This Week in Barrons: 9.29.2024

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• There is always room for someone…  who knows their way around an industry, a technology, and/or is a problem-solver.  The hard part isn’t finding people who value those offerings, but rather earning and maintaining that badge-of-courage.  As long as there are people and/or organizations who are lost – we will always need guides.

• When organizations grow…  they hire for specific tasks and the skill-sets that go with them.  But when the world changes, organizations are suddenly filled with people who were hired for yesterday’s specific skill sets.  Per Seth G: What if we just hired problem solvers who were hungry to learn and embraced change?

• Over 60% of all companies fired a recent college grad – because:

  1. They felt overly entitled. 

  2. They were offended too easily / didn’t respond well to feedback. 

  3. They lacked a strong work ethic, and regularly showed-up unprepared having done no homework.

• Rep. Tom Emmer’s Q&A for the SEC’s Gary Gensler… called out Gensler for breaking the law and lying to the courts. Emmer accused Gensler of:

  1. Abusing his enforcement powers, baiting companies into compliance, and retaliating against those who didn’t by forcing them to appear before Congress.

  2. Charging crypto-companies with: Crypto Asset Security – a phrase that doesn’t exist in any statute – and then quietly having his lawyers retract the charge in court.

  3. ‘Gary Gensler set our SEC back decades, and his leadership and guidance are continually destructive and lawless.’ 

• China jump-started its economy by:

  1. Cutting Short-Term Interest Rates == providing immediate monetary relief.

  2. Reducing Reserve Requirements to 2018 levels – freeing up more money for lending. 

  3. Providing Property Support that includes lowering borrowing costs on $5.3T in mortgages, and easing rules for second-home purchases.

  4. Injecting an Equity Market Boost of 800B yuan, and formed a market stabilization fund to support their struggling stock market.

• Microsoft signed a deal with Constellation Energy…  to use 100% of the power generated from 3-Mile Island Unit 1 nuclear power plant - to power its AI data centers.  The project will create over 3,400 jobs, generate over $3B in taxes, and be active in 2028.

• Hollywood unemployment hit 12.5%…  triple the national average.

  o The number of original shows declined by the fastest rate on record.

  o Studio mergers are eliminating many content buys.

  o And streamers are focused on buying live-sporting events.

• Intel received a takeover bid from Qualcomm…  that would be the world’s largest transaction in the chip market.

• 14 large banks and other major financial institutions…  announced that they’re going to support the nuclear power industry. 

• A looming dockworkers’ strike at 36 ports…  could shut down trade hubs that account for 60% of US shipping traffic.  If port workers don’t reach a deal by next week, 45,000 members of the Longshoremen’s Union could stage a walkout.

• John Cena and Dame Judi Dench are taking on Siri…  as they struck a deal to lend their voices to Meta’s AI chatbot.

• Apple and Meta will not sign…  the European Union's AI safety pledge.  This is despite the agreement supported by 115 other companies including OpenAI, Google, and Microsoft.

• The DOJ is suing VISA for monopolistic practices…  including trying to crush competitors like PayPal and Square.

• Real Estate listings are on the rise…  (up +36% YoY), but still down -26% from pre-pandemic levels.  The best states to buy a home are: Florida, Idaho, Tennessee, and Texas – with Colorado, Washington, Utah, and Arizona close behind.

• 83% of the time…  Bitcoin moves in the direction of the global money supply, and recently the printing-presses have been re-started.  As capital gets cheaper and more plentiful – people invest in financial assets.

• Bitcoin has been the winning asset since our FED’s 50bps rate cut…  with Gold coming in second place. It’s not just a risk-on impulse following a FED rate cut - it’s a repricing of upside growth and inflation.

• The SEC approved the listing of Bitcoin ETF options… on BlackRock’s IBIT.  You’ll get more bang for your buck, and more ways to continue hodling your crypto.

• Telegram has agreed to supply IP addresses and phone numbers…  of users in response to "valid legal requests."

• A GameStop customer found a redemption code for one bitcoin… worth ~$65k in a $30 crypto-themed trading-card pack.

• Caroline Ellison was sentenced to 2 years in prison… for her involvement in FTX scandal.  She also must forfeit her $11B payday.

• OpenAI is rolling out their Advanced Voice Mode (AVM)…  featuring new voices and improved functionality to make AI interactions feel more natural and personalized.

• I took some time off last week, but back in the saddle this week.

• Don’t bet against The Zuck…  Mark Zuckerberg (Meta’s CEO) showed off their latest pair of AR-glasses that seamlessly link to Meta’s Llama 3.2 AI language that understands both images and text.  Meta also provides for the automatic dubbing of Reels into other languages – preserving the creator's voice and syncing lip movements to match the new audio.  This unique combination of AI features should help creators reach broader audiences and create content more efficiently.  Meta’s new open-source models + the most advanced AR glasses == ~500m monthly active AI users that are receiving AI Voice chats directly onto their favorite platforms.  Meta is proving again why you: ‘Don’t bet against The Zuck’.

• OpenAI takes a sabbatical…  Mira Murati (OpenAI’s CTO) resigned last week because she’d like ‘more time and space for her own exploration’.  Then Bob McGrew (Chief Research Officer) and Barret Zoph (Open AI’s VP of Research) also left the company – just hours after Mira.  On a separate note, Sam Altman (OpenAI’s CEO) will soon receive a chunk of equity in the newly restructured company worth ~$150B – as OpenAI moves away from being a non-profit.

• Bkgd: (a) Volatility’s rising due to seasonality and the election.  (b) The PROS are hiding in their hedges – prepping for larger moves.  (c) October volatility is out-pacing November for the first time in years – making the first 3 weeks in October time to buckle-up.  (d) With Walmart up +50% and utilities up +25%, defensive sectors are the ones catching-a-bid.  The retail trader is ~60% invested in equities == an all-time-high.

  -  Tip #1 == Time to Raise some Cash – especially inside the Mag-7

• Helmets On – VIX & VVIX:  Last week the S&Ps and the QQQ’s were mildly higher, the Financials (XLF) were flat, and Energy (XLE) was at the bottom of its expected move.  Oil is falling on demand destruction forecasts.  The VVIX (the Volatility of the VIX) is moving higher as ~1m VIX options were traded on Friday alone. 

• We are in Backwardation – the RISK is NOW:  Volatility is the story of the week.    October volatility (19 days out) is ~18.9, and November volatility (54 days out) is ~18.30.  Which means market risk is greater over the next 19 days that it is over the next 54 days due to: (a) Election and Seasonal uncertainly, (b) the start of Earnings season, and (c) the upcoming Economic data-drops. 

• Due to High Volatility… markets are broadening and defensive trading is increasing.  It’s as if the entire world (since July) has decided to invest in Utilities (XLU +25% YTD) and in Walmart (WMT +50% YTD). 

• Over the next 3 months, I like:

  - Tip #2:  Basic Materials: (a) DD – Dupont: Jan ’25: +$100 / -$105U CALL-Sp., (b) DOW – DOW Inc: Jan ’25: +$57.5 / -$60 CALL-Sp., and (c) SVM – Silver Miner: Jan ’25 +$5 Calls.

  - Tip #3: Utilities: (a) XLU – Utilities: Jan ’25: $85 / $89 CALL-Sp., and (b) WEC – Wisconsin Power: Jan ’25: +$100 / -$105 CALL-Sp.

  - Tip #4: China: (a) JD – JD.COM: Jan ’25: +$50 / -$55 CALL-Sp., and (b) BABA – Alibaba: Jan ’25: +$130 / -$140 CALL-Sp.

• SPX Expected Move (EM):

  - Last Week’s $75EM … and we barely moved $30.

  - Next Week’s $96EM … a 25% increase due to more economic data to digest.

• I separated some of my investments into:

  - HODL’s that are on somewhat cruise-control,

  - Risk Reduction Option plays,

  - Hedging Option plays, and

  - Income Generation Option plays - due to their high-volatility.

   

• HODL’s: (Hold-On for Dear Life)

  - 13 to 17-Week Treasuries @ 4.75%

  - Physical Commodities = Gold @ $2,676/oz. & Silver @ $32.5/oz.

  - **Bitcoin (BTC = $65,700 / in at $4,310)

  - **Ethereum (ETH = 2,650 / in at $310)

  - HROW – Harrow Health = $44.2 / in at $12

  - INDA – India ETF ($59.2 / in at $50)

  - BRK/B – Berkshire = ($456 / in at $439)

  - **IBIT – Blackrock’s Spot Bitcoin ETF ($37.3 / in at $24)

• Options to Reduce Risk:

  - Materials / Utilities: Long Call Verticals…

  o DD – Dupont: Jan ’25: +$100 / -$105 CALL-Sp.

  o DOW – DOW Inc: Jan ’25: +$57.5 / -$60 CALL-Sp.

  o XLU – Utilities: Jan ’25: $85 / $89 CALL-Sp.

  o WEC – Wisconsin Power: Jan ’25: +$100 / -$105 CALL-Sp.

  o SVM – Jan. ’25: +$5 Calls: (   / in at $0.30)

  - China – Long Call Verticals…

  o JD – JD.COM: Jan ’25: +$50 / -$55 CALL-Sp.

  o BABA – Alibaba: Jan ’25: +$130 / -$140 CALL-Sp.

• Options as Hedges:

  - TLT – Bonds: Jan ’25: +$105 / -$110 CALL-Sp.

  - TLT – Bonds: Feb ’25: +$110 / -$120 CALL-Sp.

  - SPY – S&Ps: Jan ’25: +$520 / -$500 PUT-Sp.

  - SPY – S&Ps: Jan ’25: +$500 PUT

  - GLD – Gold ETF: Jan ‘25: +$255 / -$260 CALL-Sp.

• Options for Income:

  - **MARA – Marathon Digital = ($17.5 / in at $12)

  o Bi-Weekly:

  o BUY Puts 1 Std. Dev. OTM for protection

  o SELL Calls ½ Std. Dev. OTM for income

  - **RIOT – Riot Bitcoin Mining ($7.8 / in at $12.5)

  o Bi-Weekly:

  o BUY Puts 1 Std. Dev. OTM for protection

  o SELL Calls ½ Std. Dev. OTM for income

   

  ** Crypto-Currency aware

  Please be safe out there!

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