This Week in Barrons: 11.17.2024

This Week in Barrons: November 17, 2024:

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• Seth Goldin says: “Take good notes.”  Facts are interesting, but they don’t trigger learning – stories do.  Stories change our understanding of the world.  Good teachers are storytellers, and storytellers are good teachers.  Use your notes not as recitations of facts, but as prompts to remind you of a story that you already understand.
• Dr. Robot-O at your service…

-       At Johns Hopkins University, the da Vinci Surgical System robot is learning and performing critical surgical tasks with human-level skill.

-       The system trained and learned on hundreds of surgical videos.

-       The system also showed unexpected adaptability, like automatically retrieving dropped needles – a skill that it wasn't explicitly programmed to perform.

• The Cure for FOMO … Dr. Phil Perlman

-       The key to curing FOMO is to move away from comparing yourself to others and towards comparing the new you to the old you.

-       Make this shift by taking up hobbies that promote competition with yourself – such as jogging, swimming and/or resistance training.

-       Set a series of goals for yourself.

-       Once you have spent a solid month working to improve – then you’ll realize that experiential learning is your new superpower. 

-       Congrats, you’ve made the shift away from focusing on the accomplishments of others.

The Market:

• Many are rethinking their approach to AR … because they’re seeing Meta's simpler smart glasses finding more of a product-market fit.  By starting with everyday glasses, companies could make AR more approachable and practical for regular users.
• Apple’s preparing to launch a wall-mounted smart-home tablet.  The device looks like an iPad, but can control: AC, appliances, lighting, host video calls, answer questions, and play music.  It comes with a front camera, built-in battery, and internal speakers.  Siri and Apple Intelligence are deeply integrated.
• Trump Trades:

1.   #1 = Crypto = IBIT, MSTR and ETHA.

then…

2.   Big Oil = XOM, VLO, & KMI,

3.   Big Banks = JPM, & GS, and

4.   Space = TSLA.

 [ Gain access to Decentraland here… ]

 InfoBits:

• Howard Lindzon wrote: “One thing we can learn from Elon Musk … is how to market your product.  Always be cheerleading, pitching and marketing.  And it helps if you own a bullhorn!”
• OpenAI will launch ‘Operator’ in January …  It’s a new AI tool that can actively control a web browser to complete real, multi-step process tasks with minimal human oversight – such a booking plane flights and/or transferring funds.  This marks a shift from increasing ‘knowledge’ (smarter chatbots) to ‘actions’ (saving time).
• Amazon is working on smart glasses … that help drivers slash last-mile delivery times.  The specs will improve productivity by guiding drivers with turn-by-turn directions via a screen on the lens. 
• President-elect Donald Trump announced that … Elon Musk will co-lead DOGE – the Department of Government Efficiency.  DOGE will provide: “advice and guidance from outside the Government; therefore, not requiring legislative approvals and/or funding. The goal is to cut $2T+ from the federal budget.”
• Alphabet's Waymo is making its driverless robotaxis available … to everyone in L.A. – as they now log +1m autonomous miles/week.
• Inflation can be solved regardless of how bad it is: “In under a year, Javier Milei reduced Argentina's inflation from 25% to under 3%.  This is what happens when you aggressively cut public sector spending.  Elon Musk will do the same to the U.S.”
• Inflation (both CPI & PPI) edged higher in October.
• Klarna filed for a U.S. IPO … just as Buy Now Pay Later preps for the holidays.    [FYI: The average credit card interest rate = 23%, and 11% of credit cards are in 90-day delinquency status – largest % since the financial crisis.]
• Charlie Bilello reported: “US National Debt has increased $850B in the last 3 months, and increased 56% in the past 5 years.  Our Government is borrowing from our future to spend money like drunken sailors today.” 

Crypto-Bytes:

• Bitcoin crossed $80,000 the first time … hitting an all-time high.  Fair warning: 4-years ago (during the 2020 bitcoin halving) bitcoin’s price increased 400% going from ~$15,000 in November to ~$60,000 in March, 2021.
• MicroStrategy just bought $2B+ worth of BTC … boosting its total holdings to $23B+.  During the past week, MSTR was up ~50%.
• Last week, Ethereum ETFs smashed their own inflow record.
• Eric Balchunas wrote: “The Bitcoin Industrial Complex (ETFs, MSTR, and COIN) saw $38B in trading volume in one day.  Blackrock’s IBIT did $4.5B in one week of inflows.”
• Wyoming’s Cynthia Lummis, has proposed … selling off a chunk of the Federal Reserve's gold stash to buy a million bitcoin for a national BTC reserve. 
• Following the latest Bitcoin reserve pitches …  Pennsylvania dropped its own bill to stack BTC in the state’s treasury.  They’re looking for diversification and a hedge against inflation – with a plan to let up to 10% of PA’s budget reside in BTC.
• 18 states filed a lawsuit against the SEC …  accusing it of constitutional overreach and meddling in state’s affairs.  The SEC’s approach is a “regulation by enforcement” crusade against crypto – crushing a state’s right to manage their own economy while overstepping federal boundaries.
• The SEC’s Chairman Gary Gensler gave … what sounded like a farewell speech at a conference last week.  Most expect Gensler to be replaced shortly by a crypto-friendlier regulatory head.      

[ Visit WebStreet - here… ]

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

• Monday:   Over the last 10 days, bitcoin has rocketed 30%, from $67,405 to ~$88,000.  On the other hand, gold moved lower by ~4%.  I find this curious given they are both competing forms of money, and the dollar has been strengthening as of late.  Bitcoin is under-valued vs GOLD (by 10X), and should continue its rise in price as its use cases for being a medium of exchange continue to improve.
• Friday:  The market pouted yesterday, when the PPI came in hot, and the Grand Poo-bah himself kicked the bulls in the groin by saying: “The FED doesn't need to be in a hurry to lower rates.  The economy is still strong, and October's disappointing jobs report was mostly due to hurricanes and labor strikes.”  Powell's hawkish tone dampened market enthusiasm and lowered trader’s expectations for a December rate cut.  So (a) we have inflation, (b) everybody’s selling our bonds, and (c) the equities market wants and needs more stimulus to keep going.  The market is beginning to think that the gravy train might be running out of fuel.

Morgan’s Moments…

• Morgan and Callum Thomas noticed:

-       The S&Ps are taking a breather after briefly hitting 6,000.

-       Numerous investor surveys have hit record, bullish highs.

-       Market sentiment is showing extreme confidence & complacency.

-       However, a new consumer confidence vibe is brewing.

  The market is digesting and correcting levels of extreme confidence, optimism, and bullish euphoria.  There are certainly a lot of minds that could change with the right nudge, but currently the mood of the market is bullish and the underlying trend is still up.

• Callum Thomas noticed:

1.   The largest 20 S&P companies in 1995 had an average time in business of 129 years.  Currently, that age has dropped to ~50 years.  Will this trend continue with more new and disruptive tech companies coming online?

2.   In 2018, 1,055 companies reported sales growth of +10%, but by 2023 only 35 of them were able to consistently record sales growth of at least 10% YoY across that 6-year period.  It’s easy to grow fast once, but hard to grow fast consistently.

Next Week: Is this Sell-Off Serious?

• The Advance / Decline line left heavy risk on the table … as many traders are leaning towards the door.  It’s a small door, and nobody is rushing out of it just yet.  On Thursday and Friday of last week, we had over ~60% decliners within the S&P 100.  It’s not something to panic about, but rather something to be aware of.  The good news is that the energy sector was flat, and the financials were higher on the week.
• Our Interest Rates have issues … as the 10-Year touched 4.5% last week.  We’ve moved from 3.6% to 4.5% (a 25% move higher in rates) since mid-September.  Consumers don’t care about the FED – when markets and banks are raising their credit card and mortgage rates.  The Dollar is skyrocketing while the EURO and other emerging market currencies are being decimated.  None of that is giving me a warm-n-fuzzy. 
• The VVIX is knocking on the 110 door – again …  so traders are putting their hedges back on.  If our bonds (/ZB) continue to move closer to the 114 region and rates continue to approach 4.5 to 5% - that will snap the back of this marketplace.   
• Can Nvidia save the day (again) for the Semi-Conductor Index (SMH) … with their earnings coming out on Wednesday (11/20)?   
• SPX Expected Move (EM):

-       Last Week’s EM = $82 … we actually moved ~$130 lower.

-       Next Week’s EM = $95 … which still seems rather low in my mind because of the bond market.

TIPS:

• Tip #1: An ASPI trade:

-       ASPI is trading for $7.27, and the April $9 Calls are paying $2.65. 

-       If you bought 1,000 shares of ASPI and sold the Covered Calls, you'd take in an immediate $2.65/share, which lowers your actual cost of to $4.62/share (a 36% return if it closes flat). 

-       If ASPI gets over $10 by April, you'd get another $2,730 in appreciation and get called away.

-       That would give you a total return of 50% over the next 5 months.  The only way this is a losing trade is if ASPI is under $4.62/share in April.

• Tips #2 - #5: In/Out Call-Spread Trades … where you’re buying a $2 wide, out-of-the-money January call spread:

1.   Look at BITO … BITO could go to $32.50 = also watch MARA and RIOT.

2.   Look at ARKK … You can Buy the Jan $60 and Sell the $62 for $0.55 cents.

• Tip #6: Dividend / Earnings Trading:

1.   Buy any dividend stock right before the dividend date and prior to earnings. 

2.   Use the dividend that you’re paid – to buy a PUT on that stock.

3.   Now (with your downside covered for free) – hope for a good earnings call.

• HODL’s: (Hold-On for Dear Life)

-      13 to 17-Week Treasuries @ 4.65%

-      ICSH == iShares Ultra Short-Term Bond Active ETF

-      Physical Commodities = Gold @ $2,567/oz. & Silver @ $30.3/oz.

-      Bitcoin (BTC = $90,700 / in at $4,310)

-      Ethereum (ETH = 3,130 / in at $310)

-      HROW – Harrow Health = $39 / in at $12

-      IBIT – Blackrock’s Spot Bitcoin ETF ($52.1 / in at $24)

-      ETHA – Blackrock’s Spot Ethereum ETF ($23.3 / in at $20)

-      GLD – Gold ETF ($236 / 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 Plays == BTC, ETH, LINK, UNI, AAVE & DOGE.

Please be safe out there!

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