This Week in Barrons: 5.19.2024

Get ready for your Market Volatility Cocktail - shakin' not stirred.

• Roaring Kitty… ?Few words mark the rallying cry of meme traders quite like: Roaring Kitty. ?Last week, Keith Gill (aka ‘Roaring Kitty’ – the Internet’s Warren Buffett), tweeted?a doodle of a man leaning forward in a chair holding a gaming controller.? The post included zero words, but an army of Redditors and meme-stock enthusiasts knew exactly what it meant: the WallStreetBets man was back.? When Monday’s markets closed: GameStop (GME) had soared 74% (moving another +30% after-hours), and GME filed for a secondary stock offering days later.? [The power of Financial Nihilism... Travis King]
• The unexpected smile…? When someone is nice to you – we often say ‘thank you’ and smile.? But when things go unexpectedly wrong, it’s important (and memorable) to also greet people with warmth and forgiveness.? When it’s the most difficult to be kind – that’s when it matters the most.
• Welcome complaints…? because if they go unheard – we have no way to improve.? Per Seth G: Doctors need to remember that their goal is NOT to minimize complaints or improve their own satisfaction score – but rather to improve the health of the patients.? Complaints are clues about existing problems, and solving problems is our job – yes?
• Entrepreneurship 101:

-?????? What is your Customer Acquisition cost?

-?????? What is your Customer Retention cost?

-?????? What is your Total Cost of Ownership of that customer?

-?????? What are your Customer Scaling costs?

?

The Market:

• Sell in May - Not this year:

-?????? 16 of the last 18 Pres. Election Years – we’ve moved higher from June - August.

-?????? B of A says: June - August is the strongest period of a Pres. Election Year – with an avg. gain of 7.3%.?

-?????? This year, the juice of: Selling in May… ?may not be worth the squeeze.

• The ‘Immaculate (dis-inflation) Reception’ is back…? and globally everyone heard our FED’s sigh-of-relief.? Wednesday, year-over-year CPI inflation moved lower, and all 3 major indexes closed at all-time highs. ?We only moved one-tenth lower, but investors fixated on the price-easing / soft-landing scenario.? Rate cut expectations have put a new floor under the market (the FED ‘Put’) – and that should buoy stocks going forward.
• Have ‘my bot’ talk to ‘your bot’…? OpenAI announced GPT-4o on Monday. ?The demos included: (a) real-time language translation, (b) users speaking to machines, (c) the AI model using both photo and video inputs, and (d) GPT-4o speaking between bots to accomplish tasks.? Being able to speak directly to a machine, will have profound implications on productivity. ?Watching these 2 minutes of?two bots talking to each other to resolve a customer service scenario – completely changed Customer Retention economics for me. ?The use cases people will invent when ‘my bot’ can talk to ‘your bot’ – will be incredible.? I’m wondering if anyone has thought thru how bots will interact with money? ?Will they pay each other when appropriate?? There isn’t a bank account or payment processing infrastructure available in the legacy financial world to handle this type of transaction.? Tip #1: This is where AI, bots, stablecoins, digital wallets, and bitcoin ALL come to play together. ?

?

To Sign up with 1-Click ... Click Here...

InfoBits:

• OpenAI?announced a new LLM called?GPT-4o… ?that can?handle text, speech, and video, including responding with voice answers in?“a range of different emotive styles”
• “In the next 2 years, AI?is likely to impact 60% of jobs in advanced economies… ?and 40% of all jobs globally.”… IMF Director
• Google announced their text-to-video Veo model…? that generates 1-minute 1080p videos directly from text, image and video prompts.
• Credit card debt is expanding:

1.?? Credit card balances are 13% higher than one year ago?

2.?? ~9% of credit card balances moved into delinquency status in Q1.

3.?? 20% of all Americans have maxed out their credit cards in Q1

4.?? We have not seen levels like these since the Great Recession.

• High student loan interest rates can cause college dis-interest…? as the U.S. raised student loan interest rates to 6.5% - the highest in +10 yrs.
• Get used to WFH…? as only 31% of companies (down from ~50% last yr.) are requiring full-time, in-office work.
• David Tepper’s Appaloosa fund added… ?beaten-down Chinese stocks?to the portfolio.? Tip #2: His #1 Chinese holding = Alibaba (BABA).? China is exhibiting all of the features of a new bull market.?

1.?? Pessimism is entrenched.

2.?? Monthly and Weekly trend signals turned higher in Q1.

3.?? Chinese valuations are extremely depressed.

4.?? Breadth has been extremely strong.?

5.?? China’s macro and policy economics are falling into place.

?

Crypto-Bytes:

• Republicans have embraced Crypto.? Dems have a shot if they can:

o?? Pass stablecoin regulations.

o?? Create a self-regulatory org. that would enact common sense regulations.

o?? Mandate the Dept. of Defense (which cannot account for +$1T) to put all payments to vendors on-chain.

• Wisconsin is the first U.S. state to dive into the Bitcoin market…? as their investment board purchased $161m worth of Bitcoin ETFs.? [Expect the ‘heard’ mentality to emerge among other State funds.]
• The SEC will be denying VanEck’s application… ?for an Ether Spot ETF on May 23.? The template for approval is Bitcoin’s: (a) since a futures-based Ether ETF has already been approved, (b) the SEC will face a legal challenge, and (c) the SEC will lose by EOY.
• Oklahoma signed a bill creating a legal framework… ?for blockchain and digital assets. ?The move positions Oklahoma as a hub for U.S. digital innovation.?
• Circle, the issuer of USDC, is planning to redomicile in the US. ?The company filed paperwork for a U.S. IPO, indicating a traditional approach to going public.
• Per Howard L: ??Go ahead and create your own ‘memecoin’ on Solana… ?using?Pump.fun. ?It’s exploding in popularity and the applications for community building, membership benefits, and culture are endless.

?

To Sign-up with 1-Click ... Click Here…

?

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

• Wednesday:? This week the?BLS (Bureau of Labor & Statistics) removed coffee from the CPI inflation index calculation. ?Coffee prices have gained +35% YTD, and if your price rises too much – they yank you out of the CPI.? So, the headline CPI came in +0.3%, one tenth cooler than last month’s reading.? Instantly the markets rejoiced.? Did I miss something?? Are prices coming down?? I didn't think so.
• Friday:? With silver over $31 and gold over $2,400, the metals are putting on a show here today.? There's some speculation that China is behind gold ‘n silver’s staying power.? Something to watch for next week is SDRL. ?It's trying to get past April’s resistance, and if it gets through – it could run.? The big excitement is still over AI and NVDA’s earnings next Wednesday.? They will be good, and the market will go crazy over them because:

1.?? Stocks and sentiment are making new all-time highs – together.

2.?? Institutional investors are becoming bullish.

3.?? There are multiple echoes of a potential 2021 hyper-bull.

4.?? Lackluster earnings for non-tech highlight rotation potential – back into tech.

5.?? A similar split with lackluster global earnings – portends a shift back into US stocks.

?

Morgan’s Moments…

-?????? #1:? CME Commercial hedgers have turned into net buyers… ?Commercial hedgers have predicted the Bitcoin trade for the past several years. ?They were long the entire way up and flipped net short at its most recent top.

-?????? #2: While Bitcoin has stalled… ?equity markets are trading at new highs.? Bitcoin is far more likely to catch up to a strong equity tape as opposed to equities moving lower to Bitcoin.

-?????? #3: Short-term holders are realizing on-chain losses…? These brief periods of loss realization in bull markets occur near market lows.

• Cool stuff:

-?????? Google VideoFX?- Generate photorealistic video powered by new model Veo

-?????? Chatling.ai – Generates business chat bots ‘for free’.

• Crypto Tips:

-?????? Tip #3: Watch for Solana (SOL) to outperform Ether (ETH) in Q3 / Q4.

-?????? Meme Tip #4: PEPE long above its former high of 0.00001.

?

Next Week could Re-define Our Markets…

• Background:? The week was boring until the CPI print hit and we ended the week outside of the Expected Move to the upside.? I’m bothered by some wild, defensive trades that could rock markets for some time to come.
• NVDA’s earnings are on Wednesday… ?and THAT will be a defining moment for the AI trade.? NVDA is a $2.3T company, that is still growing at the rate of +92% YTD.? Nothing is growing like NVDA: Apple = flat YTD, AMZN +23%, GOOGL +27%, and META +36% YTD.? NVDA’s expected move around their earnings announcement is $90, and yes that will move markets.? Tip #5: I will be putting on a NVDA trade to the upside – thinking that their earnings will exceed expectations.????
• Gold ‘n Silver…? The moves in the metals since February have been astonishing.? Now, unquestionably the rise in metals was accompanied by a horrendous fall in the U.S. Dollar and some short squeezes.? But when you look at the volume of trade, a ton of professional investors are taking on some serious defensive positions in both metals and utilities.? Utilities have breached the upper edge of their expected move for the last 5 consecutive weeks. ?Why are investors moving into a ‘duck-n-cover’ position?
• Bonds…? have been rallying these past couple of weeks, and after the FOMC minutes are released on Wednesday – I’m looking for a pullback in bonds and a corresponding move higher in interest rates.
• Volatility Cocktail (shaken not stirred) … ?If you combine: (a) defensive plays like metals and utilities moving higher, with (b) NVDA’s earnings moving the entire AI trade this coming week, along with (c) the VIX (Volatility Index) being at its second lowest level in the past 3 years – you have a recipe for a Volatility Cocktail.? Remember, a Volatility Cocktail has low volatility as one of the ingredients.
• Do not be a Volatility Starved animal…? Do not force your trades.? Tip #6: Financial Nihilism is not the path to increased wealth.? Right now, markets are not paying you for selling options; therefore, do NOT sell short-dated options.
• SPX Expected Move (EM):

-?????? Last Week: $67?(5-day EM) and we moved $90.? 4 out of the last 5 weeks we have breached our EM.?

-?????? Next Week: $55?(5-day EM).? NVDA and the metals will move this market more than $55.? Please be careful.

?

TIPS:

HODL’s: (Hold On for Dear Life)

-?????? 13 to 17-Week Treasuries @ 5.4%

-?????? Physical Commodities = Gold @ $2,420/oz. & Silver @ $31.3/oz.

-?????? **Bitcoin (BTC = $66,980 / in at $4,310)

-?????? **Ethereum (ETH = 3,080 / in at $310)

-?????? **ChainLink (LINK = $16.5 / in at $7.78)???????

-?????? **IBIT – Blackrock’s Spot Bitcoin ETF ($38.28 / in at $24)

-?????? ARGT – Argentina Index ($64 / in @ $58)

-?????? EPU – Peruvian Index ($44 / in @ $42)

-?????? GGAL – Grupo Financier ($34 / in @ 30)

-?????? INDA – India ETF ($52.97 / in at $50) / BOT Nov, +$53 / -$55 Call Sp.

-?????? LUNR – Intuitive Machines: ($5.14 / in @ $6.40) / SOLD: June Cov-Calls

-?????? **MARA – Marathon Digital = ($19.5 / in at $12) / Sold Sept $30 Cov-Calls

-?????? **RIOT – Riot Bitcoin Mining ($10.18 / in at $12.5) / Sold Sept $20 Cov-Calls

-?????? TGB – Gold Miner == $3.30 / in at $2.58

-?????? HROW – Healthcare == $16.76 / in at $12

?

-?????? Various Option Plays:

o?? ADI -???? Dec. BOT $240 Calls / ($9.70 – in @ $7.68)

o?? CF – CF Serv: Sept. = BOT $80 / $85 Call Sp. / ($1.80 – in @ $1.50)

o?? GLDJ – Gold Jr. Miners: June = BOT $41 Calls / ($5.80 – in @ $3.60)

o?? MARA – Marathon Digi: Jan. = BOT $25 / $50 Call Sp. / ($3.05 – in @ $3.50)

?

-?????? Recent Option Plays:

o?? ASC – ASC Shipping: Oct: = BOT $25 Calls

o?? AZN – Astro Zeneca: Jan: BOT $85 Calls

o?? IAM – I Am Gold: Jan: 2026 BOT $4.50 Calls

o?? RKT – Rocket Mortgage: Sept. BOT $15 Calls

o?? XLU – Utilities ETF: June: BOT $73 / $71 Put Spread?

** Crypto-Currency aware

Follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.

Please be safe out there!

?

Disclaimer:

Expressed thoughts offered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews.??You can learn more and get your subscription by visiting: <https://rfcfinancialnews.blogspot.com/>.

Please write to Mr. Culbertson at: <[email protected]> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <https://rfcfinancialnews.blogspot.com/>.

If you'd like to view R.F.'s actual stock trades - and see more of his thoughts - please feel free to sign up as a StockTwits follower -??"taylorpamm" is the handle.

If you'd like to see R.F. in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:

https://www.youtube.com/watch?v=K2Z9I_6ciH0??

Creativity = https://youtu.be/n2QiPSe_dKk??

Investing =?https://youtu.be/zIIlk6DlSOM

Marketing?=?https://youtu.be/p0wWGdOfYXI

Sales?=?https://youtu.be/blKw0zb6SZk

Startup Incinerator = https://youtu.be/ieR6vzCFldI

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.??Mr. Culbertson and related parties are not registered and licensed brokers.??This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.??Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <https://rfcfinancialnews.blogspot.com/>? Until next week – be safe. R.F. Culbertson

<mailto:[email protected]>

https://rfcfinancialnews.blogspot.com