(SUMMARY OF JOHN’S MAY 29, 2024 WEBINAR)
Friday, May 31, 2024
Hello everyone,
TITLE: The Nvidia Boom
PERFORMANCE:
Month to date - +3.74%
Since inception - +694.98%
Trailing one-year return - +33.25%
Average annualized return - +51.79%
PORTFOLIO:
No Positions.
THE METHOD TO MY MADNESS:
Focus has shifted to the spectacular performance of NVDA and other AI stocks.
Downside is expected to be limited to 5-8% with $8 trillion in cash on the sidelines and a further $26.8 trillion in short-term US treasury bills.
John says technology stocks won’t crash; look for a sideways “time” correction.
All economic data is globally slowing, including the US.
Interest rates are higher for longer but September is on the plate in view of recent data releases.
Buy stocks and bonds on dips.
THE GLOBAL ECONOMY – STILL SLOWING
CPI comes in cool in April at 0.3% versus 0.4% expected.
Global Flash PMI jumps 50.9 for services, and 54.8 for manufacturing, a one-year high.
Weekly jobless claims fall, down 215,000 – down 8,000, the steepest decline since September.
Federal Reserve officials are looking for further weakening in demand as they try to tame inflation without triggering a surge in unemployment.
Consumer Inflation expectations at 3.3%, according to the University of Michigan, the amount of price rises expected in the coming year.
Fed Minutes turn bearish, from their last meeting a month ago.
Chinese government to buy unsold homes to rescue the local real estate market.
STOCKS – BLOWOFF TOP
As the DOW tops 40,000 investors are pouring money into both bonds and stocks, according to the Bank of America. Equity funds saw $11.9 billion in inflows, while bond funds drew in $11.7 billion.
NVDA has triggered split fever in the wake of its own 10:1 announcement last week and traders are piling into the shares of the next candidates.
DOJ to break up Live Nation, seeking to end the monopoly on ticket sales which have sent ticket prices soaring.
Thousands of young traders are getting wiped out following the trading advice of London-based IM Academy and the so-called guru, Chris Terry.
Biggest bear on Wall Street turns bullish. Mike Wilson at Morgan Stanley is targeting $5,400 on the S&P500.
Elon Musk’s X.ai is potentially a trillion-dollar company.
Netflix may be the next candidate to stock split, and to offer a dividend. If it does stock split, the stock will perform very well. Google and Amazon could also be stock split candidates.
Caterpillar (CAT) buy near 200-day MA. If you see weakness in Freeport McMoRan (FCX) buy.
Buy Berkshire Hathaway (BRK/B) on weakness.
Adobe in LEAPS territory. Visa (V) is setting up for another buy.
BONDS – TAKING IT ON THE NOSE:
Today’s treasury auction bombed for two- and five-year notes taking the TLT down $1.31. Oversupply is the big problem. Traders are nervous about this week’s looming inflation data.
Bond investors are making a killing, with the US Treasury paying out $900 billion in interest in 2023.
That’s double the annual cost of the past decade. Remember those coupons?
That’s another reason for the Fed to cut rates soon, so it lessens the backbreaking burden on the government.
After being held hostage by zero-rate policies for almost two decades, US Treasuries are finally reverting to their traditional role in the economy.
Bonds are becoming respectable again after a long winter. Buy (TLT) on dips.
The US Treasury announced a Bond buyback program, with the first scheduled on May 29.
The Treasury’s last regular buyback program began in the early 2000s and ended in April 2002.
FOREIGN CURRENCIES – DOLLAR ROLLING OVER
Most currencies have been hitting two-month highs due to the coming dollar interest rate cuts and are close to upside breakouts.
Japanese yen collapsed to 160 and looking for lower lows.
Bank of Japan intervened with a $35 billion yen buy, dollar sell. Avoid (FXY).
Chinese Yuan remains weak. International trade is collapsing.
Declining exports, collapsing foreign investment, and minimal population growth = weaker Chinese economy.
Higher for long rates means higher for longer greenback (although a downturn in the $ is close).
ENERGY & COMMODITIES – CHEVRON WIN
Chevron's takeover of Hess for $53 billion goes through, creating the second-largest US oil major.
The approval clears one hurdle, but the deal still requires regulatory approval and must face a lengthy arbitration battle with Exxon and CNOOC, Hess’s partners in Guyana.
Buy (CVX) on dips.
Copper slide continues - down 7% in three days as the extent of Chinese speculation becomes clear.
The takeover battle for Anglo American continues with the company turning down the latest $49 billion offer from BHP.
While Anglo’s copper assets have long been coveted by rivals, its complicated corporate structure and unusual mix of commodities have largely deterred potential suitors until now.
(OXY) great buy for the long term.
PRECIOUS METALS – NEW HIGHS
Silver goes ballistic on Chinese speculation to $32.70/ounce heading for $50.
Gold follows by half to $2,460. It is targeting $3,000.
Solar panels are driving global silver demand.
Global investment in solar PV manufacturing more than doubled last year to around $80 billion.
Miners are expanding their operations and ramping up production as prices for the precious metal climb to decade highs.
Demand for silver from the makers of solar PV panels, particularly those in China is forecast to increase by almost 170% by 2030 to roughly 273 million ounces – or about one-fifth of total silver demand.
Buy (SLV) and (WPM) on dips. (GLD) is a great buy on dips – correlates with the price of gold.
REAL ESTATE – SOARING PRICES, FALLING SALES
New Home Sales tank in Aril is down 4.4% and 7.7% in March.
The median price of a new home was $433,500, 4% higher than it was in April 2023.
Builders say they cannot lower prices due to high costs for land, labor, and materials.
The big production builders have been buying down mortgage rates to help boost sales, as they are able to do that because of their size. Smaller ones can’t.
30-year fixed rate mortgage drops below 7.0%. The housing market is taking a step back in April after a strong performance in the first quarter.
Existing home sales fall, down for the second month in a row at -1.9% to 4.14 million rate in April.
The nascent recovery in demand from a 13-year low in October is being hindered by limited inventory which is keeping asking prices elevated.
TRADE SHEET:
Stocks – buy any dips.
Bonds – buy dips.
Commodities – buy dips.
Currencies – sell dollar rallies, buy currencies.
Precious Metals – buy dips.
Energy – buy dips.
Volatility – buy $12
Real Estate – buy dips.
NEXT STRATEGY WEBINAR
Wednesday, June 12 from Incline Village, Nevada.
QI CORNER
Cheers,
Jacquie