This Week in Barrons: 8.25.2024

• It doesn’t matter how hard you try… ?you can’t change the direction of the wind. ?But that doesn’t mean you can’t get good at sailing and navigation.? Per Seth G: We can try and change the conditions in our household, community, and/or workplace. ?It might feel at times like we’re battling the wind, but the difference is – we contribute to each of their causes and can influence their outcomes.? That doesn’t make it easy or fast. ?But, knowing that it’s possible is the first step.? Otherwise, we all need to improve our sailing and navigation skills.
• Aren’t the words: ‘sponsored results’ an oxymoron?? We’ve been hooked on free media for a century. ?Newspapers and network TV evolved to be extremely clear about what is content, and what is an ad. ?The internet, by hyper-competing for the last penny – produced a pay-to-play grey area called: ‘sponsored results.’? On any search, the ‘sponsored results’ are displayed before the ‘real results.’? In the world of money vs trust, if they’re ‘sponsored results’ – doesn’t that mean they’re not results at all?
• A?simple 5-second break is amazingly effective…? when it comes to reducing negative emotions and diffusing arguments.

The Market:

• In the S&P 500, Amazon, Alphabet, Nvidia, Microsoft, and Apple…? have accounted for a record 29% of the index’s market cap.? However, market bears have increasingly gone underground as market concentration has narrowed.? The Mag-7 have doubled the returns of the S&P over the past year.? Virtually every Wall Street firm is telling their clients not to miss the ride to the top.? And with ~20% earnings growth over the next six quarters, there’s certainly a compelling risk-reward outlook for global tech.
• Remember when: Elon Musk?borrowed $13B from Morgan Stanley, B of A, and 5 other major banks to help finance its $44B acquisition of Twitter / X.? This could be the worst banking merger-finance deal since the 2008 financial crisis.? Why?? When banks lend money for takeovers, they usually sell that debt on to others, earning fees on the transaction.? That hasn’t been possible since X’s revenues have fallen by -45%, and the company is currently valued at only $19B.? Holding $13B in loans on a $19B company without a negotiated interest rate and repayment schedule – seems like a costly mistake to me.?

[ Learn about Bullseye Trades here… ]

InfoBits:

• A federal judge temporarily blocked?the launch of Venu Sports… ?on antitrust grounds. ?Venu Sports is a joint venture between: Disney's ESPN, Fox, and Warner Bros. that will charge subscribers $43/mo. for access to 15 live sports channels.
• 10% of all U.S. homes are worth $1m or more.
• If you’re invested in Berkshire Hathaway, you own…? $300B in railroads, energy & insurance – and $277B in cash and patience.
• This week the BLS downwardly revised job growth…? for the April 2023-March 2024 period by 818,000 jobs.? So, all of the monthly Jobs Reports that ‘beat estimates’ are now misses – and our job market is in far worse shape than the admin. would previously admit to us.
• For the first time, a 400-ounce bar of gold is worth over $1 million.?? Gold is starting to showcase its superiority over the U.S. Dollar.?
• Both political parties are calling for a $5k+ child tax credit…? as the U.S. birth rate plummets.
• The Mag-7 have added over $1.4T?in market cap… since August 5. While the rally as a whole has broadened out, the household names are still pulling their weight.
• Lowe’s missed earnings…? when people are uneasy about the economy, they tend to spend less on unnecessary upgrades.? Home improvement and repairs will fall about -7% YoY.
• Starbucks’?incoming CEO is getting a major work perk… ?the ability to work from their home office in Newport Beach, California – rather than move into the corporate HQ in Seattle, Washington.
• Starbucks’ CEO is not the only exec with relocation perks…? Victoria’s Secret’s new boss can also work from her home office in New York rather than in the company’s main office in Columbus, Ohio.?
• Healthcare costs will jump by 9% next year…? up from this year’s 6% hike. ?That will push the healthcare cost per employee to more than $16,000/yr.
• Amazon is letting sellers issue refunds without returning products…? as an estimated 20% of online purchases are returned.
• BMW sold more EVs than Tesla… for the first time in Europe last month.? [Elon – there may be something to that ‘marketing/sales’ stuff.]
• Inflation expectations in the U.S. (2.4%)…? UK (3.2%), and Europe (2.1%) dropped to their lowest levels since 2022.
• Salesforce introduces their Einstein Sales Agent…? that 24/7 engages with inbound leads to answer questions, handles stalls-n-objections, and books meetings.
• Uber and GM’s autonomous driving unit Cruise…? are now partners.
• On September 10, Apple will unveil…? new?iPhones, watches and AirPods.

Crypto-Bytes:

• The SEC rejected filings for Solana’s ETFs…? making their approval under the current administration highly unlikely.
• Binance (BNB) blocked $2.4B in potential fraud in 2024…? ?protecting over 1.2m users.
• A “Crypto4Harris” town hall…? is shaking up HODLers, VCs and developers now that the Harris campaign brought on an ex-Binance adviser, and Dem. Sen. Chuck Schumer said pro-crypto legislation could be signed into law this year.
• Bitcoin ETF inflows have dropped since early August…? Mt. Gox recently moved 12,000 BTC, but analysts suggest creditors are HODLing their Bitcoin. ?And rumors of a gov’t BTC sell-off are simply transfers in custody.
• Bitcoin is currently trapped in a descending channel…? and may need whales to step in and spark an anticipated Q4 rally.

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

• Tuesday:? You know it’s a slow news day when I start wondering whether the S&P green streak is going to end.? Our current 8-day stretch is the 4th longest in 30 years.
• Wednesday:? Today the BLS revised the Jobs numbers down by -818,000 jobs from their original reports. ?Subtracting 818,000 jobs is eliminating ~25% of the total 2.9m jobs the government said we added.? Unfortunately, our FED is making monetary policy decisions based on this data; therefore, they could be (once again) behind the curve in their decision-making.
• Friday:? Our FED will cut interest rates in September.? To quote J. Powell on our labor market: “It’s unlikely that the labor market will be a source of elevated inflationary pressures anytime soon.? We will support a strong labor market as we make further progress toward price stability.”?

Morgan’s Moments… ?

• Above is the ratio of the Bitcoin Miners ETF (WGMI) relative to the price of Bitcoin for 2024.? When this line is moving higher, it means that Bitcoin mining stocks are outperforming Bitcoin.? This suggests that the miners are positioned to outperform Bitcoin as Bitcoin moves higher over the coming months.? I stepped into RIOT & MARA last week – betting on an upside resolution in price in the coming weeks.
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Next Week: Echoes of Volatility…

• Bkgd:? Tech stocks face a key technical test this week - $20k for the NASDAQ 100.? Global stocks are breaking out – thanks to the weaker U.S. Dollar. ?A FED pivot is underway – away from interest rates and refocusing on unemployment.? September is the season for higher volatility. ?And, all eyes are on NVDA’s earnings (8/28) and the upcoming PCE report (8/30).?
• The Volatility effects…? continue to haunt traders. ?The VVIX is still around 110, and this is not what market movements should look like when you’re within a couple percent of all-time-highs.? Tip #1: Fair Warning: be prepared for over-sized moves because marketplace liquidity is thin. ?
• It’s no longer about the FED cutting rates…? There’s a 63% chance of a 25bps cut in September, and a 37% chance of a 50bps cut. ?Fair warning, history shows us that when our FED starts to cut, markets also start to move lower.
• Bonds appear ready for a breakout…? as rates go lower – they will pierce the 125 level on the /ZB (30-Year Treasury).? Tip #2: Any pullbacks in bonds are buyable.
• The U.S. Dollar is collapsing…? and is almost under 100.? We haven’t seen action like this in the past 3 years.? The trade here is not in the Dollar, but rather Silver (SLV) and potentially Bitcoin (BTC).? Tip #3: Let Silver (SLV) pull back to ~$26 then buy it and/or just buy Bitcoin (BTC).
• Any upcoming negative economic data…? will be NEGATIVE for the marketplace - for the first time in 15 years.? That explains (along with seasonality) the consistently high volatility that we’re seeing. ??
• The ripple effects of NVDA’s earnings… ?Nvidia is setting up for an 8 to 13% move on Thursday morning.? Be prepared that a move of that magnitude on a $3T company – will ripple into the NASDAQ and the S&Ps.?
• SPX Expected Move (EM):

-?????? Last Week: EM = $74 and we hit it on-the-nose @ $75.

-?????? Next Week: EM = $81 and we have NVDA earnings and PCE data.??

TIPS:

• HODL’s: (Hold On for Dear Life)

-????? 13 to 17-Week Treasuries @ 5.04%

-????? Physical Commodities = Gold @ $2,546/oz. & Silver @ $29.8/oz.

-????? **Bitcoin (BTC = $63,500 / in at $4,310)

-????? **Ethereum (ETH = 2,730 / in at $310)

-????? HROW – Harrow Health = $42.9 / in at $12 = ~Doubled on Aug 8th earnings

-????? **MARA – Marathon Digital = ($18.6 / in at $12)

o? Weekly: BUY Puts for protection & SELL Covered-Calls for income

-????? INDA – India ETF ($57 / in at $50)

-????? **IBIT – Blackrock’s Spot Bitcoin ETF ($36 / in at $24)

-????? **RIOT – Riot Bitcoin Mining ($8.3 / in at $12.5)

o? Weekly: BUY Puts for protection & SELL Covered-Calls for income

?

Options Plays:

-????? +TLT ($97.4) – Bonds: Jan ’26: +$110 / -$130 CALL Spread – hedge

-????? +SPY ($554) – S&Ps: Jan ’25: +$520 / -$500 PUT Spread – hedge

-????? +SPY ($554) – S&Ps: Jan ’25: +$500 PUT – hedge

-?????? +WEC????? ($92)??????? – Wisconsin Power: Oct ’24: +$95 / -$100 Call Spread - hedge

-?????? +GLD?????? ($232)?????? – Gold ETF: Oct ’24: +$245 / -$250 Call Spread – hedge ?

-?????? +XLU ($75)????? – Utilities ETF: Jan ’25: +$80 / -$85 Call Spread – hedge

** Crypto-Currency aware

Please be safe out there!

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