This Week in Barrons: 12.22.2024

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• A Quickie ‘Gen-Z’ dictionary … per The Free Press:

  - Aura:     a transcendental sense of cool,

  - Clapback: a well-placed quip in response to an insult,

  - Cooking:         dominating, succeeding,

  - Cooked:          doomed,

  - Fit check: the act of appreciating one’s outfit,

  - For real:          relatable, true,

  - High-key: intense, undisguised,

  - Rizz:      short for charisma,

  - Salty:     upset, in a jealous way,

  - Slap:      excellent, hard-hitting,

  - Slay:      to succeed,

• In 2025, avoid Mediocre Tools … BAD tools are dangerous.  They not only endanger our safety, but also undermine our work.  The good news is: bad tools are easy to notice and avoid, because they reveal themselves every time we use them. Per Seth Godin: GREAT tools are magical.  They multiply our effort, amplify our quality, and delight us – all at once.  It’s the MEDIOCRE tools that we need to remove from our toolbox.  They steal our time by forcing us to work harder on parts that don’t matter.

• Wednesday showed us one of the worst declines in years … ahead of key GDP data and another PCE inflation reading.  Stocks finished sharply lower after our FED lowered its policy rate by 25-bps to the 4.25%-4.50% range.  Our FED also said that they now project just two 25-bps rate reductions by the end of 2025 – which is 50-bps less in policy easing than officials anticipated.  Also FED inflation projections for Year 1 of DJT’s administration jumped from 2.1% to 2.5%.  It was the combo of fewer rate cuts and higher inflation that was too much for markets to handle.

• The Mag-7 moves to ‘BATMMAAN’ = 8 Stocks: Broadcom, Apple, Tesla, Microsoft, Meta, Amazon, Alphabet, and Nvidia.  They are at the Epi-Center of this market:

• Macy's announced it will close 65 stores by the end of 2024.  Party City (with its 850 stores) is considering filing for bankruptcy.  And Dollar Tree has shuttered 670 of its underperforming Family Dollar stores so far.

• Softbank CEO Masayoshi Son is promising to invest at least $100B…  in American-based projects – creating 100,000+ jobs in tech over 4 years.

• Tesla bulls forecast a $2T boom under Trump 2.0 … Dan Ives believes that: “Tesla is the most undervalued AI play on the market, and could hit $650/share.”

• OpenAI expands ChatGPT Search to all users … They’ve made it faster, and allowed it to be set as the default search-engine for any browser.

• Nissan and Honda are exploring a merger.

• Netflix’s: Squid Game: Season 2 … will be here in a week.

• A TikTok / Supreme Court cliffhanger … will begin on Jan. 10 with the highest court hearing oral arguments on TikTok’s appeal of the ban-or-sell law.  [I wonder if those arguments will be broadcast as TikTok’s?]

• The EPA announced that it will allow California to … ban most sales of new gas- and diesel-powered cars and light trucks starting in 2035.

• Amazon delayed its full-time RTO (return-to-office) … because it doesn’t have enough office space.

• The DOJ is accusing CVS of … knowingly filling thousands of prescriptions from “pill mills,” and wrongfully seeking in-kind federal reimbursement. 

•  Investors all over the world are about to gain bitcoin exposure … The Nasdaq announced that MicroStrategy will join the QQQ’s.  That’s basically saying that Bitcoin (BTC) is joining the Q’s …. Yeouza!

• BTC touched $108K … and had its longest winning streak since 2021. MSTR’s recent join of the NASDAQ 100 index – is powerful mojo for bitcoin. 

• One of the best investing strategies with bitcoin … is to get very good at doing nothing for long periods of time.

Things I Read… I use Altucher’s Investment Network to sharpen my reserve … R.F. Culbertson

The $100 Trillion Opportunity in AI?

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• Wednesday:  We’ve had 12 consecutive negative sessions in the S&Ps, and the worst advance-decline stats since 1996.  Our FED cut rates by just 25bps and signaled fewerreductions ahead.  The market reacted sharply with not just a ‘dip’ – but a wake-up call.  The VIX is over 20 and the nosebleed section of tech is setting up for a shift.  Potentially J. Powell could be flipping-the-script on bonds.

• This Week we saw… record withdrawals from Bitcoin ETFs amid a broader market selloff.  It was the largest outflow since spot Bitcoin ETFs were approved, and could signal a meaningful change in risk appetite.  Whether this is the start of a negative trend remains to be seen – but the move definitely caught my attention!

• Is it too late to buy Bitcoin?   Per Anthony Pompliano: Buying bitcoin comes down to three elements: time, size, and education. 

  - Timing: How long do you plan on holding the asset?  If you want to buy bitcoin to sell at a profit next week – then I have no clue whether you should buy or sell.    But if you’re holding bitcoin for 2 years or longer, then the odds are in your favor that bitcoin’s price will be higher in the future.  Time in the market is more important than timing the market. 

  - Sizing: Position sizing is a personal decision based upon: your net worth, annual income, future expenses, and your risk appetite.  I don’t know the right amount of bitcoin for your portfolio, but I can tell you: Zero is the wrong answer. 

  - Education: Do you understand what you’re buying?  If you have taken the time to understand bitcoin, then you are more likely to hold through any market volatility.  But if you are buying bitcoin to ‘get-rich-quick’, then you will sell at the first sign of trouble and bitcoin is not for you.  You get out of bitcoin what you put into it. 

   

  There is no bad time to buy bitcoin if you: (a) have paid your dues and understand the asset, (b) are putting a small percentage of your portfolio into the asset, and (c) you plan on holding it for at least 2 years.  I can’t guarantee success, but I can dramatically increase the odds.  A new monetary asset (like bitcoin) only comes around every few hundred years.  History will be our guide, but I like our odds.

• The strength of Santa … moved the S&Ps ~200 points on Friday (from low to high), and ended on the lower edge of their Expected Move.  Last week was a complete circus as J. Powell did his best to talk the markets lower.

• Our FED, PCE, and Bond markets … Even though our FED cut rates by 25bps on Wednesday, the 10-Year ignored all of that noise and rallied to within 130bps of its 52-week high.  Our market’s actions tell me that they’re not buying what our FED is selling.  Friday’s lower than expected PCE inflation data combined with the market’s oversold position – were the catalysts to the rally. 

• Options Triple Witching does NOT disappoint … however what it uncovered was that big tech names like: MSFT, META, AVGO, AMZN, TSLA – did not participate in the rally.  Without big tech leading the charge, this market will need to rally behind financials and energy.

• Crushing Volatility … This week’s high in the VIX was ~28 and the VIX ended the week at ~18.  For the remainder of 2024, I do not believe that volatility will go quietly into this-good-night.  I believe that the transition between the 2 U.S. Presidents will NOT be smooth due to impending spending cuts and political in-fighting like we have not seen in the past 4 years. 

• Opportunities:

  o  Tip #1 == Silver (SLV):  Silver is a buy at ~$26, and I’m accumulating more physical and the SLV ETF as they move lower. 

  o Tip #2 == Bonds:  The last time bonds (/ZB) were down to $105 was 2007.  If you believe that interest rates will level off for a bit, think about: (a) a long position in bonds, (b) selling an April (/ZB) $105 Put spread, or (c) selling an April (TLT) $80 Put spread. 

  o  Tip #3 == Apple (AAPL):  If you believe that markets continue to drift lower, then Apple (which is closing at all-time-highs) is a prime candidate for a ‘short’ position or for buying a February in-the-money Put Spread.    

• SPX Expected Move (EM):

  o  Last Week’s EM was $75 and we hit the lower edge on the nose.

  o Next Week’s EM is $101 with only 3.5 trading days.  Tip #4: The options marketplace is telling us that next week will be 30% MORE VOLATILE than last week.  Buy more protection. 

• Per Callum Thomas:

  - The 4% selloff has a healthy correction vibe, and there are signs that our FED’s disappointment hangover may have worn off.  As far as corrections go, it was a small selloff, and a successful bounce off the 50-day moving average.  Going forward, stocks are looking at earnings challenges, while bonds are facing ample opportunities for an upside surprise.  In addition, CEO turnover is at all-time-highs, and diamond and fine wine prices are slumping. 

   

  HODL’s: (Hold-On for Dear Life)

  - ICSH == iShares Ultra Short-Term Bond Active ETF (6% yield)

  - Physical Commodities = Gold @ $2,640/oz. & Silver @ $30/oz.

  - Bitcoin (BTC = $97,248 / in at $4,310)

  - Ethereum (ETH = 3,338 / in at $310)

  - IBIT – Blackrock’s Spot Bitcoin ETF ($54.8 / in at $24)

  - ETHA – Blackrock’s Spot Ethereum ETF ($26 / in at $20)

  - GLD – Gold ETF ($242 / in at $212)

   

  Options for Income: **RIOT / MARA – 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 Alts: (Results for the last 30-days…)

  - ChainLink (LINK = $22.2 / in at $11.15)

  - Aave (AAVE = $299.1 / in at $155)

  - Doge (DOGE = $0.32 / in at $0.22)

  - Uniswap (UNI = $13.3 / in at $9.10)

   

  Please be safe out there!

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