This Week in Barrons: 5.12.2024

Change is hard, and often misunderstood…

• Everybody makes Mistakes…  Last week, I made more than a few mistakes.  I overcooked a steak.  I wired a circuit incorrectly.  Financially, making a bad decision can profoundly impact your career.  But why do some people learn and build from their failures – while others don't?  Answer: It’s just math.  If you want to average-out something in finance, you simply do more of it.  The best way to learn how to turn failures into successes is to do MORE not LESS of what you’re doing.  Traders are good at finance because they’ve learned (the hard way) how to fix their mistakes.  So: trade small & often – because buying it back is just a commission away.
• You are your own Brand…   When people expect you to behave a certain way – you have a brand, and your brand includes your personality.  Understand your brand.  And if you modify your brand, tell your customers (friends ‘n family) first – before they become  concerned.
• Creativity does not understand ‘Success’ or ‘Failure’.  Is creative success the moment when your dreams match reality?  Nah.  Per Seth G: It’s not clear that creative success is even possible, because it probably is not the reason you’re doing the work.  The goal of creativity is to come out the other side – not success or failure.
• Old School Entrepreneurship is Back Baby…

o   #1 Define your Business Model? (How will you make money?)

o   #2 Flexibility comes first, and the Plan second.

o   #3 Lead with Organic Growth.

The Market:

• ChatGPT Search vs Google Search…  You know it’s coming.  A ChatGPT vs Google Search-Off would be AI boxing’s main event.  Everyone’s usable AI feature sets would be forced to take center-stage.  [Google, OpenAI is the competitor that you ‘never saw coming’.]
• Prediction markets say:

o   There’s only an 8% chance of a 2024 Recession.  Per Peter Lynch: “More money has been lost anticipating corrections, than during the corrections themselves.”

o   The 10-year rate has peaked.

o   Mega cap tech defensive names include: Google, Meta, and Nvidia.

• It’s just math … Apple announced a $110B stock buyback

o   Buffett announced that Apple will not be his largest position by EOY.

o   Apple’s free cash flow for 2024 is (coincidentally) … $110B.

o   Apple’s buyback is simply exit liquidity for W. Buffett.

• Bitcoin had its fourth 20% correction in 12 months == normal

o   Soon MS and UBS will be approving Bitcoin ETFs on their platform.

o   MS has the street-cred, and UBS is the largest asset manager in the world.

Click to see a free example trade…

InfoBits:

• May's consumer sentiment plunged…  now THAT loses elections. 
• Americans are going to Japan for the discounts.  The yen’s value has plummeted versus the US dollar, and our tourism has jumped 50% in 5 years.
• Chinese stocks had another strong week...  watch the FXI.
• Boeing admitted to falsifying records…  related to the inspection of its 787 Dreamliner planes.
• Disney reported a break-even streaming quarter…  right before they forecast a real slowdown in their theme park business. 
• TikTok is suing the U.S. Government…  for violating the First Amendment rights of millions of Americans.
• The FDIC’s sexual harassment culture…  has persisted despite legal actions and complaints.
• HBO’s “True Detective”, Netflix’s “What Jennifer Did”…  and the film “Late Night with the Devil” all have included images that have been created or altered using generative AI.
• Hackers breached DELL’s systems…  and stole data on 49m people.
• Alphabet is closing-in on acquiring HubSpot.
• Copper is used extensively in…  construction, electronics, and manufacturing – and is less than $0.40 away from all-time highs.
• Silver may not be as celebrated as gold…  but its superior thermal & electrical conductivity make it essential in electronics, solar panels, and batteries.  It is approaching 11-year highs.

Crypto-Bytes:

• Truflation estimates inflation…  over the last 3.5 years to be: ~25% (in Dollars).  If measured in Bitcoin – prices have actually come DOWN.
• The 2024 trend of Bitcoin has been…  for it to break lower and then recover back into the trading range.  These failed breakdowns tend to precede aggressive countertrend moves.
• If we see further bearishness in the dollar…  that will be a tailwind to get Bitcoin to new all-time highs.
• Gary Gensler (SEC head) believes crypto is a headache to all:  If the SEC moves forward and sues Robinhood, it would mark the agency’s seventh crypto lawsuit in three months.
• The SEC has 4X more actions against crypto companies.  Mr. Gensler be careful as ~15% of Americans own crypto and during election years – people vote with their pocket-books.
• Pricing the claims of FTX’s creditors in dollars (at bankruptcy) …  allows everyone to get their money back.  But when pricing the claims in the digital assets that they held (1 Bitcoin held then = 1 Bitcoin paid back now), FTX is only returning ~30% of the users’ funds.  [Here come the law suits.]
• Crypto options and futures data show…  traders have bought over $688m of the $100,000 Call option on Bitcoin (BTC).
• ~95% of the ETF investors HODL-ed…  during the last downturn.  Over time BTC ETF HODL-ers will display strong net growth coupled with strong hands.

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

• Monday:  Our FED is out there buying debt like a madman, so that the 10-Year comes down below 4.5%, and starts to relieve political pressure on the economy.  As long as rates keep dropping, investors will consider this a risk off atmosphere and buy stocks.  To get a good entry level price on a stock consider:

-       Most stocks will open, then fade off, regroup, and then run higher.  

-       Mark that initial out-of-the-gate high.

-       Let it fade, and when it surpasses that out-of-the-gate high – buy it. 

Morgan’s Moments…

 Factually:

1.   The bitcoin network launched on January 3, 2009. In just over 15 years, the network has become the strongest computer network in the world. There are hundreds of millions of people who have exposure to bitcoin across the spot market, ETFs, and mining.

2.   The bitcoin network processed its 1-billionth transaction last week.

3.   If you hold at least one full bitcoin, then you are in the top 2% of all HODL-ers.

4.   The total market cap of stablecoins hit new all-time highs last week.

5.   Bitcoin’s 200-day moving average just hit a new all-time high.

• How do I have more personalized conversations using ChatGPT?

1.   A ChatGPT Pro account is needed.

2.   Click on your account name (bottom-left), select Settings, Personalization, and enable Memory.

3.   Teach ChatGPT to remember specific details by explicitly stating them in the chat, e.g., “Remember that I am vegetarian when you recommend a recipe.”

4.   Manage your memories by clicking the “Manage” button located in the Memory section to view, edit, or delete specific memories.

5.   That’s it! You can now have more personalized conversations across all of your conversations

Next Week:  Will Bad News = Bad Market News?

• Bkgd:  This market sucks.  If you love when stocks move and nothing makes sense – then last week was for you.  Markets require 2-sided trading and last week we had none.  We either went straight up or down, on no volume, with a volatility vacuum.  This was the fifth time in the past six weeks that the S&Ps breached their Expected Move.  Maybe we’re closer to having Bad Economic News = Bad Market News?
• Complacency returns...  When markets wander aimlessly to the upside, volatility falls because volatility (VIX) is dependent upon people buying Put options.  When markets are climbing higher, nobody is buying Puts – therefore volatility is removed from markets and Expected Moves are compressed.
• Expected Moves and Volatility are too low…. Next week’s Expected Move is $67, and we learn the latest CPI (consumer inflation) print.  We’ve seen markets move more than 67 SPX points in 1-day based upon an out-sized CPI print; therefore, to say $67 is low is an understatement.  Tip #1: You’re not getting paid enough to SELL short-dated options when the VIX is this low and markets are this active. 
• Financials to the Rescue…  which had an upside 2 standard deviation move last week.  I’m dumbfounded by this move.  Interest rates came down – which hurts financials.  Credit card debt is out-of-control, and consumer confidence is moving drastically lower – both go against the financials.  So, who is buying JPM and Wells Fargo (WFC) under those conditions? 
• Bonds rallied, and the Dollar fell…  but both remain within a stone’s throw of all-time-lows and all-time-highs respectively.  Companies continue to come out with lower-than-expected earnings guidance for the quarters to come.  That could mean that we’re closer to having Bad Economic News == Bad Market News.  We will learn more this week when the CPI report comes out.
• We’re in the Mean-Reversion Business…  and currently, Latin America is the poster-child.  All of the below charts look the same from lower left to upper right – and are worthy of a look:

-       Tip #2: BVN … above $17 … looking for a double

-       Tip #3: GGAL… Grupo Finaciero Gal … above $37,

-       ARGT = Argentina, EPY = Peru, GXG = Columbia, AND

-       FXI = the Chinese Large-Cap ETF… all moving in the right direction.

• SPX Expected Move (EM):

-       Last Week … $62 EM and we moved ~$100.

-       Next Week … $67 EM – which is ridiculously low as we had single trading sessions last week with that kind of price action.

TIPS:

 HODL’s: (Hold On for Dear Life)

-       13 to 17-Week Treasuries @ 5.4%

-       Physical Commodities = Gold @ $2,366/oz. & Silver @ $28.3/oz.

-       **Bitcoin (BTC = $61,100 / in at $4,310)

-       **Ethereum (ETH = 2,930 / in at $310)

-       **ChainLink (LINK = $13.5 / in at $7.78)       

-       **IBIT – Blackrock’s BTC ETF ($34.5 / in at $24)

-       INDA – India ETF ($51.3 / in at $50)

o   BOT Nov, +$53 / -$55 CALL Spread

-       LUNR – Intuitive Machines: ($5.7 / in @ $6.40)

o   SOLD: May $7 and June $7.50 Covered Calls

-       **MARA – Marathon Digital = ($17.1 / in at $12)

o   Sold Sept $30 Covered Calls

-       **RIOT – Riot Bitcoin Mining ($9.2 / in at $12.5)   

o   Sold Sept $20 Covered Calls

-       Various Bullish Option Plays:

o   GLDJ – Gold Junior Miners: June = BOT $41 Calls

§  Now @ $3.50 – in @ $3.60

o   MARA – Marathon Digital: Jan. = BOT $25 / SOLD $50

§  Now @ $2.32 – in @ $3.50

o   Tip #4 == Buy ADI Dec. $240 Calls for under $7

o   Tip #5 == Buy RKT Sept. $15 Calls for under $1.30

o   Tip #6 == Buy DJT Nov. +$50 / -$100 Call Spread under $5

** 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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