of what Trump was proposing for the stock market. Tax deferred selling of the enormous profits run up under the Biden administration are a big factor.

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NVIDIA Hits New All-Time High,

the largest position held by most Mad Hedge followers, surpassing Apple with a nearly $4 trillion market cap. At the CES conference yesterday in Las Vegas, CEO Jenson Wang indicated that demand for his new Blackwell chips is far greater than expected.

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Zukerberg Caves,

scrapping fact checking on Facebook to compete with Elon Musk’s X. Truth and accuracy is proving too expressive in this new world. Censorship will end. The Nazi’s are back! Deregulation is in.

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JOLTS Soars,

coming in at 8.0 Million versus an expected 7.7 million, indicating a much hotter than expected economy. You can kiss that next interest rate cut goodbye.

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US Online Sales Rise by 9%

over the holidays, with shoppers mainly using their smartphones to buy products ranging from TVs to LEGO sets. Holiday spending from Nov. 1 through Dec. 31 rose 8.7% to about $241.4 billion online in 2023, online spending during the same period grew 4.9%.

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Services PMI Comes in Hot,

at 54.1. Notice all the data is continuing string. The next administration is certainly inheriting a great economy.

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Bonds Get Crushed,

with ten-year US Treasury yields soaring to 4.85%, a 14-month high. Fear of exploding deficits under Trump and higher rates for longer are the reason. A staggering $5.3 billion has been pulled from Blackrock’s (TLT) so far in 2025. Avoid all rate plays like (JNK), REITs, housing, and precious metals.

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Pending Home Sales Rise by 2.2%

in November, with the Midwest, South, and West regions of the U.S. experiencing month-over-month gains in transactions, while the Northeast decreased. Year-over-year, contract signings increased in all four regions, with the West leading the pack. Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory. Buyers are no longer waiting for or expecting mortgage rates to fall substantially.

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The History Business is Booming.

In 2023, people in Britain and Ireland spent more on history books than at any point since records began in 1998. Ancient history sales rose 67% from 2013 to 2023, while books focusing on “specific subjects” – individual stories of lives, events or movements – climbed 70% over the same period. In the United States, where the overall book market is flat, history has grown by 6% in the past year alone. For the first time in an election year, history as a category outsold politics by two to one. Part of the reason is the rise of streaming fantasy programs like Game of Thrones, Lord of the Rings, and westerns like my favorite Yellowstone.

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Biden Scotches US Steel Deal,

cratering the stock and miring the company with 19^th century technology. National security was given as the reason, but the real issue here is the protection of union jobs. The future of warfare is not tanks and battleships but cheap plastic drones. I know first-hand after my combat tour in Ukraine.

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Film is Back!

Pentax has introduced the first film camera in 20 years to address rising retro demand for young people. Most Japanese camera makers stopped producing analog film models in the 2000s as digital ones became dominant, according to local media. Now if only cassettes can make a comeback as well!

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A Cow-Based Economics Lesson

SOCIALISM
You have 2 cows.
You give one to your neighbor.

COMMUNISM
You have 2 cows.
The State takes both and gives you some watered-down milk.

FASCISM
You have 2 cows.
The State takes both and sells you some milk at an inflated price.

NAZISM
You have 2 cows.
The State takes both and sends you to a concentration camp.

BUREAUCRATISM
You have 2 cows.
The State takes both, shoots one, milks the other, and then throws the
milk away.

TRADITIONAL CAPITALISM
You have two cows.
You sell one and buy a bull.
Your herd multiplies and the economy grows.
You sell them and retire on the income but worry about your cholesterol level and blood pressure.

ROYAL BANK OF SCOTLAND (VENTURE) CAPITALISM
You have two cows.
You sell three of them to your publicly listed company, using letters of
credit opened by your brother-in-law at the non tax treaty offshore bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.
The milk rights of the six cows are transferred via an anonymous intermediary to a Cayman Island Company secretly owned by the majority shareholder, who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. You sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet was provided with the release. The public then buys your bull. You are lauded as a titan of free market capitalism.

SURREALISM
You have two giraffes.
The government requires you to take harmonica lessons.

AN AMERICAN CORPORATION
You have two cows.
You sell one and force the other to produce the milk of four cows.
Later, you hire a consultant to analyze why the cow has dropped dead. PETA sues you and pickets your office.

A FRENCH CORPORATION
You have two cows.
You go on strike, organize a riot, and block the roads because you
want three cows. And you have a fabulous time doing all this. The world is shocked.

A JAPANESE CORPORATION
You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and
produce twenty times the milk.
You then create a clever cow cartoon image called a Cowkimona and market
it worldwide. Then your stock crashes.

AN ITALIAN CORPORATION
You have two really fine, stylish cows which cost a fortune, but you don't know where they are.
You decide to have lunch with a fine bottle of Antinori and top it all off with a potent grappa and double espresso.

A SWISS CORPORATION
You have 5000 cows. None of them belong to you.
You charge the owners for storing them. The US IRS launches a criminal investigation and arrests every Swiss banker when they go shopping in New York.

A CHINESE CORPORATION
You have two cows.
You have 300 people milking them.
You claim that you have full employment and high bovine productivity.
You arrest the newsman who reported the real situation. Then your stock crashes.

AN INDIAN CORPORATION
You have two cows.
You worship them and feed them all your garbage.

A BRITISH CORPORATION
You have two cows.
Both are mad but drink great beer.

AN IRAQI CORPORATION
Everyone thinks you have lots of cows.
You tell them that you have none.
No one believes you, so they bomb the ** out of you and invade your
country.
You still have no cows, but at least you are now a Democracy.

AN AUSTRALIAN CORPORATION
You have two cows.
Business seems pretty good.
You close the office and go for a few beers at the bar to celebrate.