Global Market Comments
March 26, 2024
Fiat Lux
Featured Trade:
(THE DEATH OF THE MALL….NOT),
(SPG), (MAC), (TCO),
(QUANTITATIVE EASING EXPLAINED TO A 12-YEAR-OLD)
We’ve all heard this story before.
Malls are dying. Commerce is moving online at a breakneck pace. Investing in retail is a death wish.
No less a figure than Bill Gates, Sr. told me before he died that in a decade, malls would only be inhabited by climbing walls and paintball courses, and that was a decade ago.
Except it didn’t quite work out that way. Lesser quality malls are playing out Mr. Gates’ dire forecast. But others are booming. It turns out that there are malls, and then there are malls.
Let me expand a bit on my thesis.
We are just entering a decade-long decline in interest rates, probably starting in June. Malls are highly leveraged entities that often are financed by Real Estate Investment Trusts) REITS. That makes some mall-based REITS some of the most attractive investments in the market.
Technology is moving forward at an exponential rate. As a result, product performances are improving dramatically, while costs are falling. Commodity and energy prices are also rising, they are but a tiny fraction of the cost of production.
In other words, DEFLATION IS HERE TO STAY!
The nearest hint of real inflation won’t arrive until the late 2020s, when Millennials become big spenders, driving up the cost of everything.
So, let's go back to the REIT thing. Real Estate Investment Trusts are a creation of the Internal Revenue Code, which gives preferential tax treatment for investment in malls and other income-generating properties.
There are 1,100 malls in the United States. Some 464 of these are rated as B+ or better and are concentrated in the biggest spending parts of the country (San Francisco, North New Jersey, Greenwich, CT, etc).
Trading and investing for a half-century, I have noticed that most managers are backward-looking, betting that existing trends will continue forever. As a result, their returns are mediocre at best and terrible at worst.
Truly brilliant managers make big bets on what is going to happen next. They are constantly on the lookout for trend reversals, new technologies, and epochal structural changes to our rapidly evolving modern economy.
I am one of those kinds of managers.
These are not your father’s malls. It turns out the best quality malls are booming, while second and third-tier ones are dying the slow painful death that Mr. Gates outlined.
It is all a reflection of the ongoing American concentration of wealth at the top. If you are selling to the top 1% of wealth owners in the country, business is great. If fact, if you cater even to the top 20%, things are pretty damn fine.
You can see this in the top income-producing tenants in the “class A” malls. In 2000, they comprised J.C. Penney. Sears, and Victoria’s Secret. Now Apple, L Brands, and Foot Locker are sought-after renters. Put an Apple store in a mall, and it is golden.
And what about that online thing?
After 25 years of online commerce, the business has become so cutthroat and competitive that profit margins have been beaten to death. You can bleed yourself white watching Google AdWords empty out your bank account. I know, because I’ve tried it.
Many online-only businesses are now losing money, desperately searching for that perfect algorithm that will bail them out, going head-to-head against the geniuses at Amazon.
I open my email account every morning and find hundreds of solicitations for everything from discount deals on 7 For All Mankind jeans, to the new hot day trading newsletter, to the latest male enhancement vitamins (although why they think I need the latter is beyond me).
Needless to say, it is tough to get noticed in such an environment.
It turns out that the most successful consumer products these days have a very attractive tactile and physical element to them. Look no further than Apple products, which are sleek, smooth, and have an almost sexual attraction to them.
I know Steve Jobs drove his team relentlessly to achieve exactly this effect. No surprise then that Apple is the most successful company in history and can pay astronomical rents for the most prime of prime retail spaces.
It turns out that “Clicks to Bricks” is becoming a dominant business strategy. A combination of the two is presently generating the highest returns on investment in retail today.
People start out by finding a product online and then going to the local mall to try it on, touch it, and feel it. Apple does this.
Research shows that two-thirds of Millennials prefer buying their clothes and shoes at malls. Once there, the probability of a serendipitous purchase is far greater than online, anywhere from 20% to 60% of the time.
This explains why pure online businesses by the hundreds are rushing to get a foothold in the highest-end malls.
Immediate contact with a physical customer gives retailers a big advantage, gaining them the market intelligence they need to stay ahead of the pack. In “fast fashion” retailers like H&M and Uniqlo, which turn over their inventories every two weeks, this is a really big deal.
There’s more to the story. Malls are not just shopping centers they have become entertainment destinations as well. With an ever-increasing share of the population chained to their computers all day, the demand for a full out-of-the-house shopping, dining, and entertainment family experience is rising.
Notice how Merry Go Rounds have started popping up at the best properties? Imax Theaters are spreading like wildfire. And yes, they have climbing walls too. I haven’t seen any paintball courses yet, but the guns and accessories are for sale.
And notice that theaters are now installing first-class adjustable heated seats and will serve you dinner while the movie is playing. (Warning: if you eat in the dark, you will end up wearing half of it home).
This is why all of the highest-rated malls in the country are effectively full. If you want space, there you have to wait in line. REIT managers pray for tenant bankruptcies so that can jack up rents on the next incoming client or pivot their strategy towards the newest retail niche.
Malls are also in the sweet spot in the alternative energy game. Lots of floor space means plenty of roof space. That means they can cash in on the 30% federal investment tax credit for solar roof installations. Some malls in sunny southwestern states are net power generators, effectively turning them into min local power utilities. By the way, the cost of solar has recently crashed.
Fortunately for us investors, we are spoiled for choice in the number of securities we can consider, most which can now be bought for bargain basement prices. Many have a return on investment of 9-11%, a portion of which is passed on to the end investor.
There are now 25 REITs in the S&P 500. The sector has become so important that the ratings firm is about to create a separate REIT subsector within the index.
According to NAREIT.com (click here for the link), these are some of the largest mall-related investment vehicles in the country.
Simon Growth Property (SPG) is the largest REIT in the country, with 241 million square feet in the US and Asia. It is a fully integrated real estate company that operates from five retail real estate platforms: regional malls, Premium Outlet Centers, The Mills, community/lifestyle centers, and international properties. It pays a 4.88% dividend.
Macerich Co. (MAC) is a California-based company that is the third largest REIT operator in the country. It has been growing through acquisitions for the past decade. It pays a 5.31% dividend.
Mind you, REITs are not exactly risk-free investments. To get the high returns you take on more risk. We remember how disastrously the sector did when the credit crunch hit during the 2009 financial crisis. Many went under, while others escaped by the skin of their teeth.
There are a few things that can go wrong with malls. Local economies can die, as it did in Detroit. Populations age, shifting them out of a big spending age group. And tax breaks can be here today and gone tomorrow.
These are all highly leveraged companies, so any prolonged rise in interest rates could be damaging. But as I pointed out below, there is little chance of that in the near future.
The bottom line here is that we are seeing anything but the death of the mall. It just depends on the mall.
All in all, if you are looking for income and yield, which everyone on the planet is currently pursuing, then picking up some REITs could be one of your best calls of the year.
See You At the Mall
I know it’s been two years since the US dumped its reflationary policy of quantitative easing. However, Japan and Europe are still pursuing it with a vengeance. So, it’s best to be familiar with what it is. For a quick tutorial please watch this highly insightful and humorous video.
Click on the link below to watch a six-minute animation explaining quantitative easing to a 12-year-old, using cute little cuddly figures. Was Ben Bernanke a plumber who was called to fix a pipe only to break it more? Does he have a cute beard? Is he trying to blow up the entire world economy?
Since the video has gone viral, some 5.7 million viewers found out by watching by clicking here.
Global Market Comments
March 25, 2024
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or THE BEST WEEK OF THE YEAR),
(PANW), (NVDA), (LNG), (UNG), (FCX), (TLT), (XOM), (AAPL), (GOOG), (MSTR), (BA), (FXY)
You need to have a sense of humor and a strong dose of humility to work in this market. After predicting last week that the market would NOT crash but grind sideways, it then posted the next week of the year. Stocks are actually accelerating their move to the upside.
Of course, we got a big assist from Fed Governor Jay Powell who practically wrote in his own blood a promise that interest rates would be cut at least three times by the end of the year. That is quite a gesture, and all risk assets loved it, even the ones that have been asleep for a year, like gold (GLD) and silver (SLV).
Miraculously, this does happen and there has been a big one over the last two years that nobody knows about.
Cheniere Energy (LNG) shipped 640 tankers full of natural gas (UNG) to Europe last year and 630 in 2022. One tanker provides enough gas to heat one million homes for a month. You can do the math. In total, it has sent out 3,400 tankers since 2016, mostly to China.
When Russia invaded Ukraine in 2022, Europe was totally dependent on Vladimir Putin for gas. Any doubt about the Russian supply was ended when the Nordstream undersea pipeline was mysteriously blown up. A total cut-off would have been an economic disaster and caused the collapse of NATO.
Two years ago, it was believed that even if we could get the gas to Europe, there were no facilities to liquefy natural gas as it is shipped back into natural gas. Then 16 floating de-liquefaction plants showed up out of nowhere.
Natural gas demand has been soaring in the US as well. Over the past 20 years, coal has dropped from generating 50% of the US electric power supply to only 19% (the unused American share of the coal was sold to China). That has eliminated 500 million tons of carbon dioxide from entering the atmosphere.
If you noticed that the skies over American cities are getting clearer, this is the reason.
Much has been made over Biden’s “pause” of permitting for new natural gas facilities. The reality is that it will take four years to build the 16 new gas export facilities that have already been approved. By then, we’ll have a new president. All Biden did was throw a bone at the environmental wing of his party. Such are the ways of Washington.
By the way, the Republican Party now has an environmental wing too. Who knew? It’s all proof that if you live long enough, you see everything.
One of the reasons I have been in love with cybersecurity stocks like Palo Alto Networks (PANW) for the past decade is that hacking is the ultimate growth industry. It never goes out of style, is recession-proof, and is growing at an exponential rate.
It is also getting more sophisticated. The big hackers are franchising their business models, inviting in criminals with minimal computer knowledge, vastly increasing their numbers. They are attacking small vendors to large companies to get access to the big ones. They are also picking targets too poor to afford the big cybersecurity companies. The City of Oakland is a classic example, which was prevented from paying its teachers for six months. And now they have AI.
Spending on cybersecurity is expected to grow from $188 billion in 2023 to $215 billion this year, a gain of 14.36%. The number of data breaches has rocketed by 78% over the past two years. Buy (PANW) on dips, which we are seeing right now.
“We’re going to need a bigger GPU” to borrow a famous line from Stephen Spielberg’s blockbuster Jaws.
If you want a peak at the future, both of our own and NVIDIA stock, check out the company’s latest entry into the chip wars, the $50,000 Blackwell GPU, available in a few months. In layman’s terms, it offers four times the computing ability but requires only one-quarter of the electric power, which is increasingly becoming an AI issue. It also uses deep learning to write its own software.
The chip was introduced by CEO Jensen Huang at the Developers conference in San Jose, which I attended in a venue normally occupied by rock stars. Huang started the conference by warning he was not there to sing. But perform he did, accompanied by a group of dancing robots powered by AI.
And while NVIDIA’s sales have tripled over the past year, you ain’t seen anything yet. When I recommended (NVDA) for the millionth time at $400 a share last October, my long-term target was $1,000. It recently hit $975, now stands at $943, and shows no sign of abating. NVIDIA could well keep powering on until the actual release of the Blackwell chip.
As in Jaws, I sense a feeding frenzy coming and (NVDA) shorts are the bait.
In February we closed up +7.42%. So far in March, we are up +3.53%. My 2024 year-to-date performance is at +6.67%. The S&P 500 (SPY) is up +9.22% so far in 2024. My trailing one-year return reached +56.98% versus +52% for the S&P 500.
That brings my 16-year total return to +683.30%. My average annualized return has recovered to +51.57%.
Some 63 of my 70 round trips were profitable in 2023. Some 11 of 19 trades have been profitable so far in 2024.
I miniated no new longs last week, content to let my existing longs run in Freeport McMoRan (FCX), bonds (TLT), and ExxonMobile (XOM). I am 70% in cash given the elevated state of the market and am looking for new commodity and energy plays to pile into.
Fed Chair Jay Powell Promises Three Interest Rate Cuts of 25 basis points each, at his press conference on Wednesday. Powell said he did not see "cracks" in the labor market, which he described as "in good shape," noting that "the extreme imbalances that we saw in the early parts of the pandemic recovery have mostly been resolved." These are very pro-risk statements. Buy the dips in everything.
Fed to Dial Back Quantitative Tightening, or QT from the current $120 billion a month. It’s a huge plus for risk assets and explains why the most liquidity-driven ones like gold and silver had such a great day. Buy (GLD) and (SLV) on dips.
The Dept of Justice Goes After Apple on Antitrust, on its 61.3% share of the US smartphone market. It accused the iPhone maker of blocking rivals from accessing hardware and software features on its popular devices. Google’s (GOOG) Android actually has a bigger global market share at 70.3% with Apple at only 24%. This is another waste of time that will last ten years and go nowhere.
Bank of Japan to Cut Interest Rates as Early as April, bringing to an end a 34-year stimulus program that was a dismal failure. The Japanese yen (FXY) should rocket, but Japanese stocks not so much.
MicroStrategy (MSTR) Dives 18%, the largest owner of Bitcoin, on a crypto correction. MicroStrategy is the largest corporate owner of Bitcoin. (MSTR) just completed a massive borrowing to buy more crypto at the top. After SEC approval of ETFs and the imminent halving, what is left to drive crypto? Avoid (MSTR) which was blindsided by the last 90% crypto correction.
Existing Homes Sales Soar 9.7% in February to 4.38 million units, on a seasonally adjusted annualized basis. Inventory rose 5.9% year over year to 1.07 million homes for sale at the end of February. That represents a still low 2.9-month supply at the current sales pace. Higher demand continued to push the median price higher, up 5.7% from the year before to $384,500.
Home Prices Have Risen by 2.4 Times the Inflation Rate Since 1960. The cost of a typical house in the U.S. is nearly half a million dollars: the median price for a home in the U.S. is $412,778, according to Redfin data. That’s what successful demographic tailwinds leading to a chronic housing shortage get you.
Boeing is Leasing 36 Airbuses, to meet its own unfilled orders caused by production delays. Another panel fell off an airborne plane last week in Medford, OR. Looking for missing parts has become a regular part of every Boeing landing. This is an act of desperation. Avoid (BA)
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, March 25, at 7:00 AM EDT, the US Building Permits are announced.
On Tuesday, March 26 at 8:30 AM, S&P Case Shiller for February is released.
On Wednesday, March 27 at 11:00 AM, the MBA Mortgage Data is published
On Thursday, March 28 at 8:30 AM, the Weekly Jobless Claims are announced. The final read of the Q2 US GDP is also out.
On Friday, March 29 at 2:00 PM, Personal Income and Spending is out. The Baker Hughes Rig Count is printed.
As for me, as I am about to take off for Cuba to visit Finca Vigia (Lookout Farm), the home of Earnest Hemingway and Martha Gellhorn I thought I’d review my long history with this storied family. This is where he finished For Whom the Bells Toll, his epic novel about the Spanish Civil War.
My grandfather drove for the Italian Red Cross on the Alpine front during WWI, where Hemingway got his start, so we had a connection right there going back over 100 years.
Since I read Hemingway’s books in my mid-teens, I decided I wanted to be him and became a war correspondent. In those days, you traveled by ship a lot, leaving ample time to finish off his complete work.
I visited his homes in Key West and Ketchum Idaho. In 2023, he stayed at his Hotel Poste room in Cortina, Italy where he lived for five months during the 1950s. His Cuban residence was high on my list, now that Castro is gone.
I used to stay in the Hemingway Suite at the Ritz Hotel on Place Vendome in Paris where he lived during WWII. I had drinks at the Hemingway Bar downstairs where war correspondent Ernest shot a German colonel in the face at point-blank range. I still have the ashtrays.
Harry’s Bar in Venice, a Hemingway favorite, was a regular stopping-off point for me. I have those ashtrays too.
I even dated his granddaughter from his first wife, Hadley, the movie star Mariel Hemingway, before she got married, and when she was still being pursued by Robert de Niro and Woody Allen. Some genes skip generations and she was a dead ringer for her grandfather. She was the only Playboy centerfold I ever went out with. We still keep in touch.
So, I’ll spend the weekend watching Farewell to Arms….again, after I finish this newsletter.
Oh, and if you visit the Ritz Hotel today, you’ll find the ashtrays are now glued to the tables.
Hemingway in 1917
At Work on Hemingway’s Typewriter
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Global Market Comments
March 22, 2024
Fiat Lux
Featured Trade:
(MARCH 20 BIWEEKLY STRATEGY WEBINAR Q&A),
(DIS), (GLD), (BITB), (UUP), (FXY), (F), (TSLA), (NVDA), (FCX), (UNG), (TLT), (MCD)
Below please find subscribers’ Q&A for the March 20 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Silicon Valley.
Q: Do you recommend a form of dollar-cost averaging, and what is it?
A: Absolutely, yes. It is impossible for anybody to get an absolute bottom when you're buying, so the best thing to do is time average. If you have a position you like, go in there every day and buy a little piece. I bought Nvidia (NVDA) practically every day for months and boy did that work! (NVDA) had already gone up a lot, but I just kept buying it and buying it, averaging up and up. So that is the way I dollar-cost average. It's really more of a time averaging than a price averaging. No one knows where tops and bottoms are, even if they promise you that they do.
Q: Are you still long the Yen (FXY) and shorting the Dollar (UUP) given current conditions?
A: I actually don’t have any positions in the currencies, because the volatility is so low compared to stocks. Suffice to say that over time when US interest rates go down, currencies should go up, especially the Yen, which has been depressed for such a long time.
Q: Can gold (GLD) and Bitcoin (BITB) go up at the same time?
A: Absolutely. They almost always go up at the same time, because they are liquidity-driven assets, and when liquidity is as rich as it is now, all liquidity-driven assets go up at the same time which includes gold, silver, and Bitcoin and other cryptos. The only difference this time is that the source of liquidity is not the Federal Reserve—in fact, the Fed is quite restrictive right now with their high-interest rate policy—the new source of liquidity is corporate profits, especially from technology stocks, and that is unlimited and not subject to political whims. It’s always there and it’s always growing; it's a much better form of liquidity than the old form from the US government.
Q: What are your thoughts on the Disney (DIS) and Peltz fight, and how should that affect the stock price?
A: Whenever Nelson Peltz gets involved in a company, it's almost always positive for the stock even if he makes boards uncomfortable. That's why he's going in—to force better management. He usually succeeds and then gets out at a higher price. And if it means forcing some things on management they don't like (and I'm not really sure in the case of Disney what it is he's pressuring them for), he gets his profit and he leaves, and that's what corporate raiders do.
Q: Should I buy the dip in the EV narrative?
A: Not yet. You need a global economic recovery for that to happen, especially in Europe and China. We forget how prosperous we are here, and how weak things are in pretty much the rest of the world—and that is where the EV sales have really collapsed. So let the burden of proof be on the EV companies to report better sales and better technology, and then I'll be back in. Tesla periodically has 80% corrections: we’re right at the tail end of one of those. We may have another 10% to go and that's it. I'm a fair-weather friend, I only like to be long stocks when they're going up. How about that?
Q: I am understanding correctly that you believe the transition from technology and semiconductors to commodities and elsewhere is actually showing long-term strength growth for the tech stocks since they are mostly going sideways from here and not crashing with the rotation.
A: What I see is a time correction in technology where after tremendous moves they go sideways for a period, and new money switches over to other sectors like commodities and energy. And then you'll have a rotation back into technology after they've had a rest, probably before the end of the year. This back-and-forth kind of action could go on for many years—I've seen this happen before. So that's what I'm trying to position for now. And you know, I'm not alone in saying I don't like buying stocks after they tripled in a year. It's almost a no-win trade if you're a professional manager.
Q: Are we heading towards $90 a barrel in oil (USO), and will we pass $100?
A: Yes, we’re definitely headed to $90. But I think the new range is sort of like $65 to $95 because when you get up to the high prices, all of a sudden supply starts coming out of the woodwork, especially from the United States, which is already the world's largest oil producer at 13 million barrels a day. As soon as you get a high price, money just starts pouring in to start new drilling, setting up the next price collapse. The United States is the cap on global oil prices and China is the floor. They come in as the buyer of last resort as the world's largest consumer whenever prices get super cheap, and that actually is a best-case scenario—not only for us but for OPEC. Because their investments do well in the US when oil is in a $65 to $95 range. Any higher than that, the stock market crashes, wiping out the value of their savings. And that is how the modern world has evolved.
Q: Will today's Fed meeting be a non-event?
A: Yes, no interest rate changes until June, maybe even later. And the market is basically telling us that—dead in the water as it is. Dow is nowhere, and there are no big moves. Everyone is just treading water here.
Q: Would you take profits on NVIDIA (NVDA)?
A: Yes, some profits. I structured my own personal portfolio so I have expiring front month short put positions, which are ringing the cash register every month, but my long-term LEAPS I'm keeping. Because I think you could have another 50% move up in a year in (NVDA) stock given their dominant position in the market, and the fact that the new Blackwell chip, the $40,000 Blackwell chip is taking over the world. It's essentially a computer on its own, and it writes its own software. Nobody else is close to that, nor will they be. So keep the long-term positions to LEAPS, and keep taking profits every month. And you have to keep in mind also that (NVDA) is almost every portfolio manager's larger single position through capital appreciation, or they're not in it at all, and they're looking for a job or driving an Uber cab somewhere.
Q: Should I buy Ford (F) or Tesla (TSLA) or both?
A: Wait for the market to start discounting the Tesla Model 2 when it comes out next year. Maybe you start buying the stock in 6 months or a year. Probably the better question is not Ford or Tesla, but Tesla or Rivian (RIVN), which seems to be making progress in their mass production. I just don't see any future for the legacy car companies at all. They're just so far behind in technology. I spent most of my life trying to tell them what to do, and if they had followed my advice, they would be much better off than now.
Q: How long can an employment number stay strong? I feel like we have been waiting for a recession for almost 5 years now.
A: Actually the last real recession was the pandemic in 2020, which only lasted a couple of quarters. We may not have another real recession for 5 or 10 years. Why? Because we're in the roaring twenties and we have 6 more years to go. We also are in the new American Golden Age, and who's been predicting that for the last 10 years? I have! It's all about demographics. We happen to have peak spenders, i.e. people in their thirties and forties, at all-time highs, and that is what drives the economy—that is what makes the golden ages predictable as they have been for hundreds of years.
Q: How are the stem cell injections working?
A: Fantastic. After I got shot in the hip last year in Ukraine, I got one and I literally was walking around in weeks and eliminated the pain completely. I went from talking about hip replacement to climbing Kilimanjaro in literally a matter of weeks. So yes, they work for me. I know they don't work for everyone, but I've used them on both my knees, my back, and my hip, and they've been wildly successful. I won't need any more stem cell injections until I go back to Ukraine and get shot again.
Q: Where are you traveling to this time?
A: I’ll be working out of Florida during April, and probably take the quickie trip to Cuba. After that, it's Ecuador and the Galapagos Islands where I want to challenge Darwin’s Theory of Evolution. It turns out that it is in the same time zone as New York, so it'll be easy to work there from a time zone point of view. The Space X Starlink has provided great Internet everywhere, the Galapagos and Ukraine.
Q: Our real estate commission is about to disappear. Will that benefit housing prices?
A: You get what you pay for. If you have commissions drop from 6% to 1%, you'll get 1% worth of the service out of your agent. So if you want your house sold and sold well, you’d better keep paying the commission. Otherwise, your agent will not work for it. You get what you pay for. However, I always thought real estate commissions were too high for too long, and that may be about to change. And if you don't believe me, try selling your house on the internet someday. It doesn't work.
Q: Does the US have the infrastructure for electrification?
A: No, it does not. That means it has to be built out, and that is why we own Freeport McMoRan (FCX) and you should too! Anything involving electrification involves a lot of copper. The grid has to double in size to accommodate the needs of AI.
Q: Should I continue with natural gas (UNG)?
A: If you have a long-term position I would hang on because you're only one cold snap away from a major rally, and at some point, China will come back on stream as a major buyer. So long term I would hold it. Short term positions I would get rid of it before accelerated time decay wipes out your position.
Q: Will the US 10-year Treasury bond (TLT) go below 4% again?
A: Yes, when you get the Fed on an interest rate cutting cycle, 4% is easy; and by the way, home mortgages will be much cheaper in a year, so it's probably not a bad idea if you're buying a home now to take an adjustable-rate mortgage (ARM) then refinance after the Fed finishing cutting rates.
Q: Should I buy the dip in McDonald's (MCD)?
A: Probably not. The concern there is that the weight loss drugs are destroying American appetites and reducing their need for fast food. Eventually, some 100 million Americans could end up taking weight loss drugs. So that's why the stock is sold off. Fundamentally, (MCD) is a low-margin retail play so it's never interested me. The good news is that they're cutting jobs with computers. So that is the only reason to buy it, is the computerization effort. Walk into a new McDonald’s and you can only order by computer. The people there don’t even know how to take a verbal order. This is even more widespread in Europe where labor costs are higher.
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, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), 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
Home Sweet Home
“If we’re in a bubble, then we’ll act bubbly,” said legendary hedge fund manager, David Tepper.
Global Market Comments
March 21, 2024
Fiat Lux
Featured Trade:
(REVISITING THE FIRST SILVER BUBBLE),
(SLV), (SLW)
Global Market Comments
March 20, 2024
Fiat Lux
Featured Trade:
(WELCOME TO THE DEFLATIONARY CENTURY),
(TLT), (TBT), (AAPL), (MSFT)