This Week in Barrons: 12.8.2024

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• Hard Work vs Talent:  Talent searches have rejected each of the following musicians: Christina Aguilera, Justin Timberlake, Usher, Alanis Morissette, and Beyonce – and picked someone else to win their various competition(s).  Per Seth Godin, you could argue that the judges were simply incompetent, it wasn’t your time, OR just maybe – getting rejected is part of the process that develops your skill-set and hones your craft.  Maybe the winner is someone who persisted long enough, discovered the right timing, and combined skill and luck in a way that others now celebrate.  Persistence, skill, luck, and timing – are then the winning combination.

• A Yale study found that people live 7.5 years longer … when they have more positive beliefs toward aging – compared to those who associate getting older with disease and decline.

• How do you keep your brand relevant, desirable, and future proof … fully knowing that:

  - Clicks are not a substitute for purchases.

  - Awareness is not desire.

  - Gimmicks are not marketing.

  - Social media followers aren’t really following you.

  - Noise is not information.

  And burning down your house draws a crowd, but it’s a lousy way to renovate.

• If you love Bitcoin, just buy Bitcoin … not MicroStrategy (MSTR).  MSTR trades at a 200%+ premium to its NAV.  So, why would anyone loan money to MicroStrategy at less than 1% to buy Bitcoin at 3 times where it’s currently trading?  This is either the greatest marketing ploy ever, or an eyes-wide-open, modern-day version of a publicly-listed Ponzi scheme.  The key to MSTR’s strategy is to constantly raise more and more capital while maintaining an unrealistic premium over the actual price of Bitcoin.  I’m not sure that MSTR can EVER SELL because if their premium disappears (and they trade at the price of bitcoin) – they could crash the digital asset marketplace.  MSTR investors should be careful.  If you love Bitcoin, just buy Bitcoin.  It’s a lot less expensive.

• November’s performance:(a) S&Ps = +6%, (b) Nasdaq = +5.5%, (c) Russell 2000 = +11%, and (d) Bitcoin = +39%.

• A couple milestones in T. Swift’s 21-month Eras tour:

  o After 9 months, it was the first concert tour to gross over $1B.

  o The Eras tour movie is the highest-grossing concert film of all time.

  o The tour alone lifted the UK economy by $1.3B, and increased Sweden’s core inflation rate.

• OpenAI is exploring adding advertising into its AI products … They’ve hired ad-execs from Meta and Google.  Even though ChatGPT brings in $4B/yr., they spend over $5B/yr. in development and operations.

• Donald Trump threatens 100% tariffs … on the BRICS (Russia & 8 other countries) if they work to replace the US dollar in international transactions.

• EU births declined -5.5% in 2023 … making it the largest decline since data collection began in 1961.

• Intel CEO Pat Gelsinger … was forced to retire amid falling revenue.  On his way ‘out-the-door’ Pat will be handed a check for ~$12m for his troubles. 

• Walmart is buying TV maker Vizio … for $2.3B, and BlackRock is buying credit manager HPS Investment Partners for $12B.

• China’s testing the Biden admin’s mettle … by restricting U.S. access to rare minerals used to make semiconductors, solar panels, and EV batteries.  China produces ~60% of the world’s rare minerals and processes ~85% of them.

• Google’s DeepMind demonstrated an AI model … capable of generating 3D game-like, interactive video in minutes.  It creates 3D environments – complete with physics, lighting, and character controls from simple image prompts.

• Google also revealed an AI model … capable of predicting the weather more accurately than existing forecasting systems.

• Hedge funds are ditching MBAs for MDs … as Wall Street is sourcing its new hires from hospitals instead of universities.

• Individuals who get 5 to 6 minutes of ‘real’ exercise per day… are seeing a 16% reduction in major cardiovascular events.

• Per Ali Martinez …  “Bitcoin has reached market tops roughly 8 to 12 months after its previous all-time high.  The next potential market top for BTC should occur between July and November 2025.”

• Quinten Francois writes …  “The average Bitcoin cycle starts 170 days after halving, and peaks 480 days after halving.  We are currently 225 days after the last BTC halving.”

• Stockmoney Lizard believes …  “Bitcoin’s cycle top always follows the monthly RSI exceeding 90, and we have a ‘way-to-go’ before that occures.

• Bitcoin ETFs now control 5% of ALL bitcoin supply.

• Apple’s newest Coinbase partnership … allows users to buy crypto via Apple Pay. The Coinbase Onramp also allows the +60m U.S. users of Apple Pay to instantly bring money on-chain.

• D. Trump nominated Paul Atkins … to replace Gary Gensler as SEC Chair.  Atkins is a long-time crypto advocate, and has a history of prioritizing innovation over over-regulation. 

• Powell says Bitcoin “is just like gold, only it’s virtual.” … Some think of it as a “competitor to gold”, but history will be our best teacher on this one.

• Crypto Mining revealed that Dogecoin and Litecoin mining are … 3X more profitable than Bitcoin mining – thanks to BTC halving complexities and Musk’s continued meme endorsements.

• David Sacks was named “White House AI & Crypto Czar” … His focus will be on establishing a legal framework for crypto, and guiding policy on AI.

• Companies are getting FOMO over strategic bitcoin reserves … even as momentum around a national bitcoin strategic reserve grows.  Companies are examining the MSTR stock price, and rushing to set up their own reserves.

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• Monday:  Per Ivanhoff: If NVDA can close above 140-141, it will likely recover towards 150 by the EOY.  The build-up of AI infrastructure continues, and the stocks participating in the process keep making higher lows and higher highs: VRT, VST, COHR, NRG & ANET.

• Wednesday:  Another day, another potential record for the S&P 500 and Nasdaq – as strong earnings results from several technology companies boosting markets. Shares of Dow component and software giant Salesforce (CRM), semi chip maker Marvell technologies (MRVL), storage company Pure Storage (PSTG), and security software maker Okta (OKTA) are all trading up +10% or more following results. 

• Thursday: “Digital gold has its shine back” … as it crossed over $100,000.  Since its launch, bitcoin has been called “electronic cash,” “magic internet money,” the “future of finance,” and, increasingly: “digital gold.”  The idea that bitcoin could act as a store of value akin to actual gold may be winning out.  Google Trends show that web searches for “digital gold” hit a record high this month, and DJT has proposed creating a “national bitcoin stockpile.”

• Friday: Today is jobs day. Jobs came in at +227k – somewhat in line with the estimates, and Sept. and Oct. were both revised slightly higher.  Fair Warning: per the most recent SKEW reading, the Pros are buying hedges at a rate we have not seen since the 1987 crash. That means our market’s downside risk has never been greater. Per Steve Forbes:The U.S.-born employment index has never returned to its pre-pandemic trend and is now 619,000 below its pre-pandemic level. Conversely, non-U.S.-born employment is at its pre-pandemic growth trend, and accounts for ALL of the net job growth over the last 5 years

• How crypto-insane was November?

  o Bitcoin (BTC)     = +37%      &       Solana (SOL)      = +41%

  o Ethereum (ETH) = +47%      &       Litecoin (LTC)    = +48%

  o Chainlink (LINK) = +66%      &       DOGE                 = +160%

  o Ripple (XRP)       = +282%    &       Stellar (XLM)      = +468%

• Per Callum Thomas:  The U.S. is experiencing more signs of a stretched sentiment as valuations reflect supreme confidence.  The Gold vs Stocks ratio is nearing an inflection point, as the ratio between Commodities (inflation) and Bonds (recession) holds the key to the upcoming macro outlook.  Tip #1: Temper your ‘inner-bull’ due to the market’s high expectations.  It won’t take much to cause investors to press the sell button.

• Bkgd:  This market is behaving like a bad soap-opera.  (a) Key sectors are pivoting and hemorrhaging value – while tech is powering higher.  (b) Stocks are trading on holiday volume – while option volume is soaring.  (c) And the SKEW is at all-time-highs – causing Puts / hedges to be bought like they’re going out of style. 

• All-time-highs with anemic volume … Nobody really traded this week, but the major indexes made all-time-highs. However, the options volume was +10% above normal.  The upward momentum that we’re seeing in stocks, is being caused by investors buying Call options in the Mag-7 early in the day.  Investors are turning into traders and playing the hand in front of them. 

• SKEW (OTM Puts vs Calls) is at all-time-highs … which means that people are hedging (buying Put options) like crazy.  Tip #2: Pros are leveraging their bets by: Buying out-of-the-money Put options and Selling out-of-the-money Call options. Traders are also heavily buying Call options in the Volatility Index (VIX) – believing that upcoming increased selling pressure will cause market volatility to rise. 

• Sector review … Although the S&P and Nasdaq are up +30% YTD, specific sectors are telling a different story.  In fact, there are a very limited number of current drivers of this market: (a) financials, (b) utilities, and (c) the Mag-7.  Sectors such as: energy, materials, industrials, and healthcare are all taking a hit to the downside.  Tip #3: Fair warning: History tells us that these tight, marketplace consolidations often precede big turns in markets. 

• SPX Expected Move (EM):

  • Last Week’s EM: $67 – we tagged it (6100) before backing off a little bit.

  • Next Week’s EM: $62. If marketplace consolidation continues, then look for volatility to return.

• HODL’s: (Hold-On for Dear Life)

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

  - JPC == Nuveen Preferred Income Opportunities Fund (10% yield)

  -  Physical Commodities = Gold @ $2,654/oz. & Silver @ $31.4/oz.

  - Bitcoin (BTC = $99,860 / in at $4,310)

  - Ethereum (ETH = 4,000 / in at $310)

  - IBIT – Blackrock’s Spot Bitcoin ETF ($57.8 / in at $24)

  - ETHA – Blackrock’s Spot Ethereum ETF ($30.7 / 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 = $24.68 / in at $11.15)

  - Doge (DOGE = $0.465 / in at $0.22)

  - Uniswap (UNI = $17.32 / in at $9.10)

  - Aave (AAVE = $280.58 / in at $155)

  - Curve (CRV = $1.23 / in at $0.82)

  - Solana (SOL = $241.5 / in at $256)

  Please be safe out there!

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